Wall Street, New York City (File image: Reuters)
Stocks are opening mostly lower on Wall Street as traders look over some mixed news on company earnings.
The weakness followed declines in Europe after the European Central Bank raised interest rates for the first time in 11 years, and more than was expected, as it joins other central banks including the Federal Reserve in fighting inflation.
Markets were also lower in Italy after that country’s highly respected premier, Mario Draghi, resigned after his ruling coalition fell apart, a destabilizing blow for the region.
Tesla jumped 5.5% after reporting earnings that beat forecasts. The S&P 500 slipped 0.2% in the early going Thursday.
Earlier, Wall Street pointed toward a modestly lower open Thursday and oil prices tumbled again ahead of another batch of corporate earnings.
Futures for the Dow Jones industrials slipped 0.4% and futures for the S&P 500 retreated 0.2% before the opening bell.
A mid-week rally driven by strong corporate earnings may be losing steam.
“After the strong showing in Wall Street over the past two days, particularly so for tech stocks, markets may take somewhat of a breather,” Yeap Jun Rong, market strategist at IG in Singapore, said in a commentary.
Airline shares are under pressure after a pair of major carriers posted quarterly earnings. American Airlines put up mixed results Thursday before the bell and shares declined more than 3%. On Wednesday, United Airlines reported profit of $329 million, falling short of Wall Street expectations. The company said it was scaling back previous plans for growth and shares skidded 7.5% in premarket trading.
Still on the way this week are earnings from railroads, restaurant chains, financial companies and also, on Friday, quarterly results from Twitter which is locked in a legal battle with billionaire Elon Musk.
On Wednesday, Wall Street ended with gains as investors welcomed encouraging profit reports from U.S. companies.
The S&P 500 rose 0.6%. The Dow Jones Industrial Average added 0.2%, while the Nasdaq gained 1.6%. The Russell 2000 climbed 1.6% to 1,827.95.
Global shares were mixed after Italian Premier Mario Draghi resigned following a boycott of a confidence vote by key coalition allies.
The change likely signals an early election and more uncertainty for Italy and for Europe as a whole at a time when the region is forecast to fall into recession thanks to energy shortages and other spillover effects of the war in Ukraine.
Germany’s DAX lost 0.6%, while the CAC 40 in Paris edged 0.2% higher. Britain’s FTSE 100 shed 0.4%.
Italy’s benchmark index, the FTSE MIB, dropped 1.4%.
Draghi’s government of national unity imploded Wednesday after members of his uneasy coalition of right, left and populists rebuffed his appeal to band back together to finish the legislature’s natural term and ensure implementation of the European Union-funded pandemic recovery program.
The disarray comes at a time when Italy is dealing with soaring inflation and energy costs, Russia’s war against Ukraine and outstanding reforms needed to clinch the remainder of the EU’s 200 billion euros in recovery funds.
The European Central Bank was expected to announce an interest rate hike on Thursday, its first in 11 years, to try to bat down inflation.
U.S. benchmark crude shed $4.78 to $95.10 a barrel in electronic trading on the New York Mercantile Exchange early Thursday. It shed 86 cents to $99.88 per barrel on Wednesday. Brent crude, the international pricing standard, lost $4.77 to $102.15 a barrel.
The euro’s cost inched up to $1.0192, while the U.S. dollar rose to 138.76 Japanese yen from 138.25 yen.
In Asia, investors were keeping an eye on inflation and prospects for the slowing Chinese economy.
Tokyo’s benchmark Nikkei 225 edged up 0.4% to finish at 27,803.00 after the Bank of Japan wrapped up a two-day policy meeting without any major policy changes, as was widely expected.
The BOJ has indicated it does not intend to follow the lead of other central banks, including the U.S. Federal Reserve, in raising interest rates to curb inflation. Japan has suffered years of stagnation, when deflation or falling prices was a major problem.
Japan reported its trade deficit for the first half of this year totaled nearly 8 trillion yen ($58 billion), pushed higher by surging oil prices and a weaker yen.
Australia’s S&P/ASX 200 advanced 0.5% to 6,794.30 and South Korea’s Kospi gained 09% to 2,409.16.
But Hong Kong’s Hang Seng slipped 1.5% to 20,574.63, while the Shanghai Composite fell 1.0% to 3,272.00.