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Indexes up: Dow 0.1%, S&P 500 0.2%, Nasdaq 0.09%

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Tesla falls after Q3 profit misses estimates

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IBM ( IBM ) slumps on recording cloud software slowdown

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Quantum computing firms gain on report of US govt stake

talks

(Updates on market open)

By Pranav Kashyap and Twesha Dikshit

Oct 23 (Reuters) - Wall Street was largely muted on

Thursday, as lackluster earnings from Tesla and IBM ( IBM ) cast a

shadow over risk appetite, while investors kept a close eye on

simmering U.S.-China trade tensions.

Tesla's third-quarter profit missed expectations,

dragging its shares down 5.3%. A revenue beat offered little

relief, as Wall Street grappled with tempered optimism through

the week.

The electric-vehicle maker kicked off earnings for the

"Magnificent Seven" - a cohort that forms nearly 35% of S&P

500's weight, and could dictate the market's next move.

IBM ( IBM ) dropped 5.4% after the company recorded a

slowdown in growth in its key cloud software segment, eclipsing

a third-quarter beat.

Amid a whirlwind of earnings reports, profit-taking and

escalating trade tensions, the equity rally is showing signs of

fatigue.

While most companies have outpaced analyst estimates,

cautious outlooks have cast a shadow as investors look for

justification behind sky-high equity valuations.

"The numbers are not high profile enough and not rampant

enough to really drive a market through these big milestones,"

said Chris Beauchamp, chief market analyst at IG Group.

"The caution does feed in and big earnings are to come

through next week and that might just be the wait and see

approach."

At 09:38 a.m., the Dow Jones Industrial Average rose

41.34 points, or 0.10%, to 46,631.75, the S&P 500 gained

11.93 points, or 0.18%, to 6,711.33 and the Nasdaq Composite

gained 23.30 points, or 0.09%, to 22,760.43.

Quantum computing firms were a bright spot after the Wall

Street Journal reported that U.S. President Donald Trump's

administration was in talks with several of them to take equity

stakes in exchange for federal funding.

IonQ ( IONQ ) and D-Wave Quantum ( QBTS ) gained 5.7% and

15.6%, respectively, while Rigetti Computing ( RGTI ) added 8%.

Energy stocks added 1.2% following a jump in crude

prices on fresh U.S. sanctions against Russia. Chevron ( CVX ),

Exxon Mobil ( XOM ) and Halliburton ( HAL ) rose between 1% and

2.1%.

Health insurer Molina Healthcare ( MOH ) plunged 20.9% after

slashing its annual profit forecast. Peers Centene ( CNC ) and

UnitedHealth ( UNH ) fell 6.6% and 1.5%, respectively.

S&P Industrials index rose 0.8% after a slew of

earnings. Honeywell ( HON ) raised its annual profit forecast on

strong aerospace demand, sending its shares up 5%.

American Airlines ( AAL ) shares gained 3.6% after the

carrier raised its profit forecast for the year, while Southwest

Airlines ( LUV ) slipped 3.7% despite a surprise quarterly

profit.

T-Mobile dipped 2.3% despite adding

more-than-expected wireless subscribers during the third

quarter.

DATA DROUGHT DRAGS ON

With the U.S. government shutdown entering its twenty-third

day, key economic releases, including Thursday's usual reading

of weekly jobless claims data, remain frozen, leaving investors

without crucial signals.

That puts Friday's core CPI print, expected to hold steady

at 3.1%, in sharp focus as the Federal Reserve's only clear

inflation guide ahead of next week's policy meeting.

Markets have already priced in a 25-basis-point rate cut,

with traders betting the Fed will ease again in December.

Meanwhile, a Reuters report said the Trump administration

was weighing sweeping curbs on high-tech exports to China in

retaliation for Beijing's latest restrictions on rare-earth

shipments. The report injected fresh uncertainty into the

markets.

Advancing issues outnumbered decliners by a 2.07-to-1 ratio

on the NYSE and by a 1.66-to-1 ratio on the Nasdaq.

The S&P 500 posted 5 new 52-week highs and one new low while

the Nasdaq Composite recorded 19 new highs and 32 new lows.