(MarketWatch) — U.S. stock indexes ended lower Tuesday, with the Nasdaq Composite and S&P 500 snapping long win streaks as market benchmarks retreated from record highs.
Investors parsed a report on U.S. wholesale inflation and news that industrial conglomerate General Electric was planning on splitting into three separate companies.
- The Dow fell -112.24 or -0.31%
- The S&P 500 slid -16.45 or -0.35%
- The Nasdaq retreated -95.81 or -0.60%
Investors on Tuesday saw that markets also fall, following a protracted period of buoyancy for the main stock indexes that has been described as a “melt up” by some market bulls and bears alike.
The consumer discretionary, financials, and information technology sectors were under the greatest selling pressure in the S&P 500 index Tuesday, with the downturn in stocks ending an eight-day win streak for the index and an 11-session run-up for the Nasdaq Composite.
Tesla shares dropped 12% Tuesday, weighing on the S&P 500 and Nasdaq Composite, after founder Elon Musk over the weekend asked in a Twitter poll if he should sell 10% of his stock. A majority of respondents said he should.
Meanwhile, the Federal Reserve’s twice-a-year financial stability report, released Monday, said valuation measures are high across most asset classes. The report noted that stock prices relative to earnings forecasts are at the upper end of the ratio’s historical distribution, and the yields on Treasury securities, corporate bonds and leveraged loans are at low levels relative to their history.
While U.S. stocks have moved higher faster than he expected, Frederick told MarketWatch that he remains “optimistic” about the fourth quarter as companies should continue to produce strong earnings.
Meanwhile, traders will have to consider the possibility of a change in leadership at the Federal Reserve, after Bloomberg News reported that Fed Gov. Lael Brainard interviewed for the role currently held by Jerome Powell. Powell’s still considered likely to be nominated to serve a second term as chairman.
In U.S. economic data, the October producer-price index rose 0.6%, in line with expectations, with the pace of wholesale inflation over the past 12 months flat at 8.6%. That is the highest level since the index was reconfigured in 2009, and likely one of the highest readings since the early 1980s.
- Shares of General Electric Co. rose 2.7% after the industrial conglomerate announced plans to split into three publicly traded companies.
- AMC Entertainment Holdings Inc. late Monday reported quarterly results that beat expectations across the board. Shares of the popular meme stock fell 11.4%.
- Shares of Hertz Global Holdings Inc. slid 9.8% after the car-rental company announced overnight that an upsized public offering of shares priced at the top end of the expected range. Hertz emerged from bankruptcy protection in July.
- PayPal Holdings Inc. shares dropped about 10.5% after the payments company fell short of expectations with its holiday-quarter outlook Monday, while also announcing a new arrangement with Amazon.com Inc. through which Venmo users will be able to use the service as a checkout option on the e-commerce giant’s platform.
- Shares of Roblox Corp. surged 42% after the social-gaming platform late Monday said its October performance would still top last year’s, despite a three-day outage over the Halloween weekend.
- Oil futures ended higher, with the U.S. benchmark rising 2.7% to settle at $84.15 a barrel.
- Gold futures rose nearly 0.2% to settle at $1,830.80 an ounce.
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