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Wall Street eyes corporate earnings after last week’s Big Tech selloff

ASSOCIATED PRESS / 2023
                                Street signs at the center of the New York City financial district frame the U.S. flags flying from the front of the New York Stock Exchange.
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ASSOCIATED PRESS / 2023

Street signs at the center of the New York City financial district frame the U.S. flags flying from the front of the New York Stock Exchange.

Wall Street was poised to kick of the week with gains as investors focused on the latest deluge of corporate earnings.

U.S. futures were higher early Monday, with the contracts for the S&P 500 and Dow Jones Industrial Average both up 0.5% before the bell.

The upbeat start to the week contrasted with the gloom on Wall Street after big technology stocks logged their worst week since the COVID crash in 2020.

Verizon jumped 3.6% after the telecom giant beat Wall Street’s profit targets on strong wireless service growth.

Tesla shares tumbled again after the Elon Musk-owned electric car maker announced more price cuts over the weekend. Early Monday Tesla shares fell 3.3% after the company knocked roughly a third off the price of its “Full Self Driving” system, to $8,000 from $12,000. The cuts, which occurred on Saturday, follow Tesla’s moves to slash $2,000 off the prices of three of its five models in the United States late Friday.

Tesla shares were trading around $147 before the bell Monday and are down more than 40% this year. The company reports first quarter earnings after markets close on Tuesday.

A bevy of big names are reporting earnings this week, including PepsiCo, General Motors, Boeing, Ford, Meta, American Airlines and Google parent Alphabet.

Tech stocks in the S&P 500 broadly lost 7.3% last week for their worst performance since March 2020 as some global giants reported discouraging trends. ASML, a Dutch company that’s a major supplier to the semiconductor industry, reported weaker-than-expected orders for the start of 2024, for example.

Markets have been hit by the growing recognition that the Federal Reserve will likely keep interest rates higher for longer than investors had hoped. High rates hurt prices for all kinds of investments and some of the hardest hit tend to be those seen as the most expensive and which make investors wait the longest for big growth. That can make tech stocks vulnerable.

Fed officials are adamant that they want to see additional proof inflation is heading down toward their 2% target before lowering the Fed’s main interest rate, which is at its highest level since 2001.

Because interest rates look unlikely to offer much help in the near term, companies are under even more pressure to deliver growth in profits.

In Europe at midday, Germany’s DAX added 0.6% while the FTSE 100 climbed 1.6%. In Paris, the CAC 40 rose 0.3%.

In Asian trading, Hong Kong’s Hang Seng led the region, gaining 1.8% to 16,511.69. But the Shanghai Composite index shed 0.7% to 3,051.76 after the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged.

The Chinese central bank is waiting to see if more stimulus is needed after the economy expanded at a faster-than-expected 5.3% annual rate in the January-March quarter, analysts said.

“The first-quarter gross domestic product (GDP) read has been promising, but pockets of weakness remain in its domestic demand alongside property sector challenges,” Yeap Jun Rong of IG said in a commentary. “Any signs of fizzling out in recovery momentum ahead could still raise calls for further cuts later this year.”

Tokyo’s Nikkei 225 added 1% to 37,438.61 and the yen weakened further. The U.S. dollar rose to 154.69 yen from 154.59 yen, trading at levels not seen since 1990.

The Kospi in South Korea jumped 1.3% to 2,629.44.

Australia’s S&P/ASX 200 surged 1.1% to 7,649.20.

In the oil market, U.S. benchmark crude oil shed 78 cents to $81.44 per barrel in electronic trading on the New York Mercantile Exchange. It gained 12 cents on Friday, to $82.22 per barrel.

A barrel of Brent crude gave up 81 cents to $86.48 per barrel. On Friday, it pulled back to $87.29 after briefly leaping above $90 overnight on worries about fighting in the Middle East.

In currency trading, the U.S. dollar inched up to 154.73 Japanese yen. The euro cost $1.0632.

On Friday, the S&P 500 dropped 0.9% to close out its third straight losing week. It ended 5.5% below its record set late last month, the longest losing streak since October, when it broke into a romp that sent it to a string of records this year.

The Dow Jones Industrial Average rose 0.6% and the Nasdaq composite fell 2%.

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