Crucial Fed meeting has US stock investors on edge

Tech colossuses Apple (AAPL), Google owner Alphabet (GOOGL) and Microsoft (MSFT) all reported healthy profits after the closing bell Tuesday. The three giants also have an insane amount of cash sitting on their balance sheets.

Apple ended the quarter with about $193.6 billion in cash, a total that also includes "marketable securities" that could easily be liquidated. Alphabet said its cash hoard now stands at $135.9 billion and Microsoft has $130.3 billion in its corporate coffers.

That's nearly $460 billion in cash just sitting around, earning little interest in this zero-rate environment.

Of course, these companies also have a fair amount of debt.

But even after you add up their collective borrowings, the trio still has about $195 billion in net cash to use for acquisitions, investments in research and development, stock buybacks and other general corporate purposes.

Apple and Microsoft already pay generous dividends with some of their cash. It will be interesting to see whether Alphabet decides to start giving money back to shareholders too. Cue the Pink Floyd.

Sen. Elizabeth Warren is no a fan of bitcoin and its ilk, but when it comes to central bank backed digital currencies, she sees things differently.

"There has been an enormous failure by the big banks to reach consumers all across the country," she said during an interview with CNBC earlier today. Millions of people in America are unbanked or underbanked, Warren said, and they're paying a price for not having standard checking accounts.

US stocks opened higher on Wednesday ahead of the Federal Reserve’s monetary policy update in the afternoon. Investors are looking for comments about the Covid-19 Delta variant’s impact on the Fed’s economic outlook, as well as further commentary on inflation and the recovery. The central bank’s update is due at 2pm ET, followed by a press conference with Chairman Jerome Powell at 2:30pm ET.

On the earnings front, Tuesday’s earnings showed massive profits for America’s big tech companies, including Apple (AAPL) and Microsoft (MSFT).

Intel (INTC) warned in its earnings release last week that chip shortages could last well into 2023. But that doesn't seem to be holding back its smaller rival Advanced Micro Devices.

AMD (AMD) reported great results and a solid outlook in its own earnings release late Tuesday — and what's more, AMD said it's managing supply chain issues reasonably well, despite the troubles Intel and others are facing.

Shares of AMD rose 3% in premarket trading Wednesday.

"We've been working on supply for the past couple of quarters," said AMD CEO Lisa Su during a conference call with analysts Tuesday evening. "I'm actually quite pleased with the progress that we've made in terms of increasing our supply...Certainly, we do see some level of constraints, but we are making progress each quarter." 

Wall Street was impressed too. "We had not expected the company to navigate supply constraints flawlessly and raise full year expectations," said Susquehanna Financial Group analyst Christopher Rolland in a report Wednesday.

Rolland took a jab at Intel as well, titling his AMD report "The Tale of Two CPU Companies Continues; Supply Concerns Overblown."

Pfizer (PFE) raised its full-year outlook following strong sales of its Covid-19 vaccine.

The drugmaker posted better-than-expected earnings Wednesday, with a second-quarter revenue of $19 billion. Pfizer said it expects rake in $33.5 billion from the coveted vaccine from 2.1 billion doses -- more than $26 billion it previously forecast.

Last quarter, Pfizer posted $7.8 billion in revenue from the vaccine it made with BioNTech.

Shares are flat in premarket trading.

The White House and the Federal Reserve broadly agree: Inflation isn't here to stay. Red-hot prices will cool off as the US economy reopens.

Most economists seem to concur that inflation is "transitory," as the Fed puts it. Investors aren't freaking out either about the biggest price hikes since 2008.

But the stakes couldn't be much higher here. If the consensus is wrong (as it sometimes is) and inflation remains uncomfortably high, it could threaten the economic recovery, the stock market boom and even the Biden agenda.

Read more here.

Regulators are investigating the fact that Robinhood CEO Vlad Tenev is not licensed by FINRA, Wall Street's powerful self-regulator, the online trading platform announced Tuesday.

News of the probe comes more than five months after CNN Business reported that Tenev, the public face of Robinhood, is not registered with FINRA, short for the Financial Industry Regulatory Authority. That's despite the fact that he presides over one of the nation's largest and most powerful online brokerages.

It also comes on the eve of a blockbuster initial public offering that could value Robinhood at $35 billion.

Read more here.

US stock futures were flat ahead of a critical Fed meeting and after ending their 5-day win streak Tuesday. Hong Kong’s stock market rebounded, making up a small bit of ground after China urged calm. 

Chinese state media is urging investors to stay calm following a brutal stock market sell-off this week that has wiped out hundreds of billions of dollars in value.

Chinese state-run newspaper Securities Times published a commentary Wednesday acknowledging the "changes in policy for certain industries" after a market rout on Monday and Tuesday that came as investors reacted to Beijing's widening crackdown on private enterprise.

Even so, Chinese tech stocks swung wildly Wednesday.

Read more here.