By Elaine Kurtenbach
Stocks are falling at the open on Wall Street Thursday after mixed earnings reports from Tesla, AT&T and other big companies, along with potentially discouraging reports on the economy. The S&P 500 is 0.7% lower in early trading while the Dow and Nasdaq are also down. Tesla is biggest loser in the S&P 500, dropping to a nearly three-month low after it told investors recent price cuts are hurting the electric car maker’s profit margins. Several banks are also tumbling after reporting weaker profits. Treasury yields are down.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Shares were mostly lower in Europe and Asia on Thursday after they barely budged on Wall Street following a mixed batch of earnings reports from big U.S. companies.
U.S. futures and oil prices also declined.
Germany’s DAX slipped 0.9% to 15,761.62 and the CAC 40 in Paris gave up 0.4% to 7,520.78. Britain’s FTSE 100 shed 0.3% to 7,877.39.
The future for the Dow Jones Industrial Average was down 0.4% and that for the S&P 500 was 0.5% lower.
Japan reported that its trade deficit narrowed in March as exports rose more than expected, helped by a nearly 40% increase in the value of vehicle exports. But exports to China fell, reflecting the slow pace of the recovery from pandemic disruptions. Growth in imports also slowed.
Tokyo’s Nikkei 225 added 0.2% to 28,657.57 and Australia’s S&P/ASX 200 was virtually unchanged at 7,362.20.
In Hong Kong, the Hang Seng index was unchanged at 20,365.84. South Korea’s Kospi lost 0.5% to 2,563.11 and the Shanghai Composite index declined 0.1% to 3,367.03.
On Wednesday, the S&P 500 inched down by less than 0.1%, and the Dow industrials fell 0.2%. The Nasdaq composite edged up less than 0.1%.
Tesla weighed heavily on the market after the electric-vehicle company cut prices for its two top-selling models, its fourth price cut in the U.S. this year. That could signal that Tesla is trying to spur sales amid shifting U.S. tax credits for electric vehicles. Tesla fell 2% before releasing its latest earnings report after trading closed.
So far, most companies have been beating profit forecasts to clear a bar that was set particularly low given the pressure on profits from high inflation and elevated interest rates that are slowing parts of the economy.
Particular focus has been on the health of banks after higher interest rates helped lead to the second- and third-largest U.S. bank failures in history last month.
The industry’s giants have largely reported better results than expected, with several saying they benefited from the industry’s turmoil as customers moved deposits to them and away from smaller banks that seemed at greater risk.
The fear was how much pain smaller, regional banks would show in their quarterly reports, including how many of their customers fled. Another fear is that smaller and mid-sized banks could curtail lending, clamping the brakes even tighter on the economy. The Federal Reserve said Wednesday that several of its 12 regional districts have noticed banks tightening lending standards recently.
Central banks around the world have been raising rates at a furious pace for more than a year, and the wide expectation is for the Federal Reserve to raise short-term U.S. rates again at its meeting next month. High rates can stifle inflation, but only by slowing the entire economy, raising the risk of a recession and hurting prices for investments.
The yield on the 10-year Treasury rose to 3.59% from 3.58% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for the Fed, rose to 4.25% from 4.20%.
In other trading, benchmark U.S. crude oil slipped $1.30 to $77.94 per barrel. It lost $1.66 to $79.24 per barrel on Wednesday.
Brent crude oil, the international standard, lost $1.32 to $81.80 per barrel.
The U.S. dollar fell to 134.56 Japanese yen from 134.72 yen. The euro was unchanged at $1.0956.