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ADRs in China are due to concerns about the direction of the economy
Tesla falls on price cuts in China
US business contracts in Oct
Indexes: Dow up 0.46%, S&P up 0.09%, Nasdaq up 1.19%
(Market Opening Updates)
By Amruta Khandekar and Devik Jain
Oct 24 (Reuters) – U.S. stock indexes were mixed in morning trade on Monday, with the tech Nasdaq hit by a drop in Tesla and other mega-cap stocks, while signs of a cooling U.S. economy raised hopes the Federal Reserve would eventually account will slow its pace of interest rate increases.
Tesla Inc fell nearly 7% after it cut starting prices for its Model 3 and Model Y cars by as much as 9% in China, showing signs of softening demand in the world’s biggest auto market.
Other megacap stocks, including those of Amazon.com Inc and Alphabet Inc, also fell ahead of earnings later this week.
U.S. business activity contracted for a fourth straight month in October, a survey showed, the latest evidence of a softening economy amid high inflation and rising interest rates.
Wall Street’s main indexes rose on Friday after a report said the U.S. central bank was likely to discuss a smaller rate hike in December.
“We think the Fed meeting (in November) could be a positive change because it will show that at least some members are rethinking their ultra-hawkish stance,” said Jay Hatfield, chief executive of Infrastructure Capital Management.
U.S. Treasury yields fell after the report, hitting a 15-year high of 4.34% hit on Friday.
The benchmark S&P 500 rose about 5% from its lowest close for the year on Oct. 12. Despite the recent recovery, the index is down 21% so far in 2022, on track for its biggest decline since 2008.
Indexes posted their biggest weekly percentage gains in four months on Friday, also boosted by better-than-expected earnings reports.
Besides Google and Amazon.com parent Alphabet, Microsoft Corp and Apple Inc also report later this week.
Earnings reports from the four largest U.S. companies by market capitalization could test Wall Street’s nascent rally as stocks bounce back from recent lows.
“I think the bar for success for mega-caps is relatively low. So the reaction to actual earnings is likely to be positive,” said Art Hogan, chief market strategist at B. Riley Wealth in New York.
“Reporting season really gives investors an opportunity to shift their focus to the actual strength of corporate America’s earnings, and I think that’s why we’re coming up a little bit.”
Of the 99 companies in the S&P 500 that reported third-quarter earnings through Friday, 74.7% beat analysts’ expectations, according to Refinitiv IBES estimates. The long-term average is 66.2%.
At 10:28 a.m. ET, the Dow Jones Industrial Average was up 141.93 points, or 0.46%, at 31,224.49, the S&P 500 was down 3.47 points, or 0.09%, at 3,749, 28, and the Nasdaq Composite was down 129.16 points, or 1.19%, at 10,730.56.
US-listed shares of Chinese companies such as Pinduoduo, JD.com and Baidu Inc fell between 18% and 30% as President Xi Jinping’s new leadership team fueled fears that growth will be sacrificed to ideologically driven policies.
Declining issues outnumbered advancing ones by a ratio of 1.46 to 1 on the NYSE. Declining issues outnumbered advancing ones by a ratio of 1.99 to 1 on the Nasdaq.
The S&P recorded 20 new 52-week highs and 4 new lows, while the Nasdaq recorded 42 new highs and 204 new lows. (Reporting by Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru; Editing by Sriraj Kaluvila)