Wall Street Opens Lower, Spooked by Inflation Data; Dow Down 50 Pts

imageStock Markets10 hours ago (Nov 10, 2021 15:28)

© Reuters.

By Geoffrey Smith 

Investing.com — U.S. stock markets opened lower on Wednesday after data showing the U.S. inflation rate hit its highest in over 30 years, something sure to put fresh pressure on the Federal Reserve to tighten monetary policy faster.

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was down 53 points, or 0.2%, at 36,267 points. The S&P 500 was down 0.3% and the Nasdaq Composite – with its heavier weighting of ‘long-duration’ tech stocks that are sensitive to assumptions of future interest rates – was underperforming, down 0.8%.

All three indices had hit record highs in within the last week after the Federal Reserve had indicated at its last policy meeting that it expected not to have to raise interest rates for another year.

The Labor Department said earlier that consumer prices rose 0.9% on the month in October and were up 6.2% on the year – the highest rate in over 30 years. The rise was broad-based, and even the rise in core CPI accelerated to 0.6% on the month, an annual rate of 4.6%. 

“October’s core CPI is just a taster; the next few months are going to be horrible,” said Pantheon Macroeconomics chief economst Ian Shepherdson via Twitter (NYSE:TWTR). “The year-on-year core rate is headed for 6-6.5% over the next three months.”

The bond market’s reaction was nonetheless muted: the yield on the 10-year U.S. Treasury bond rose only 2 basis points to 1.49%, still well off its recent highs. 

Among individual movers, Tesla (NASDAQ:TSLA) stock rebounded 2.8% after falling 12% on Tuesday, a decline that took its market value back below $1 trillion.  The electric vehicle investment universe is set for a major expansion later when Rivian (NASDAQ:RIVN), the truck-maker backed by Amazon (NASDAQ:AMZN) and Ford (NYSE:F), begins trading. The company, which has never yet sold a vehicle, raised nearly $12 billion and locked in a valuation of some $77 billion in pricing its initial public offering at $78 a share late on Tuesday.  That was comfortably above the top end of a marketing range that had already been raised at the start of the week.

The Rivian IPO process has been a major factor behind the recent rally in Ford stock, which has risen 30% since Rivian’s bookrunners started their roadshow and added another 0.9% early Wednesday. The legacy carmaker owns 5% of Rivian.

Elsewhere, Upstart (NASDAQ:UPST) stock fell 16%. The Cloud-based AI company’s earnings and outlook, released on Tuesday, were above expectations but still provided the trigger for profit-taking after the stock tripled between August and October. Even at Tuesday’s close, the stock trades at over 55 times sales. Coinbase (NASDAQ:COIN) stock also fell 6.7%, likewise hit by profit-taking after results that showed a drop in daily average users despite the recent rally in cryptocurrencies.

Going in the other direction was Fiverr International (NYSE:FVRR) stock, which leaped 20% on the back of results that reflected the buoyant demand for labor across the economy. That was also evident in jobless claims data earlier that showed initial claims inching down to another post-pandemic low of 267,000.

Wall Street Opens Lower, Spooked by Inflation Data; Dow Down 50 Pts

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