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US STOCKS-Wall St set to drop at open after strong rally; Fed minutes awaited

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* IBM down after bigger-than-expected drop in revenue

* Minutes of Fed’s Sept. meeting due at 2 pm ET (1800 GMT)

* Netflix surges after subscriber growth tops estimates

* United Airlines rises after upbeat quarter; boosts rivals

* Futures dip: Dow 0.54 pct, S&P 0.41 pct, Nasdaq 0.59 pct (Changes comment, adds details, updates prices)

Oct 17 (Reuters) - U.S. stocks were set to open lower on Wednesday, a day after Wall Street’s strongest rally in seven months, as investors were disappointed with IBM’s results and remained cautious ahead of the minutes of Federal Reserve’s latest meeting.

Shares of IBM dropped 5.1 percent in premarket trading after the company’s quarterly revenue fell more than expected, pointing to a bumpy recovery for the member of the Dow Jones Industrial Average.

IBM’s results follow strong reports from other Dow members such as Goldman Sachs, UnitedHealth and Johnson & Johnson, which helped U.S. stocks jump more than 2 percent on Tuesday to claw back some losses from the recent selloff.

The selloff last week was mainly driven by worries over how corporate profit would be affected by tariffs, growing wages, rising interest rates and an increasingly hawkish Fed, which President Donald Trump called “my biggest threat”.

The minutes of the Fed’s September policy meeting, at which it raised rates for the third time this year, is due at 2:00 p.m. ET (1800 GMT). Since the meeting, a string of strong economic data has prompted Fed policymakers to say they expect to continue a rate-hike cycle that began in late 2015.

“The (stock) indices are pulling back after yesterday’s blockbuster earnings rally that is likely to be challenged by the Fed’s FOMC minutes,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

However, Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, said the content of the Fed minutes is already known.

“Every now and then there might be a comment or an anecdote which we didn’t know about and the market might have made a quick reaction to it but generally it is a short lived move.”

Even a 9.7 percent surge in Netflix shares after its blowout subscriber addition numbers failed to help the futures.

At 8:43 a.m. ET, Dow e-minis were down 139 points, or 0.54 percent. S&P 500 e-minis were down 11.5 points, or 0.41 percent and Nasdaq 100 e-minis were down 43.75 points, or 0.59 percent.

United Airlines shares climbed 5.2 percent after a solid third-quarter profit and again raising it 2018 outlook. That also lifted American Airlines, Delta Air Lines , Southwest Airlines and JetBlue Airways between 1.90 percent and 3.82 percent.

The struggling semiconductor sector got a lift after industry bellwether ASML Holding NV’s bullish results and outlook eased fears of slackening demand.

ASML’s U.S. shares rose 2.1 percent, while other chip gear makers such as LAM Research, Applied Material and KLA Tencor rose between 2.73 percent and 6.35 percent.

Latest data showed U.S. homebuilding dropped more than expected in September, as construction activity in the South fell by the most in nearly three years, likely held down by Hurricane Florence. (Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)