US open: Stocks trade lower as Q2 earnings remain in focus

Wall Street stocks were in the red early on Thursday as market participants continued to thumb over earnings from some of the nation's biggest companies.

As of 1535 BST, the Dow Jones Industrial Average was down 1.01% at 31,553.89, while the S&P 500 was 0.68% weaker at 3,933.07 and the Nasdaq Composite came out the gate 0.60% softer at 11,826.15.

The Dow opened 320.95 points lower on Thursday, reversing gains recorded in the previous session.

Earnings season continued to hold investor attention at the open after electric carmaker Tesla posted stronger-than-expected earnings but narrowed automotive gross margins overnight and carrier United Airlines revealed it had returned to profitability in Q2 despite results falling short of analysts' expectations.

As for Thursday's earnings slate, American Airlines missed earnings estimates on Thursday despite record quarterly earnings that came amid an increase in fares and demand, while AT&T raised full-year revenue growth forecasts for its wireless service business on the back of increased subscriber numbers.

Domino's missed expectations for its second trading quarter, citing a tough labour market and higher costs, while Phillip Morris topped earnings estimates as cigarette volume was up 1.1% and net revenue from smoke-free products accounted for 29.9% of total net revenues.

Still to come, Mattel, Snap, Capital One, and Seagate will update on their most recent trading quarters after the close.

On the data front, Americans filed new claims for unemployment benefits at an accelerated clip in the week ended 16 July, jumping by 9,000 to 251,000, well above market expectations for a print of 240,000 and the highest since November 2021. According to the Labor Department, on a non-seasonally adjusted basis, initial claims rose by 7,853 week-on-week to 248,991, with notable increases in Massachusetts, California, and South Carolina.

Elsewhere, factory activity in the US mid-Atlantic region weakened unexpectedly in July as the decline in new orders accelerated its recent fall, the results of a key survey revealed. The Federal Reserve Bank of Philadelphia's manufacturing index retreated from a reading of -3.3 for June to -12.3 in July, while a key sub-index tracking firms' new orders fell from -12.4 to -24.8.

Finally, the Conference Board's leading index decreased 0.8% in June to 117.1, following a 0.6% decline in May. The index was also down 1.8% over the first six months of 2022, a reversal from its 3.3% growth over the second half of 2021.

Investors also digested news from across the pond that the European Central Bank announced its biggest rate hike in more than 20 years as it looked to tackle surging inflation, which hit a record 8.6% in June. The ECB hiked rates by 50 basis points to 0.0% from a record low, versus expectations for a 25 basis points increase. This marked the first hike in 11 years and the biggest since 2000

Reporting by Iain Gilbert at Sharecast.com