* FOMC begins two-day meeting on Tuesday
* Apple, Twitter set to report results after market close
* McDonald‘s, 3M and Caterpillar fall on weak results
* Futures: Dow down 12 pts, S&P flat, Nasdaq up 7.25 pts (Adds details, comments, updates prices)
By Yashaswini Swamynathan
July 26 (Reuters) - Wall Street was set to open little changed on Tuesday as investors awaited the Federal Reserve’s meeting and braced for earnings reports from companies such as Apple and Twitter.
The Federal Open Market Committee (FOMC) begins a two-day meeting on Tuesday to decide whether the U.S. economy is strong enough to absorb an interest rate hike.
The central bank, which will announce its decision at 2:00 p.m. ET on Wednesday, is not expected to pull the trigger on interest rates in the near term as inflation remains below its 2 percent target and global growth continues to sputter.
Traders have priced in an 18.7 percent chance of a rate increase in September and a 42.8 percent chance in December, according to CME Group’s FedWatch tool.
Strong economic data, an improvement in quarterly earnings and low expectations of a rate hike have spurred Wall Street to record highs in the past two weeks.
“Earnings continue to beat expectations on an adjusted basis but I think the markets will wait to hear what central bankers have to say tomorrow,” said John Brady, senior vice president at R.J. O‘Brien & Associates in Chicago.
“While investors do not seem to care that earnings have been lower, the U.S. equity market remains the tallest midget in the crowd,” Brady added.
Of the 129 S&P 500 companies that have reported earnings as of Monday, 68 percent topped analysts’ estimates. In a typical quarter, 63 percent of companies beat expectations, according to Thomson Reuters data.
Dow e-minis were down 12 points, or 0.07 percent at 8:28 a.m. ET, with 29,439 contracts changing hands.
S&P 500 e-minis remained unchanged, with 171,627 contracts traded.
Nasdaq 100 e-minis were up 7.25 points, or 0.16 percent, on volume of 20,558 contracts.
Dow component McDonald’s shares dropped 3.3 percent premarket, after the restaurant chain reported a 3.6 percent decline in quarterly revenue.
Industrial majors 3M and Caterpillar cut full-year forecasts, sending their shares down 1.5 percent and 0.6 percent, respectively.
Apple and Twitter are scheduled to report results later in the day.
Wall Street ended lower on Monday as weak oil prices weighed on energy shares. Oil prices continued to be lower on Tuesday on oversupply worries.
One bright spot was Texas Instruments whose shares rose 7 percent after its current quarter forecast beat analysts’ estimates.
A report by Conference Board is likely to show the consumer confidence index slipped to 95.9 in July from 98.0 in June. The data is expected at 10:00 a.m. ET.
Another report will show single-family homes sales rose 1.6 percent in June to 560,000. The report is due at 10:00 a.m. ET. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D‘Silva)