(Reuters) - Wall Street was largely muted on Thursday, as lackluster earnings from Tesla and 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 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 and D-Wave Quantum gained 5.7% and 15.6%, respectively, while Rigetti Computing added 8%.

Energy stocks added 1.2% following a jump in crude prices on fresh U.S. sanctions against Russia. Chevron, Exxon Mobil and Halliburton rose between 1% and 2.1%.

Health insurer Molina Healthcare plunged 20.9% after slashing its annual profit forecast. Peers Centene and UnitedHealth fell 6.6% and 1.5%, respectively.

S&P Industrials index rose 0.8% after a slew of earnings. Honeywell raised its annual profit forecast on strong aerospace demand, sending its shares up 5%.

American Airlines shares gained 3.6% after the carrier raised its profit forecast for the year, while Southwest Airlines 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.