Stocks: Investors take a breather

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NEW YORK (CNNMoney) -- U.S. stocks were set to open lower Wednesday, following a string of gains that put all three major indexes at their highest levels since early May.

U.S. stock futures were slightly lower.

Investors are awaiting the latest round of corporate results, while keeping an eye on news from Europe and the world's central banks.

England's central bank released its quarterly inflation report Wednesday, and was gloomy in its outlook. The Bank of England slashed its forecast for economic growth in Britain to 2% annually in two years, down from its earlier estimate of 2.6%. The central bank also trimmed its inflation outlook.

"The economy will continue to face headwinds over the forecast period, from the fiscal consolidation and tight credit conditions at home, as well as from the difficulties in the euro area and a broader slowing in the world economy," said Bank of England governor Sir Mervyn King, in a statement.

Meanwhile, borrowing costs for Spain and Italy remain uncomfortably high, with the Spanish 10-year yield hovering around 7% and the Italian 10-year yield just below 6%. Worries remain that Spain, in particular, might need additional bailout funds.

On the corporate front, firms including Macy's (M, Fortune 500) and Polo Ralph Lauren (RL, Fortune 500) reported their quarterly results before the bell, while News Corp (NWSA, Fortune 500) reports will report after the closing bell.

About 85% of the companies in the S&P 500 have reported their quarterly results, and earnings are on pace to grow just 0.6% -- the slowest pace since the third quarter of 2009.

On the bright side, 64% of the companies that have reported so far have topped Wall Street expectations, higher than the average rate of 62% over the past decade.

U.S. stocks rose Tuesday, extending gains for a third day.

World markets: European stocks slid in afternoon trading. Britain's FTSE 100 and the DAX in Germany lost 0.5% and France's CAC 40 fell 0.6%.

Asian markets had a mixed finish. The Shanghai Composite rose 0.2% and Japan's Nikkei added 0.9%, while the Hang Seng in Hong Kong dipped slightly.

Economy: Productivity increased 1.6% during the second quarter, according to the Bureau of Labor Statistics. Analysts were expecting the figure to rise 1.5%.

Labor costs rose 1.7% last quarter, higher than the expected 0.4% increase.

Companies: Shares of Macy's rose in premarket trading, as the retailer topped earnings and revenue expectations. Macy's also raised its earnings guidance for the year.

Shares of Ralph Lauren slipped after the company issued a downbeat forecast for the third quarter, forecasting revenues to decline slightly. The company's second quarter earnings beat forecasts, while revenue was in line with expectations.

Priceline (PCLN) shares were sharply lower after the online travel company's forecast for the third quarter fell short of analyst expectations. Priceline blamed Europe's debt crisis and "the viability of the euro" for the slowdown.

Starbucks (SBUX, Fortune 500) signed on with Square Inc. to process its credit and debit card purchases. As part of the deal, Starbucks pledged to invest $25 million in Square, a mobile payment platform for retailers. In addition, Starbucks CEO Howard Schultz will join Square's board of directors.

Disney (DIS, Fortune 500) shares slid Wednesday, after the media giant reported quarterly results that beat earnings expectations but missed on revenue on late Tuesday.

Dean Foods (DF, Fortune 500) shares jumped in premarket trading after the company boosted its profit forecast for the year.

Dean Foods also announced that it is spinning off its WhiteWave-Alpro business, which sells the Horizon Organic, Silk soy milk and almond milk, International Delight and Land O' Lakes Products. The company is expected to complete the WhiteWave initial public offering the fourth quarter.

Bain Capital-backed Bloomin' Brands (BLMN), which owns Outback Steakhouse as well as smaller chains like Carrabba's Italian Grill and Fleming's Prime Steakhouse, is set to debut on the Nasdaq Wednesday. Bloomin' Brands raised $176 million in its initial public offering late Tuesday, when it priced shares at $11, below its targeted range of $13 to $15.

After the bell, News Corp is expected to report earnings of 32 cents a share on $8.7 billion in revenue.

Currencies and commodities: The dollar rose against the euro, but declined versus the British pound and the Japanese yen.

Oil for September delivery fell 51 cents to $93.16 a barrel.

Gold futures for August delivery fell $4.10 to $1,605.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.62% from 1.63% late Tuesday.