Equity benchmarks rose in Japan and South Korea, while futures for Hong Kong pointed up. US futures gained in early Asian trading. In late US hours, Tesla Inc. soared as the electric-vehicle giant struck an upbeat tone despite a sales miss, the first of the “Magnificent Seven” megacaps to report. The stock halted a seven-day plunge, climbing alongside other members of the group.

Meanwhile, weakness in measures of business activity helped keep alive forecasts for US rate cuts this year, which was positive for equities but weighed on the dollar and Treasury yields.

After hitting several record highs this year, equities have lost traction in the past few weeks on signals the Federal Reserve will hold rates higher for longer. The slide made stocks more attractive as it removed market froth, with investors now focused on earnings, according to Citigroup Inc. strategists.

“We would view the recent pullback as a buying opportunity,” Citi’s Mihir Tirodkar and Beata Manthey said. “Bullish positioning has unwound and now looks more neutral, particularly in the US. The current earnings season could refocus investor attention on solid underlying fundamentals.”

The S&P 500 notched its best back-to-back rally in two months. Nvidia Corp., the poster child of the artificial-intelligence boom, led a surge in chipmakers. Texas Instruments Inc. gave a bullish revenue forecast — a good sign for the chip industry that may help lift Asian producers on Wednesday.

Treasuries were largely steady after briefly extending gains on a solid $69 billion sale of two-year notes — but quickly returned to levels seen ahead of the auction — with 10-year yields little changed.

Oil held a gain as an industry report showed shrinking US crude stockpiles and traders tracked progress toward fresh sanctions against Iran. Gold is little changed.

In Japan, the yen was steady within sight of reaching the psychological 155 level to the dollar, keeping traders on guard for potential intervention by authorities to prop up the currency.

Earnings on Watch

Morgan Stanley’s Mike Wilson said the bar is high for US firms to deliver on earnings, particularly for megacap technology names, which face tough comparisons from the growth they showed last year.

Besides Tesla, Microsoft Corp., Meta Platforms Inc. and Alphabet Inc. are also due to report earnings this week. Profits for the “Magnificent Seven” group — which also includes Apple Inc., Amazon.com Inc. and Nvidia Corp. — are forecast to rise about 40% in the first quarter from a year ago, according to Bloomberg Intelligence data.

The group of tech megacaps is crucial to the S&P 500 since the companies carry the heaviest weightings in the benchmark. After this year’s advance, valuations have gotten lofty. After the latest selloff, the Magnificent Seven still traded at a combined 31 times forward earnings, according to data compiled by Bloomberg.

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