Wall Street opens higher; Tesla jumps after strong results

NEW YORK (AP) — Stocks are opening higher on Wall Street as traders were able to find encouraging signs in some of the earnings reports that big U.S. companies are putting out. Tesla jumped 10% in the early going Thursday after reporting results that were better than analysts were expecting and saying demand for its products is strong. Data storage company Seagate was also sharply higher after reporting better-than-expected results, but paint maker Sherwin-Williams sank after issuing a forecast that was weaker than analysts were expecting. The government’s initial estimate showed that U.S. economic growth slowed in the final quarter of 2022 but still beat forecasts. The S&P 500 was up 0.3%.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street was mixed in muted trading early Thursday as investors waited for more U.S. economic data amid rising hope that Western economies can avoid a recession despite higher interest rates meant to cool inflation.

Futures for the Dow were off less than 0.1% before the bell Thursday, while the S&P 500 rose 0.2%.

The Commerce Department was due to issue its first of three estimates for U.S. economic growth in October-December later Thursday. The economy likely rolled out of 2022 with momentum, registering decent growth in the face of painful inflation, high interest rates and rising concern that a recession may be months away.

Economists have estimated that the gross domestic product — the broadest measure of economic output — grew at a 2.3% annual pace in the last quarter.

Investors are optimistic the United States and European economies can evade a recession despite warnings by the Federal Reserve and other central bank officials that interest rates will be kept elevated for an extended period to cool economic activity and inflation.

“There’s increasing confidence the economy may not require a recession to tame the inflation beast,” said Stephen Innes of SPI Asset Management in a report.

Tesla shares jumped nearly 7% in off-hours trading after the electric vehicle maker posted record net income in the fourth quarter of last year.

Shares in Southwest Airlines fell nearly 3% in before the bell after it reported a wider-than-expected $220 million loss in the fourth quarter, driven by more than 16,700 flight cancellations during a disastrous holiday travel season.

Other companies reporting Thursday include Visa and JetBlue.

Companies have been increasingly announcing layoffs as they report quarterly results. Materials science company Dow said Thursday that it is cutting about 2,000 jobs, or approximately 5% of its global workforce.

Germany’s SAP said it’s cutting up to 3,000 jobs worldwide, or about 2.5% of its workforce, after a sharp drop in profits at Europe’s biggest software company. 3M, maker of Post-it notes, industrial coatings and ceramics, announced Tuesday that it was slashing 2,500 manufacturing jobs worldwide.

Those announcement come after a string of similar job cuts by technology companies. Late Wednesday, IBM announced 3,900 job cuts.

Later Thursday, the Labor Department issues its weekly report on unemployment benefit claims.

Analysts are forecasting S&P 500 companies will report their first drop in quarterly earnings per share since 2020 at the start of the coronavirus pandemic.

Traders expect the Fed to raise its benchmark lending rate by another 0.25 percentage points at its next update on Feb. 1. That would be another reduction in the margin of increase from 0.5 percentage points last month and four hikes of 0.75 points earlier.

Many investors expect the Fed to ease off rate hike plans as economic activity cools and start to cut rates before the end of this year. The Fed has said it expects to keep rates high at least through the end of the year to extinguish inflation.

At midday in Europe, London’s FTSE 100 gained 0.1%, the DAX in Frankfurt fell less than 0.1% and the CAC 40 in Paris added 0.6%.

In Asia, the Hang Seng in Hong Kong surged 2.4% to 22,566.78. The Nikkei 225 in Tokyo shed 0.1% to 27,362.75. Markets in China, India and Australia were closed for holidays.

The Kospi in Seoul gained 1.7% to 2,468.65 after South Korea’s economic output shrank by 0.4%, as expected, in the final quarter of 2022 from the previous quarter.

Manila’s main index lost 0.3% after the Philippine economy grew by 7.2% over a year earlier in the final three months of 2022.

New Zealand, Singapore and Jakarta advanced while Bangkok and Kuala Lumpur declined.

In energy markets, benchmark U.S. crude rose 69 cents to $80.84 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 2 cents on Wednesday to $80.15. Brent crude, the price basis for international oil trading, rose 61 cents to $86.80 per barrel in London. It retreated 1 cent the previous session to $86.12.

The dollar gained to 129.94 yen from Wednesday’s 129.55 yen. The euro slipped to $1.0899 from $1.0913.

On Wall Street, the S&P 500 index lost less than 0.1% on Wednesday after rebounding from a morning loss of 1.7%.

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McDonald reported from Beijing; Ott reported from Washington.