Wall Street futures flat, eyes on China impact

By Sruthi Shankar

(Reuters) - U.S. stock market was set to open roughly flat on Tuesday, stabilizing after a slide a day earlier driven by concerns that the fallout from the U.S.-China trade dispute could be set to dominate the corporate earnings season and weaken profits.

Initial releases in a bumper day of results on Tuesday showed Xerox Corp rising 5.8 percent in premarket trading after beating profit estimates, while Pfizer Inc fell 1.7 percent and Harley-Davidson Inc plunged about 8 percent.

Wall Street sold off on Monday after Caterpillar Inc and Nvidia Corp joined a growing list of companies to blame a slowdown in China for the grim forecasts.

Whirlpool Corp, another major China-linked business, dropped 5.6 percent after the home appliances maker warned of a higher tax bill, costs and a strong dollar hitting its 2019 profit and revenue.

In a potential setback to the progress in U.S-China trade talks, the U.S. Justice Department leveled charges against China's telecom giant Huawei days before a high-level meeting between the two countries in Washington, aimed to tackle a prolonged tariff war that has roiled financial markets.

Reports this week from high-profile companies including Apple Inc, which has already issued a sales alert due to weak demand from China, and Boeing Co could worsen the fears.

Although earnings have largely surpassed Wall Street's expectations, helping the S&P 500 climb about 12 percent from its December lows, worries about slowing global growth have tempered expectations.

Since the reporting season began two weeks ago, analysts' estimates for fourth-quarter profit growth have stayed steady at about 14 percent, but expectations for 2019 earnings growth have dropped to 5.6 percent from 6.3 percent, according to IBES data from Refinitiv.

At 6:59 a.m. ET, Dow e-minis were down 2 points, or 0.01 percent. S&P 500 e-minis remained unchanged and Nasdaq 100 e-minis were down 3 points, or 0.04 percent.

The Federal Reserve begins a two-day meeting on interest rate on Tuesday. After raising rates gradually last year, the central bank is taking a wait-and-see approach to further tightening in the face of an overseas slowdown and market volatility.

Pfizer fell after the drugmaker forecast full-year revenue below analysts' estimate.

Harley-Davidson dropped after the motorcycle maker reported a lower-than-expected quarterly profit, hit by declining sales in the United States.

PG&E Corp plunged 6.2 percent after the power provider filed for voluntary Chapter 11 bankruptcy protection late on Tuesday, succumbing to liabilities stemming from wildfires in Northern California in 2017 and 2018.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)