Wall Street eyes subdued open as Caterpillar, Texas Instruments disappoint

(Reuters) – Wall Street headed for a flat open on Wednesday, after earnings from industrial bellwether Caterpillar and chip major Texas Instruments kept investors on edge over the fallout from the U.S.-China trade war.

Texas Instruments (TXN.O) fell 8% premarket after the trade tensions took a toll on the chip industry proxy’s current-quarter revenue forecast, while Caterpillar Inc (CAT.N) dipped after the company cut its annual profit forecast on slowing China demand.

Texas Instruments weighed on other chipmakers, with Intel Corp (INTC.O), Analog Devices Inc (ADI.O) and Nvidia Corp (NVDA.O) down between 1% and 2%.

“What I think is causing the hesitation is the fear of other bellwether companies also disappointing,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

Investors are now waiting for results from big tech firms, which make up the largest swath of the U.S. stock market.

Microsoft Corp (MSFT.O) is scheduled to report after markets close on Wednesday.

“A name like Microsoft could counter a McDonald’s and investors’ mindsets could be brought back on track while we wait for trade and continual monitoring of the economic cycle,” Bakhos added.

Boeing Co (BA.N) rose 1.3%, as the world’s largest planemaker did not report any new charges related to its grounded 737 MAX jets, despite quarterly profit more than halving from a year earlier.

The earnings season has largely been upbeat, with over 80 of the 100 companies topping analysts’ estimates for profit, according to Refinitiv data. But analysts still project the first earnings contraction since 2016.

At 8:42 a.m. ET, Dow e-minis 1YMcv1 were down 7 points, or 0.03%. S&P 500 e-minis EScv1 were down 2.25 points, or 0.08% and Nasdaq 100 e-minis NQcv1 were up 5.5 points, or 0.07%.

The S&P 500 .SPX is hovering near its record high on signs of progress in trade talks between the world’s top two economies.

A handful of healthcare companies with low exposure to China rose on strong results. Drugmaker Alexion Pharmaceuticals (ALXN.O) gained 1.5% after raising full-year forecast.

Medical device makers Boston Scientific Corp (BSX.N) and Thermo Fisher Scientific (TMO.N) gained 3% each as quarterly profits beat estimates.

However, Eli Lilly and Co (LLY.N) fell 3% after the drugmaker missed third-quarter revenue estimates.

Shares of Walgreens Boots Alliance Inc (WBA.O) dropped 1.6% after JPMorgan downgraded the drugstore chain’s stock to “neutral” from “overweight”.