By Geoffrey Smith
Investing.com — U.S. stock markets opened mixed on Tuesday after producer prices data for October reminded the market that inflation remains a live issue – and one that policymakers appear in little hurry to address.
By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was down 79 points, or 0.2%, at 36,354. The S&P 500 was effectively unchanged and the Nasdaq Composite was up 0.2%. All three indices had ground out new record highs on Monday but appeared to be consolidating after a week of strong gains.
Factory gate prices rose another 0.6% in October, while the core PPI gain accelerated to 0.4% from 0.2% in September. That left the headline annual rate of producer price inflation at 8.6%, a fraction lower than forecasts, and the core rate at 6.8%, unchanged from September and in line with expectations. That’s still nearly twice as high as at any time in the last 10 years.
However, the risk of the Federal Reserve moving to raise interest rates quickly appears to have receded a little further since Chairman Jerome Powell’s press conference last week. Reports indicate that President Joe Biden interviewed governor Lael Brainard – a woman usually seen at the dovish end of the policy-making spectrum – for the chairman’s position last week. Biden has promised a decision soon on whether or not he wil reappoint Powell for a second term.
Tesla (NASDAQ:TSLA) stock grabbed headlines for the wrong reasons again, falling 8.4% after a stock exchange filing showed that Kimbal Musk, brother of the company’s CEO Elon, sold stock only a day before the latter’s latest PR gimmick, polling his Twitter (NYSE:TWTR) followers on whether or not to sell stock. The CEO had previously indicated that he has a big tax bill looming due to the exercise of previously granted stock options, and his holding in Tesla accounts for the lion’s share of his fortune, leaving him few other ways of meeting the tax demand.
The disclosure reignited concern about Tesla’s governance, at a time when Elon Musk is being sued by Tesla shareholders for allegedly overpaying with company money to buy SolarCity, which was at the time controlled by one of Musk’s relatives.
The company that made Musk’s first fortune, PayPal, was also down heavily, though for completely unrelated reasons. PayPal (NASDAQ:PYPL) stock fell 12.4% after trimming its guidance for full-year earnings. The announcement of a deal expanding the use of its Venmo app on Amazon (NASDAQ:AMZN)’s ecosystem failed to offset that.
Roblox (NYSE:RBLX) stock rose 29% after it posted blowout earnings that testified to the staying power of the gaming boom even as the pandemic recedes. Mobile games maker Zynga (NASDAQ:ZNGA) stock also rose 7.6%, after its quarterly report showed it benefiting from the same trends.
Elsewhere, General Electric (NYSE:GE) stock rose 5.3% after the company said it will complete its corporate breakup by 2024, splitting into three separate companies concentrating on aviation, healthcare and energy. It also repeated that it’s on course to meet its three-year debt reduction target by year-end.
Moderna (NASDAQ:MRNA) stock also resumed its decline, falling 4.3% against a backdrop of rising competition from antiviral pill remedies for Covid-19 that may eat into future vaccine sales. Fellow vaccine-maker BioNTech SE (NASDAQ:BNTX) also fell, but less dramatically so, losing only 2.1% after bumping up its revenue guidance for this year.
Wall Street Opens Mixed as PPI Keeps Inflation Narrative Alive; Dow Down 80 Pts
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