By Amruta Khandekar
(Reuters) -U.S. stocks were set to open higher on Monday as Treasury yields eased on hopes of a less aggressive Federal Reserve, while investors braced for a busy week of earnings dominated by Big Tech companies.
Wall Street’s three main indexes rallied on Friday after a report said the U.S. central bank will likely debate on a smaller interest rate hike in December, spurring expectations that it may be poised to dial down its ultra-hawkish stance on fighting surging inflation.
U.S. Treasury yields slipped following the report. The 10-year yield was last seen at 4.17% after hitting a 15-year high at 4.34% on Friday. [US/]
The indexes notched their biggest weekly percentage gains in four months on Friday, also supported by better-than-expected earnings reports.
Google-parent Alphabet Inc and Microsoft Corp will report on Tuesday, followed by Apple Inc and Amazon.com Inc on Thursday.
The earnings reports from the four biggest U.S. companies by market capitalization could test a nascent rally on Wall Street as stocks claw their way back from the latest lows.
“I think the bar for success for mega cap companies is relatively low. Therefore, the reaction function to the actual earnings will likely be positive,” said Art Hogan, chief market strategist at B. Riley Wealth in New York.
“The reporting season really gives investors the opportunity to shift their focus on the actual earnings power of corporate America, and I think that’s why we’re popping a little bit.”
Of the 99 companies in the S&P 500 that reported third-quarter earnings through Friday, 74.7% had beat analysts’ expectations, according to Refinitiv IBES estimates. The long-term average is 66.2%.
The benchmark S&P 500 is up nearly 5% from its Oct. 12 closing low for the year. Despite the recent rebound, the index is down 21% so far in 2022, on track for its biggest decline since 2008.
Meanwhile, U.S.-listed shares of Chinese companies such as Alibaba Group Holding Ltd and Baidu Inc fell about 12% each in premarket trading as President Xi Jinping’s new leadership team heightened fears that growth will be sacrificed for ideology-driven policies.
Tesla fell 2.9% after the electric-car maker cut starter prices for its Model 3 and Model Y cars by as much as 9% in China, reversing a trend of increases across the industry amid signs of softening demand in the world’s largest auto market.
At 8:27 a.m. ET, Dow e-minis were up 144 points, or 0.46%, S&P 500 e-minis were up 14.75 points, or 0.39%, and Nasdaq 100 e-minis were up 13.25 points, or 0.12%.
Investors will be watching S&P Global’s flash survey on U.S. business activity in October, due at 9:45 a.m. ET, for clues on the health of the U.S. economy amid rapidly rising interest rates.
Medtronic Plc rose 1.9% after the medical device maker said it would spin off its patient monitoring and respiratory interventions businesses into a new company.
(Reporting by Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru; Editing by Sriraj Kalluvila)