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The New York Stock Exchange. Stocks in the U.S. retreated Monday.
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U.S. stock markets were sliding Tuesday as U.S. producer prices continued to surge, creating even more uncertainty ahead of the crucial decisions major central banks are due to make later this week.
In morning trading, the
Dow Jones Industrial Average
was down 134 points, or 0.4%, while the
S&P 500
fell 1%, and the
Nasdaq Composite
dropped 1.6%.
If investors were expecting to see signs that inflation was finally beginning to cool, they had another thing coming. U.S. producer prices rose 0.8% in November from October, above forecasts for 0.5%, and up from 0.6%, while core PPI increased 0.7%, ahead of expectations for 0.4%. On a year-over-year basis, PPI rose 9.6%. “This was the first month in a while that the infamous wholesale and retail margin categories did not boost the core much, and yet we still got a 0.7% core advance,” writes Stephen Stanley, chief economist at Amherst Pierpont. “This is a testament to the fact that inflation continues to broaden out. The Fed should be very concerned.”
Investors have been expecting the Federal Reserve to indicate this week that it will speed up the “tapering,” or phasing out, of its bond-buying program, which might in turn signal the U.S. central bank will be raising interest rates sooner than thought.
But the Bank of England and the European Central Bank might send more dovish signals, ignoring for now multiyear high inflation on concerns that the Omicron coronavirus variant might slow the economic recovery.
A U.S. monetary policy tightening would send yields higher and affect equities. The dovish twist of Europe’s central banks, however, would have the opposite effect. China, meanwhile, looks to be easing monetary policy, which could also provide a boost to global risk assets. “The more worried China’s government sounds about the economy, the more excited investors get,” write Gavekal’s Thomas Gatley and Wei He.
Oil prices were lower after a report from the International Energy Agency cut its oil demand outlook for next year by 100,000 barrels a day, indicating that the surge of coronavirus cases due to the Omicron variant likely will affect global growth.
Brent crude, the international benchmark, was down 1.2% to $73.50 a barrel, while West Texas Intermediate fell 1.1% to $70.50 a barrel.
Here are seven stocks on the move Tuesday:
Beyond Meat (ticker: BYND) was up 7.4% after getting upgraded to Neutral from Underweight at Piper Sandler.
Apple (AAPL) was down 1.2% despite getting upgraded to Buy from Neutral at Bank of America.
Tesla (TSLA) was down 1.9% Tuesday, after founder and CEO Elon Musk sold more than $900 million worth of shares, while exercising his right to acquire stock options on more than 2 million shares in his electric-vehicle company.
U.K pest control group
Rentokil (RTO.U.K) saw its stock fall by almost 9%, after it said it would acquire U.S.-based rival
Terminix (TMX) in a $6.7 billion deal. Terminix stock was up 20%.
Cloudflare (NET) slumped 7% and
Datadog (DDOG) dropped 6.7% after getting cut to Underweight from Neutral at JPMorgan.
Write to Pierre Briançon at pierre.briancon@dowjones.com