Futures slip as Big Tech results roll in; Fed in focus By Reuters

By Bansari Mayur Kamdar and ghc foreign exchange dealerJohann M Cherian

(Reuters) -Wall Street futures crept lower on Wednesday as investors assessed earnings from Microsoft (NASDAQ:) and Alphabet (NASDAQ:) ahead of a widely expected Federal Reserve rate hike that could push borrowing costs to their highest since the global financial crisis.

Microsoft eased 3.6% in premarket trading after laying out an aggressive spending plan to meet demand for its new artificial intelligence (AI)-powered services. The Windows maker still surpassed estimates for quarterly revenue and profit.

On the other hand, Alphabet gained 6.3% after the Google parent's second-quarter profit exceeded Wall Street expectations on steady demand for its cloud services and a rebound in advertising.

The NYSE FANG+ index, which houses many megacap growth names, has rallied 76.5% so far this year on optimism over AI and hopes that the Fed is nearing the end of its rate hiking cycle.

"Margins and profitability (of Microsoft and Alphabet) will be under the spotlight until investors start to see a significant contribution from AI," said Joshua Warner, market analyst at City Index.

Meta Platforms (O:) rose 1.8% after (NYSE:)'s cloud unit said it would support the Facebook owner's open-source AI model Llama. Meta is also expected to report quarterly results after the bell.

The Fed is expected to deliver a 25-basis point interest rate hike later in the day, though there is less clarity over what the central bank will do at subsequent meetings.

"The key question is what comes next. The dot plot still shows room for another 25bp hike this year, but recent inflation figures don't signal urgency," said Stefan Koopman, senior macro strategist at Rabobank

At 7:00 a.m. ET, were down 65 points, or 0.18%, were down 7.25 points, or 0.16%, and were down 43.75 points, or 0.28%.

The blue-chips Dow extended its winning streak to a 12th straight session on Tuesday, driven by strong healthcare and financial earnings and some rotation out of tech stocks.

In other earnings-driven news, Coca-Cola (NYSE:) added 1.2% after the beverage maker raised its annual revenue and profit forecasts, betting on higher pricing and resilient demand for its sodas.

Snap (NYSE:) tumbled 18.5% after the photo messaging app owner gave a weaker-than-expected third-quarter forecast as it struggles to compete with tech giants for advertising dollars.

AT&T (NYSE:) rose 2% as the telecom service provider handily beat estimates for second-quarter free cash flow, while Thermo Fisher Scientific (NYSE:) tumbled 6.7% as the medical equipment maker cut its annual profit forecast.

Amazon.com (NASDAQ:) fell 1.9% after a media report that the Federal Trade Commission was finalizing an antitrust lawsuit against the company.

(NYSE:) climbed 2.8% after the bank's board authorized a new share buyback program of up to $30 billion.

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