Stock futures mixed as Big Tech earnings roll in, Fed decision looms

U.S. stock futures were mixed in early morning trading on Wednesday as investors digested major technology earnings and geared up for the latest Federal Reserve policy announcement.

S&P 500 futures hovered above the flatline while Nasdaq 100 futures traded mildly lower. Dow futures fell 42 points.

Google parent Alphabet reported better-than-expected earnings after the bell on Tuesday, sending shares of the tech giant up more than 4% in after-hours trading. Alphabet saw its revenues grow 34% from a year ago.

Meanwhile, Microsoft shares dipped about 3% in extended trading even after the company topped analyst earnings. Microsoft had its largest revenue growth since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages last year.

Boosting sentiment about the economic recovery from the pandemic, Starbucks raised its full-year outlook as U.S. same-store sales growth returns to pre-pandemic levels.

On Tuesday, the major averages traded around the flatline. The Dow Jones Industrial Average rose just 3 points. The S&P 500 closed flat after notching an all-time high on Monday. The Nasdaq Composite was the relative underperformer, dipping 0.34% as Tesla fell 4.5%.

“Although the overall stock market was flat today, the reopening trade was still working,” The Leuthold Group chief investment strategist Jim Paulsen told CNBC. “The S&P 500 was led by almost 1% gains in Energy, Financials and Industrial stocks. Likewise, the small cap Russell 2000 posted another day of modest outperformance.”

Technology darlings Apple and Facebook both report earnings on Wednesday after the bell.

“Many FAANGs are reporting this week and the stock market may wait until some of these key reports are out before deciding on its next major direction,” added Paulsen.

The Fed wraps up its two-day policy meeting on Wednesday. The central bank is not expected to take any action, but economists expect it to defend its policy to let inflation run hot. Fed Chairman Jerome Powell will hold a press conference at 2:30 p.m. ET, 30 minutes after the decision is announced.

“Any clues offered in the board’s statement or in the subsequent press conference about potential QE tapering — when and how fast — would likely move both the stock and bond markets,” Paulsen said.

Boeing, Ford, Qualcomm, eBay and MGM Resorts are among the other major corporate earnings on Wednesday.