Closing Stock Market SummaryThe S&P 500 declined 0.4% on Tuesday, snapping an eight-session winning streak amid profit-taking interest and another decline in Treasury yields. The Nasdaq Composite snapped an 11-session winning streak with a 0.6% decline. The Russell 2000 also fell 0.6% while the Dow Jones Industrial Average fell 0.3%.
Tesla (TSLA 1023.50, -139.44, -12.0%) was the prime recipient of profit taking, as the stock fell 12% today and extended its two-day decline to 16%. Entering the week, the stock was up more than 55% in a month. Accordingly, TSLA dragged the S&P 500 consumer discretionary sector (-1.4%) to the bottom of the sector standings.
The information technology (-0.4%), financials (-0.6%), health care (-0.4%), and communication services (-0.3%) sectors closed modestly lower, while the six other sectors in the S&P 500 provided offsetting support with 0.3-0.4% gains. The utilities sector (+0.4%) eked out the top spot.
PayPal (PYPL 205.42, -24.00, -10.5%) held back the technology sector with a 10.5% decline following its earnings report. Elsewhere, peculiar curve-flattening activity in the Treasury market weighed on the financials sector.
The price action in Treasuries was counter-intuitive because yields settled lower despite the elevated inflation pressures depicted in the Producer Price Index (PPI) report for October and the lukewarm demand in the $39 billion 10-yr Treasury note auction. Total PPI increased 0.6% month-over-month, in-line with the Briefing.com consensus, and held steady at 8.6% year-over-year.
The 2-yr yield fell five basis points to 0.40%, and the 10-yr yield fell seven basis points to 1.43%. The U.S. Dollar Index declined 0.1% to 93.97. WTI crude futures rose 2.7%, or $2.20, to $84.16/bbl.
Presumably, Treasuries were propped up by defensive positioning from investors cautious on equities, by peak inflation expectations, and by an understanding that the Fed isn't in a hurry to hike rates.
Separately, shares of Roblox (RBLX 109.52, +32.52, +42.2%) soared 42% after the company pleased investors with its earnings report. General Electric (GE 111.29, +2.87, +2.7%) rose nearly 3.0% after announcing plans to form three public companies focused on aviation, healthcare, and energy.
Reviewing Tuesday's economic data:
- The Producer Price Index for final demand increased 0.6% month-over-month in October (consensus +0.6%) and the index for final demand, less foods and energy, increased 0.4% (consensus +0.4%).
- The key takeaway from the report is that the year-over-year readings for total PPI and core PPI were unchanged from September, which will contribute to the notion that the inflation experienced by producers is at, or near, peak levels.
- The NFIB Small Business Optimism Index for October decreased to 98.2 from 99.1 in September.
Looking ahead, investors will receive the weekly Claims
- S&P 500 +24.7% YTD
- Nasdaq Composite +23.3% YTD
- Russell 2000 +22.9% YTD
- Dow Jones Industrial Average +18.7% YTD