US Stock market opens in red ahead of Fed outcome and Meta and Microsoft earnings

US stock markets opened in the red on Wednesday ahead of the crucial Federal Policy meeting outcome and major tech earnings later in the day. Dow Jones plunged 400 points, or 0.8%, erasing the majority of Tuesday’s gains. The S&P 500 traded 12 points, or 0.1%, lower on Wednesday. Meanwhile, the tech-heavy NASDAQ 100 index hovered around flat lines as investors reassess the risks in the overheated chip stocks.

Investors remain on the sidelines ahead of the policy decision to be announced later in the day. Street estimates suggest the Federal Reserve will keep the policy rates unchanged, amid the evolving situation in the Middle East. Investors will closely watch Federal Chairman Kevin Warsh’s commentary on underlying rising inflation fears, as it will provide clear cues for the interest rate trajectory in coming quarters.

Crude oil prices bounced back as much as 7% on WTI crude futures on Wednesday evening after Trump said the latest Iranian strikes on American bases in the Middle East will be answered. The Brent crude oil price now trades above $87 per barrel after hitting the $80 per barrel mark on Tuesday.

Microsoft earnings

The cloud services major is expected to post revenue of $86.7-$87.2 billion, a growth of 14%-15% for the quarter ended June 30, 2026, as guided by the company. Meanwhile, the consensus estimate indicates revenue of $87.4-$87.6 billion for the quarter. Additionally, the EPS is expected to be in the range of $4.21-$4.24 per share for the quarter. Apart from general expectations, investors will closely monitor the commentary on AI demand and capacity. Meanwhile, the AI-related investment guidance for FY2027 will also remain under focus as the company expects 2026 guidance at $190 billion.

Meta earnings

Meta Platforms’ revenue guidance stands at $58-$61 billion for Q2, a 27% growth over last year. Meanwhile, the consensus estimates suggest revenue of $61 billion for the quarter. The EPS estimates stand at $7.1 per share, up 20-22% over the last year. Similar to Microsoft, the AI capex guidance for the remaining FY2026 will be closely watched.

Alphabet, in its latest quarterly earnings, has increased its AI capex guidance to over $200 billion, citing strong AI computational demand and underlying supply shortages.

Meanwhile, stock markets in Asia ended mixed as South Horea’s KOSPI index slumped as heavyweight chipmaker SK Hynix’s earnings failed to impress the market. Meanwhile, Chinese shares gained as a rebound in technology shares helped benchmarks recover from recent losses.