Wall Street declines, ending a run of record highs

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NEW YORK (Businesshala) – Wall Street slid on Tuesday, closing a multi-day rally of straight record closings as gains and concerns over ongoing inflation fueled a broader sell-off.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US November 8, 2021. Businesshala/Brendan McDermid

All three major US stock indexes were down, with the S&P 500 and Nasdaq setting a course to break their winning streak of eight consecutive record closing highs.

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After such a run, and in the absence of market-driven catalysts, market participants were driven to take profits.

“It’s a risky day,” said Jay Hatfield, CEO and portfolio manager at Infracap Advisors in New York. “After the PPI today and tomorrow with the CPI, it is appropriate that we take a break.”

“The earnings season is almost over and we are at our all-time high,” Hatfield said. “It makes sense that the market would halt and perhaps test some support levels.”

“It’s not a ‘race to the exit.’ I see no reason to add exposure right now.”

The Labor Department’s Producer Prices (PPI) report shows inflation continues to rise as ongoing goods and labor supply challenges send price increases ahead of the US Federal Reserve’s average annual 2% inflation target.

Wednesday’s CPI report will be examined for clues to the extent to which producer prices are being passed along to the consumer, whose spending accounts for about 70% of the US economy.

(Graphic: Inflation:)

The Dow Jones Industrial Average fell 206.42 points, or 0.57%, to 36,225.8, the S&P 500 fell 25.98 points, or 0.55%, to 4,675.72 and the Nasdaq Composite fell 130.99 points, or 0.82%, to 15,851.37.

Among the 11 key sectors of the S&P 500, consumer discretionary suffered the most percentage declines, while utilities posted gains.

The finish line is in sight for the third quarter reporting season, which reported 445 companies in the S&P 500. According to Refinitiv, 81% of them have defeated Consensus.

General Electric Co. posted a 2.5% increase after the 129-year-old industrial conglomerate announced it would split into three separate public companies to simplify its business.

Tesla Inc. lost 11.4%, weighing down the consumer discretionary sector and detailing losses after a Twitter poll by Chief Executive Elon Musk to sell his tenth stake received 57.9% of the vote in favor of the sale. This raised questions about whether Musk violated the agreement with the US Securities and Exchange Commission (SEC).

Shares of Robinhood Markets Inc. fell 3.0% after the online retail trading app reported a security breach affecting nearly 5 million of its customers.

On the plus side, upbeat quarterly results saw video game maker Zynga Inc jump 8.9% and homebuilder DR Horton’s shares jumped 5.1%.

A decline in the number of issues moving beyond the 1.38-to-1 ratio on the NYSE; On the Nasdaq, a 1.74-to-1 ratio favored the downside.

The S&P 500 posted 31 new 52-week highs and two new lows; The Nasdaq Composite posted 105 new highs and 64 new lows.

(This story is refined to include the dropped letter in the first paragraph)

Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Cynthia Osterman

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