By Tanya Agrawal
REUTERS - Wall Street was set to open lower on Wednesday as the initial optimism over earnings faded after disappointing results from technology giants including Apple and Microsoft.
Apple shares slumped 7 percent to $121.58 in premarket trading, a day after the iPhone maker's revenue forecast for the fourth quarter fell below expectations.
Microsoft fell 3.5 percent to $45.64 after reporting its biggest quarterly loss, as the company wrote down its Nokia phone business and demand fell for its Windows operating system.
Yahoo was down 2.3 percent at $38.85 after it forecast lower-than-expected revenue for the current quarter as it struggles to revive its core online advertising business.
While markets are near record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.9 percent, according to Thomson Reuters data, well below the 5.9 percent gain forecast on Jan. 1.
So far, 70 percent have reported earnings above analyst expectations, above the 63 percent average beat rate since 1994.
However, only 53 percent have topped revenue forecasts, below the 61 percent average beat rate since 2002. U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar that reduces the value of U.S. companies' overseas income.
"Underwhelming reports from headline companies is moving the market today as the focus shifts from the macro to micro," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
"There is concern regarding the lack of organic revenue growth and the strong dollar which will continue to be a drag as we head into the second half of the year but that effect should moderate over time."
Adding to the weakness, commodities resumed their downward spiral with gold and oil prices under pressure.
S&P 500 e-minis were down 10.75 points, or 0.51 percent, with 132,827 contracts traded at 8:49 a.m. ET.
Nasdaq 100 e-minis were down 67 points, or 1.44 percent, on volume of 26,524 contracts while Dow e-minis were down 75 points, or 0.42 percent, with 15,149 contracts changing hands.
Dow component Coca Cola fell marginally to $41.10 after the company reported better-than-expected results but said it may spend lesser to buy back shares this year.
Boeing was up 1.5 percent at $147.49 after the company reported a better-than-expected quarterly profit, helped by booming demand for commercial aircraft.
Thoratec jumped 9.5 percent to $63.07 after St. Jude Medical agreed to buy the smaller rival for $3.4 billion. St. Jude fell 2.3 percent to $75.
Data expected on Wednesday includes existing home sales data. Home sales, which reached a 5-1/2-year high in May, are expected to have risen 1.2 percent at an annual rate of 5.40 million units in June. The data is expected at 10 a.m. ET (1400 GMT).
(Editing by Don Sebastian)
