Dow futures steady as tech giants report, Fed decision on tap

Investing.com - US stock futures experienced a downturn on Tuesday night following the release of quarterly results by two leading tech corporations Microsoft and Alphabet. Investors are also focusing on the Federal Reserve's upcoming decision on interest rates.

By 6:40 pm ET (11:40 pm GMT) Dow Jones Futures were little changed, S&P 500 Futures fell 0.4% and Nasdaq 100 Futures lost 0.9%.

In post-market trading, Microsoft Corporation (NASDAQ:MSFT) stock fell by 0.7% despite reporting EPS of $2.93 versus $2.78 expected, while revenues surpassed estimates, coming in at $62 billion versus $61.1 billion expected. However, less-than-anticipated growth in cloud services was also reported.

Google's parent company, Alphabet Inc (NASDAQ:GOOGL) declined by 5.6% after reporting EPS of $1.64 versus $1.59 expected, while revenues came in at $86.31 billion versus $85.23 billion expected. Ad revenue, however, appeared to fall short of investor expectations. As a result, Meta Platforms Inc (NASDAQ:META) and Snap Inc (NYSE:SNAP) also experienced a decrease in stock value.

Shares of Advanced Micro Devices Inc (NASDAQ:AMD) fell by 5.9% after reporting EPS of $0.77, in-line with expectations, while revenues were reported at $6.2 billion versus $6.13 billion expected.

Starbucks Corporation (NASDAQ:SBUX) gained 4.2% after the company reported EPS of $0.9 versus $0.94 expected, while revenues came in at $9.43 billion versus $9.62 billion expected. The coffee giant also reported a 5% increase in global comparable store sales.

Tesla Inc (NASDAQ:TSLA) also fell by 3.5% after-hours, following a legal decision to nullify Elon Musk’s $55 billion pay package.

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The tech sector, which has been the driving force behind the market rally from 2023 into 2024, currently trades at a relatively high valuation of nearly 29 times its 2024 earnings. In light of this, investors will need to see an expansion in earnings for tech companies to sustain their high price-to-book levels.

This activity follows a mixed day for stocks. The Dow Jones Industrial Average outperformed, adding 0.4%. The S&P 500 marginally declined by 0.1% while the NASDAQ Composite lost 0.8%.

The focus for traders on Wednesday will be the Fed's rate decision. The fed funds futures market has priced in a nearly 98% probability that the central bank will leave rates unchanged, according to the CME FedWatch tool. Investors will be seeking indications of shifts in the central bank's policy stance in its post-meeting statement and Fed Chair Jerome Powell's remarks.

In terms of earnings, Dow member Boeing Co (NYSE:BA) is set to release its results on Wednesday before the bell, while chipmaker Qualcomm Incorporated (NASDAQ:QCOM) is scheduled to announce its quarterly earnings after the close.

On the bond markets, United States 10-Year rates were at 4.036%.