By Shreyashi Sanyal and Johann M Cherian
(Reuters) -U.S. stock indexes were set to open lower on Tuesday as corporate reports from bellwethers including 3M (NYSE:MMM), Johnson & Johnson (NYSE:JNJ) and GE pushed earnings season into high gear, while chip companies retreated after bouncing in the previous session.
In a week packed with high-profile earnings reports and key economic data, investors will now look to assess the impact of the Federal Reserve's rate-hiking spree. The central bank is widely expected to raise rates by another quarter of a percentage point next week.
Industrial conglomerate 3M Co fell 4.7%, leading the decliners among Dow components in premarket trading, after reporting a fall in quarterly profit.
Verizon Communications Inc (NYSE:VZ) dropped 2.6% after forecasting annual profit below estimates as it grapples with slowing growth in wireless customer sign-ups.
Johnson & Johnson shares fell 1.4% after the healthcare giant warned that its medical devices business would be hit by China's COVID-19 surge in the first half of 2023, even as it beat estimates for fourth-quarter profit.
General Electric (NYSE:GE) Co rose 2.2% as it topped quarterly profit estimates, boosted by strong demand for its engines and after-market services.
"It's going to be earnings now that will direct the market's direction and as far as today is concerned, we're looking at a mixed session," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Wall Street's main indexes started the earnings-heavy week on solid ground amid renewed appetite for growth stocks following a battering last year.
After logging its biggest gain in over two months on Monday, Advanced Micro Devices (NASDAQ:AMD) Inc slipped 2.6% as brokerage Bernstein downgraded the chipmaker to "market-perform" from "outperform" citing a bleak outlook for the PC market.
Other chipmakers including Nvidia Corp, Intel Corp (NASDAQ:INTC) and Broadcom (NASDAQ:AVGO) Inc fell between 0.4% and 1.3%.
Shares of Microsoft Corp (NASDAQ:MSFT), which is scheduled to report quarterly earnings after the bell, were flat.
Big Tech earnings could also determine whether renewed enthusiasm for growth stocks will be sustained.
"In the near-term, the answer seemingly lies with tech earnings ... longer-term, if we do experience a Fed pivot this year, then would anticipate a strong, positive buying impulse for tech," JPMorgan (NYSE:JPM) analysts wrote in a client note.
Analysts now see fourth-quarter earnings for S&P 500 companies dropping 3% year-on-year, nearly twice as much as the 1.6% annual drop seen at the beginning of the year, according to Refinitiv data.
At 8:10 a.m. ET, Dow e-minis were down 96 points, or 0.28%, S&P 500 e-minis were down 10.25 points, or 0.25%, and Nasdaq 100 e-minis were down 48.75 points, or 0.41%.
Other major growth stocks also dipped, with Alphabet (NASDAQ:GOOGL) Inc falling 1.1%. The U.S. Justice Department is poised to sue Google as soon as Tuesday, according to a report, regarding its dominance over the digital advertising market.
Data from S&P Global (NYSE:SPGI) later in the day will likely show flash manufacturing PMI fell to 46.0 in January from a final reading of 46.2 in December, while flash services PMI rose to 45 this month from 44.7 in December.