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

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Uber ( UBER ), Estee Lauder fall after results

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September PCE data in-line with estimates

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VIX rises to over three-week high

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Futures down: Dow 0.52%, S&P 500 0.64%, Nasdaq 0.67%

(Updated at 8:51 a.m. ET)

By Lisa Pauline Mattackal

Oct 31 (Reuters) - Wall Street was set to open lower on

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

rising AI costs sobered some of the buzz around megacap stocks,

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

Shares of Facebook-owner Meta dipped 1.4% and

Microsoft ( MSFT ) fell 3.5% in premarket trading, despite both

companies beating earnings estimates in results reported after

the bell on Wednesday.

Meanwhile, the Personal Consumption Expenditures price

index, the Federal Reserve's preferred inflation metric, rose

0.2% in September, in-line with economists' expectation and

supporting bets of a gradual easing of monetary policy by the

U.S. central bank.

"Investors are pondering results from Microsoft ( MSFT ) and Meta

more than the economic news," said Peter Cardillo, chief market

economist at Spartan Capital Securities.

"Still, the inflation news could up the chances the Fed

pauses next week. That could be on investors' mind and cause

some more negativity in the medium term."

Data from the labor department showed the number of

Americans filing new applications for unemployment fell to a

more than expected 216,000 claims last week as distortions from

hurricanes faded. Monthly nonfarm payrolls data is 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 stocks also slipped,

with Nvidia ( NVDA ) losing 1.1% and Alphabet down

0.3%, giving up some gains after soaring in the previous session

following upbeat results.

Amazon.com ( AMZN ) lost 1.3% and Apple ( AAPL ) dipped 0.1%

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."

S&P 500 e-minis were down 37.75 points, or

0.64%. Nasdaq 100 e-minis dropped 138.5 points, or 0.67%

and Dow e-minis fell 220 points, or 0.52%

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

5.7% following downbeat revenue forecasts, while trading

platform Robinhood slumped 9.1% after its third-quarter

earnings missed expectations.

Uber Technologies ( UBER ) shares dropped 8.2% after the

company forecast fourth-quarter gross bookings below

expectations.

Estee Lauder plummeted 23.8% 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.