US STOCKS-S&P 500 briefly tops 7,000 before pullback as Fed, Big Tech earnings loom

By Pranav Kashyap and Twesha Dikshit

Jan 28 (Reuters) - The S&P 500 briefly topped 7,000 points for the first time on Wednesday only to pull back, with volatility picking up as traders awaited the Federal Reserve's rate decision and a wave of Big Tech earnings.

The benchmark slipped back to little changed, while the Nasdaq held on to a mild advance after trimming earlier gains.

"These big round numbers can be difficult psychological tests for the market, but we think it's a very positive sign," said Jeff Buchbinder, chief equity strategist for LPL Financial.

The Fed convenes later in the day for its rate decision, with policymakers widely expected to keep it unchanged at 3.5%–3.75%. Traders will be alert for the Fed's statement and Chair Jerome Powell's remarks, for clues on the future rate trajectory.

The U.S. central bank, which recently started receiving real-time data on the economy's health after a partial government shutdown last year, is navigating policy while peering through an increasingly politicized fog.

This meeting arrives in the backdrop of a Justice Department inquiry launched earlier this month involving Powell as well as Trump's hints that a successor will be named "soon".

The markets currently expect the first rate cut to come in June, according to CME's FedWatch tool.

At 11:31 a.m. ET, the Dow Jones Industrial Average .DJI rose 49.62 points, or 0.10%, to 49,053.03, the S&P 500 .SPX gained 1.23 points, or 0.03%, to 6,980.50 and the Nasdaq Composite .IXIC gained 20.74 points, or 0.09%, to 23,839.44.

Nvidia NVDA.O climbed 1.5%, Intel INTC.O jumped 11.3%, and Micron MU.O and Microchip Technology MCHP.O each gained over 5%. SK Hynix, a key Nvidia supplier, reported a record quarterly profit and ASML booked its highest ever fourth-quarter orders, igniting a tech rally from Europe to Asia.

The Philadelphia SE Semiconductor index .SOX rose 1.8%.

"MAG 7" KICKS OFF EARNINGS

Meta META.O, Microsoft MSFT.O and Tesla TSLA.O report after market close, kicking off the so-called "Magnificent Seven" earnings that have driven the AI trade, powering markets to record levels.

Apple AAPL.O, whose results are due on Thursday, fell over 1%.

With lofty valuations driving rotation into undervalued areas of the market, the group's capital plans will be closely watched as investors question whether AI spending will drive returns.

Meta and Microsoft slipped over 0.3% while Tesla gained 0.8%. Bellwether IBM IBM.N, also due to report after the market closes, was flat.

"We're still in the early innings. The last phase of it is end users adopting and we're still in the early phases of business adoption," said Glenn Dorsey, head of client portfolio management at Clark Capital.

"You're starting to see a point where their growth rate is slowing somewhat. It creates a potential normal volatility year."

Among earnings-driven moves, Texas Instruments TXN.O surged 8% after the analog chipmaker forecast first-quarter revenue and profit above Wall Street estimates. Starbucks SBUX.O rose 1.8% after posting a bigger-than-expected increase in first-quarter comparable sales. AT&T T.N climbed 5.2% after the U.S. carrier projected annual profit above market expectations.

In industrials, Textron TXT.N fell 8.4% after guiding fiscal profit below estimates, while Otis OTIS.N dropped 3% after its fourth-quarter revenue missed expectations.

Seagate Technology STX.O jumped 20.3% after it forecast third-quarter revenue and profit above Wall Street expectations. Rival Western Digital WDC.O rose 10%.