NEW YORK, Oct 24 —US stock indexes were mixed in morning trading today, with the tech-heavy Nasdaq hit by a slide in Tesla and other megacap stocks while signs of a cooling US economy raised hopes that the Federal Reserve will eventually slow its pace of rate hikes.

Tesla Inc dropped nearly 7 per cent after it cut starter prices for its Model 3 and Model Y cars by as much as 9 per cent in China, indicating signs of softening demand in the world's largest auto market.

Other megacap shares, including those of Amazon.com Inc and Alphabet Inc, also dropped ahead of their earnings later this week.

US business activity contracted for a fourth straight month in October, a survey showed, in the latest evidence of an economy softening in the face of high inflation and rising interest rates.

Wall Street's main indexes rallied on Friday after a report said the US central bank will likely debate on a smaller interest rate hike in December.

"We think that the Fed meeting (in November) could be a positive inflection because it will indicate at least some members are re-thinking their ultra-hawkish stance," said Jay Hatfield, chief executive officer, Infrastructure Capital Management.

US Treasury yields slipped after the report, coming off a 15-year high of 4.34 per cent hit on Friday.

The benchmark S&P 500 is up about 5 per cent from its Oct. 12 closing low for the year. Despite the recent rebound, the index is down 21 per cent so far in 2022, on track for its biggest decline since 2008.

The indexes notched their biggest weekly percentage gains in four months on Friday, also supported by better-than-expected earnings reports.

Apart from Google-parent Alphabet and Amazon.com, Microsoft Corp and Apple Inc too report later this week.

The earnings reports from the four biggest US 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 per cent had beat analysts' expectations, according to Refinitiv IBES estimates. The long-term average is 66.2 per cent.

At 10:28 a.m. ET, the Dow Jones Industrial Average was up 141.93 points, or 0.46 per cent, at 31,224.49, the S&P 500 was down 3.47 points, or 0.09 per cent, at 3,749.28, and the Nasdaq Composite was down 129.16 points, or 1.19 per cent, at 10,730.56.

US-listed shares of Chinese companies such as Pinduoduo , JD.com and Baidu Inc fell between 18 per cent and 30 per cent as President Xi Jinping's new leadership team heightened fears that growth will be sacrificed for ideology-driven policies.

Declining issues outnumbered advancers for a 1.46-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.99-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and 4 new lows, while the Nasdaq recorded 42 new highs and 204 new lows. — Reuters