US stock futures largely lower after tech giants report; Fed decision due

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Investing.com — U.S. stock futures traded largely lower Wednesday, with disappointing ad revenue numbers from Google-parent Alphabet (NASDAQ:GOOGL) weighing ahead of the conclusion of the latest Federal Reserve policy meeting.

By 06:45 ET (11:45 GMT), the Dow Futures contract was up 60 points, or 0.2%, while S&P 500 Futures traded 22 points, or 0.5%, lower and Nasdaq 100 Futures dropped 200 points, or 1.1%.

The main U.S. averages closed in a mixed fashion Tuesday, with the Dow Jones Industrial Average outperforming, closing higher while the S&P 500 and the Nasdaq Composite ended recent positive runs.

Alphabet, Microsoft weigh on tech sector

Hitting the markets Wednesday, and the tech-heavy Nasdaq in particular, has been the pullback in Alphabet (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) shares after these two tech giants reported quarterly results after the close Tuesday.

The companies reported largely positive results, but both signaled that capital spending will rise this year in their push to develop products powered by artificial intelligence.

Alphabet, in particular, has been hit hard after the YouTube-parent said that spending would be “notably larger” in 2024, as it attempts to build out its AI offerings at its key advertising and cloud services units.

Tesla (NASDAQ:TSLA) stock was also seen slipping premarket after a judge in the U.S. state of Delaware threw out CEO Elon Musk’s huge $55.8 billion Tesla package, saying that awarding such an “unfathomable sum” was not fair to shareholders.

Should the ruling be upheld, Musk would lose options to more than 303 million Tesla shares, or roughly about 10% of the company and well below his previously stated goal of 25% ownership.

The earnings season continues Wednesday, with embattled aircraft manufacturer Boeing (NYSE:BA) due to release its results before the bell, and chipmaker Qualcomm (NASDAQ:QCOM) after the close.

Fed meeting to conclude

The Federal Reserve announces its latest policy decision later in the session, and is widely tipped to keep interest rates on hold at more than two-decade highs.

Fed chief Jerome Powell’s accompanying press conference will be carefully studied for any comments around the path ahead for interest rates, after the central bank signaled in December that it could reduce rates as many as six times this year.

Inflation remains above the Fed’s stated 2% target, but it has continued to show signs of easing back down to this mark.

Economic activity has also been resilient, and there is more labor data to study Wednesday in the form of the ADP National Employment report for January, after the JOLTS report on Wednesday signaled an unexpected rise in December job openings.

Crude falls on weak Chinese data

Oil prices slipped lower Wednesday, as disappointing manufacturing activity data from China, the world’s biggest crude importer, weighed on demand sentiment.

By 06:45 ET, the U.S. crude futures traded 1.2% lower at $76.89 a barrel, while the Brent contract dropped 1.1% to $81.56 a barrel.

The official Chinese manufacturing PMI release showed the world’s second-largest economy contracted for a fourth straight month in January, raising further doubts about the strength of the economic recovery of this vital crude market.

That said, the crude benchmarks are still on course for their first monthly gain since September as broadening Middle East conflicts raised supply concerns from this oil-rich region.

U.S. inventory data from the American Petroleum Institute indicated that crude stockpiles dropped by 2.5 million barrels in the week ended Jan. 26, if this is confirmed by official data later in the session.

Additionally, gold futures rose 0.2% to $2,055.25/oz, while EUR/USD traded 0.1% lower at 1.0838.

(Oliver Gray contributed to this article.)

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