US STOCKS-Wall St eyes strong open on Microsoft's outlook; Fed decision looms

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* Microsoft (MSFT), Texas Instruments (TXN) climb on strong outlook

* All eyes on Fed's policy decision at 2 p.m. ET

* Mattel (MAT) rises on winning back Disney Princess license from Hasbro (HAS)

* Futures up: Dow 1.15%, S&P 1.57%, Nasdaq 2.31% (Adds comment, details; updates prices)

By Devik Jain and Bansari Mayur Kamdar

Jan 26 (Reuters) - Stellar outlook from Microsoft (MSFT) put U.S. stock indexes on course for a stronger open on Wednesday after two sessions of turbulent trading and ahead of the outcome of a Federal Reserve policy meeting.

Microsoft Corp (MSFT) gained 5.3% before the bell after estimating current-quarter revenue broadly ahead of market estimates, driven in part by its cloud business. Chipmaker Texas Instruments Inc rose 4.6% as it also gave a strong outlook.

The positive forecasts lifted tech-related stocks, with Meta Platforms (FB), Apple Inc (AAPL), Google-owner Alphabet Inc ,, Advanced Micro Devices (AMD) and Nvidia Corp (NVDA) rising between 2.1% and 4.4%.

The rate-sensitive tech and growth stocks have recently been roiled by fears of aggressive Fed action to combat inflation. Rising geopolitical tensions around Russia and Ukraine have also weighed on the market, with the S&P 500 index flirting with a correction twice this week.

The Fed policy decision is due at 2 p.m. ET (1900 GMT), with the U.S. central bank expected to signal the start of an interest rate hike cycle beginning March.

The announcement will be followed by Fed chairman Jerome Powell's news conference, which will be parsed for clues on the magnitude and pace of hikes for the year and strategy for shrinking the central bank's roughly $9 trillion balance sheet.

Fed funds futures traders are pricing in a 25 basis point hike in March, in addition to three more rate increases by the end of the year.

"If between the notes and Chairman Powell's press conference today, we get some clarity around that path of interest rate hikes that could certainly settle down the market and decrease the volatility we're seeing," said Mike Skillman, chief executive officer at Faith Investor Services in Dallas.

"When rates rise valuation becomes more important so earnings become more important to save the day. From a market perspective, earnings going forward are going to be better."

The fourth-quarter reporting season is in full stride. As of Tuesday, analysts expected S&P 500 earnings to grow 24.1% year-over-year, according to Refinitiv.

At 8:32 a.m. ET, Dow e-minis were up 394 points, or 1.15%, S&P 500 e-minis were up 68.25 points, or 1.57%, and Nasdaq 100 e-minis were up 326.25 points, or 2.31%.

The S&P 500 index is now down nearly 9.2% from its record closing peak on Jan. 3, while the tech-heavy Nasdaq has fallen 13.5% so far this year.

Planemaker Boeing Co gained 2.2% after saying it generated positive cash flow in the fourth-quarter, its first positive cash quarter since early 2019.

Tesla Inc (TSLA) added 4.2% ahead of its quarterly results after market close, while AT&T Inc (T) rose 2.2% after it beat market estimates for quarterly revenue on strong wireless and streaming demand.

Barbie maker Mattel (MAT) jumped 7.6% on winning back rights to make toys based on Disney Princesses from Hasbro Inc (HAS) . (Reporting by Susan Mathew, Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel and Aditya Soni)

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