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* Futures: Dow down 0.17%, S&P up 0.23%, Nasdaq up 0.27%

July 29 (Reuters) - S&P 500 and Nasdaq futures inched higher

on Wednesday as investors awaited the Federal Reserve's monetary

policy verdict against a backdrop of simmering Middle East

tensions, while chip stocks struggled ahead of Big Tech earnings

later this week.

Global markets have been volatile this month as investors

questioned the sustainability of the AI spending boom after

signs that major U.S. companies were deepening a web of

AI-linked investments and continuing to funnel billions into the

technology even at the expense of free cash flow.

The scrutiny comes as competition from China heats up, both in

the race to develop advanced chips and as Chinese firms roll out

cheaper AI models. On Wednesday, the rout extended from Asia

through Europe after South Korean chipmaker SK Hynix's ( SKHY )

bumper quarterly results fell short of lofty

investor expectations.

U.S.-listed shares of the company dipped 0.5% in premarket

trading, while other chip stocks seesawed in volatile trade.

Nvidia ( NVDA ) edged up 0.3%, Micron climbed 0.5%,

Applied Materials ( AMAT ) dropped 1.1% and SanDisk ( SNDK )

edged up 0.5%.

Offering some respite was memory chip maker Seagate Technology ( STX )

, which rose 6% after forecasting quarterly results above

estimates. Fuel cell systems provider Bloom Energy ( BE ) jumped

11% after raising annual forecasts.

Results from Microsoft ( MSFT ), Meta, Amazon.com ( AMZN )

and Apple ( AAPL ) later this week will be closely

watched for signs that their billion dollar AI investments were

boosting earnings. Shares of the companies were marginally

higher in premarket trading.

At 05:42 a.m. ET, Dow E-minis were down 89 points, or

0.17%, and S&P 500 E-minis were up 17.5 points, or

0.23%. Nasdaq 100 E-minis were up 76.75 points, or

0.27%.

Tech concerns have pushed the Nasdaq to a

three-month low, prompting investors to focus on other areas of

the market such as consumer staples and healthcare

. The blue-chip Dow is also at a two-week high.

FED DAY

The spotlight later in the day will be on the Fed's monetary

policy verdict, due at 2:00 p.m. ET, against the backdrop of

crude prices soaring by 3.3% to $86.8 a barrel as

tensions in the Middle East flared up.

Traders are pricing in only a 35.1% likelihood that the Fed

will hike interest rates, LSEG-compiled data showed, on the back

of a report that showed price pressures moderated in the

previous month.

However, they see interest rates rising by at least 25 basis

points by year-end, as tariff costs and energy prices feed into

inflation.

Markets will scrutinize Chairman Kevin Warsh's comments

following the decision to gauge his tone on monetary policy at a

time when he has said that the central bank will avoid offering

any guidance on interest rates.

Ford Motor ( F ) gained 4.7% after raising its annual profit

outlook for a second time this year.

The second-quarter earnings season has reflected healthy

corporate performance, with 85.2% of the 169 S&P 500 companies

that have reported earnings having surpassed expectations, LSEG

compiled data showed. Historically, 68% companies have achieved

that feat.

(Reporting by Johann M Cherian in Bengaluru; Editing by Devika

Syamnath)