FILE PHOTO: A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 4, 2024. REUTERS/Andrew Kelly/File Photo

By Pranav Kashyap and Twesha Dikshit

(Reuters) -Wall Street looked set for a subdued open on Wednesday, with Netflix's disappointing results pressuring market sentiment as investors tiptoe through a high-stakes earnings season.

Shares of Netflix dropped 7.2% in premarket trading on Wednesday after the streaming giant's fourth-quarter revenue outlook failed to excite investors - even with blockbuster titles like the final season of Stranger Things on deck.

At 08:08 a.m., Dow E-minis were down 4 points, or 0.01%, Nasdaq 100 E-minis were down 48.5 points, or 0.19%, U.S. S&P 500 E-minis were up 1.75 points, or 0.03%.

A 7.7% drop in Texas Instruments, following lower-than-expected revenue and profit forecasts from the chipmaker, weighed on Nasdaq futures.

Peers Microchip Technology dropped 3%, ON Semiconductor lost 2.9%, and Analog Devices fell 2.2%.

All eyes are on Tesla, which will kick off the 'Magnificent Seven' earnings lineup after the closing bell. Its shares were flat.

The Magnificent Seven — Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla - collectively account for about 35% of the S&P 500's total market capitalization.

With equities hovering near record highs and valuations stretched thin, investors need more than earnings beats to justify lofty price tags.

Despite strong results from several big names on Tuesday, markets remained indecisive. The S&P 500 ended virtually unchanged, the Nasdaq dipped slightly, while the Dow outperformed, closing up 0.5%.

Wall Street is now bracing for next week's earnings from Alphabet, Meta and Apple — which could either reinforce the recent rally or rattle investor confidence.

So far, 78 S&P 500 companies have reported, with 87% beating estimates, according to LSEG data. Analysts expect third-quarter earnings growth of 9.2% year-on-year, up from 8.8% at the start of the month.

AT&T added more wireless subscribers than expected for the third quarter, sending its shares up nearly 1%.

GEOPOLITICS AND DATA TROUBLES

Geopolitical jitters continued. A planned summit between U.S. President Donald Trump and Russian President Vladimir Putin was put on hold, while uncertainty swirled around a potential meeting with Chinese President Xi Jinping.

Despite recent signs of tensions thawing between Washington and Beijing, Trump reignited doubts on Tuesday, saying the meeting with Xi "maybe won't happen."

Trump also refused to meet top Democrats until the three-week-old government shutdown ends, leaving the Federal Reserve short on data ahead of next week's policy meeting.

With economic signals stalled, Friday's data — with core CPI expected to hold at 3.1% — may be the Fed's only clear read on inflation.

"If the government remains shut down until November 5, it will be the longest ever. The longer the U.S. government shutdown lasts, the greater (are) the downside risks to the labor market and growth," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

Among other moves, Beyond Meat and Krispy Kreme jumped 82.6% and 25.1% respectively, adding to the run of recent gains.

Mattel shares slipped 6.2% after the Barbie-maker missed Wall Street estimates for third-quarter revenue and profit.

Alphabet eased losses after a 2.4% fall on Tuesday. Bloomberg News reported Anthropic was in talks with Google to secure additional computing power valued in the high tens of billions of dollars.

(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Arun Koyyur and Shinjini Ganguli)