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Meta Platforms ( META ), Microsoft ( MSFT ) drag megacaps

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Uber ( UBER ), Estee Lauder fall after results

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September PCE data due at 8:30 a.m. ET

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VIX rises to over three week high

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Futures down: Dow 0.49%, S&P 500 0.74%, Nasdaq 0.88%

(Updated at 7:05 a.m. ET/1105 GMT)

By Lisa Pauline Mattackal

Oct 31 (Reuters) - Wall Street futures tumbled on

Thursday as warnings from Meta Platforms ( META ) and Microsoft ( MSFT ) about

rising AI-related costs dampened optimism around megacap stocks,

which have been the market's primary driver this year.

Shares of Facebook-owner Meta slumped 3.5% and

Microsoft ( MSFT ) dropped 3.9% in premarket trading, despite

both companies beating earnings estimates in results reported

after the bell on Wednesday.

Markets were also on edge ahead of the release of the

Personal Consumption Expenditures index, the U.S. Federal

Reserve's preferred inflation metric, for insight on how much

the central bank could ease borrowing costs in the last two

months of 2024. Nonfarm payrolls data is also due on Friday.

Meta warned of "significant acceleration" in AI

infrastructure investments. Microsoft ( MSFT ) predicted slower growth in

its Azure cloud business, signaling that the company's already

hefty AI investments were not enough to keep pace with capacity

constraints.

The other so-called Magnificent Seven megacap stocks also

slipped, with Nvidia ( NVDA ) losing 1.5% and Alphabet

down 0.7%, giving up some gains after soaring in the previous

session following upbeat results.

Amazon.com ( AMZN ) lost 1% and Apple ( AAPL ) dipped 0.2%

ahead of quarterly results from both, due after market close.

Although betting on AI-driven tech stocks propelled Wall

Street to record highs this year, investor exuberance has meant

stocks are trading at incredibly expensive valuations. Meta and

Microsoft's ( MSFT ) warnings point to the challenges companies face in

pleasing investors.

"The market is unforgiving of any AI-related company that

fails to significantly outperform," said Dan Coatsworth,

investment analyst at AJ Bell.

"Meta is the latest stock to feel the wrath of

investors, despite extending its track record of doing better

than analyst forecasts on key financial measures."

Dow E-minis were down 206 points, or 0.49%, S&P

500 E-minis were down 43.25 points, or 0.74% and Nasdaq

100 E-minis were down 180.75 points, or 0.88%.

The VIX, Wall Street's "fear gauge", rose to a more

than three-week high as investors brace for more volatility from

corporate results, the upcoming U.S. presidential election and

the central bank's November meeting in the next few weeks.

The benchmark index is set for its sixth straight month

of gains in October, and the Nasdaq Composite is set to

rise over 2%, though the Dow is on track to decline

slightly.

In results-driven moves, e-commerce firm eBay ( EBAY ) fell

9% following downbeat revenue forecasts, while trading platform

Robinhood slumped 10.5% after its third-quarter

earnings missed expectations.

Uber Technologies ( UBER ) shares dropped 6.5% after the

company forecast fourth-quarter gross bookings below

expectations.

Estee Lauder plummeted 16.6% after the

cosmetics company

withdrew 2025 annual forecasts and cut its dividend.

Of the S&P 500 companies that have reported results so

far, 77.4% have beaten analysts expectations, about in line with

the 79% average beat rate of the past four quarters as per LSEG

data as of Wednesday.