* Futures down: Dow 0.61%, S&P 0.03%, Nasdaq 0.12%

* Seagate ( STX ) gains after forecasting revenue, profit above

estimates

* Ford rises after lifting FY profit outlook

* Fed expected to leave rates on hold, verdict due at 2:00

pm ET

(Updates before markets open)

By Johann M Cherian and Ragini Mathur

July 29 (Reuters) - The S&P 500 and the Nasdaq were set for

a subdued opening 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 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 1.6% in

premarket trading, while other chip stocks seesawed in volatile

trade. Nvidia ( NVDA ) was flat, Intel ( INTC ) climbed 0.7%,

Applied Materials ( AMAT ) dropped 3.2% and Sandisk ( SNDK )

dipped 1.2%.

"The pressure is shifting from spending plans to returns on

investment. Investors want evidence that AI capex is generating

revenues now, while also strengthening the future growth

outlook," said Gina Martin Adams, chief market strategist at HB

Wealth.

Data storage provider Seagate Technology ( STX ) was a

bright spot, climbing 4.9% after forecasting quarterly results

above estimates. KLA Corp ( KLAC ), meanwhile, forecast

stronger-than-expected first-quarter revenue, but its shares

fell 9% as investors sought more.

Results from Microsoft ( MSFT ) and Meta are due

after markets close, while Amazon.com ( AMZN ) and Apple ( AAPL )

are expected later this week. Traders will closely

watch for signs that their billion-dollar AI investments were

boosting earnings. Shares of the companies struggled for

direction.

At 8:35 a.m. ET, Dow E-minis were down 321 points,

or 0.61%, and S&P 500 E-minis were down 2.5 points, or

0.03%. Nasdaq 100 E-minis were down 34.5 points, or

0.12%.

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,

while the S&P 500 equally-weighted index hit a record

high on Tuesday.

FED IN FOCUS

The Fed will announce its monetary policy verdict at 2:00

p.m. ET against the backdrop of crude prices soaring by

7% to $89.94 a barrel, as U.S. President Donald Trump said that

the U.S. would respond to Iran's attacks in Jordan.

Traders see a 39.4% chance of a rate hike, according to LSEG

data, following a report showing that price pressures eased in

the prior month, but they are confident that rates will rise by

at least 25 basis points by year-end.

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 5.1% after raising its annual profit

outlook for a second time this year. Procter & Gamble ( PG )

dropped 2.7% after forecasting slower revenue growth in fiscal

2027.

The second-quarter earnings season has broadly 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% of

companies have achieved that feat in a typical quarter.