Benchmarks closed in the red on Tuesday as investors engaged in profit-taking after consecutive session of record highs and also eyed on economic data highlighting ongoing inflation.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 112.24 points, or 0.3%, to close at 36,319.98, weighed down by 3.2% loss in shares of Visa Inc.
V
. Visa carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 slid 16.45 points, or 0.4%, to close at 4,685.25 on Tuesday. Five of the 11 major sectors of the broader index closed in the red led by 1.4% decline in the consumer discretionary sector.
The Nasdaq Composite Index closed at 15,886.54, after falling 95.81 points, or 0.6%, yesterday. The tech-heavy index was weighed down by nearly 12% drop in shares of Tesla, Inc.
TSLA
, followed by PayPal Holdings, Inc.
PYPL
that slipped 10.5%.
On Tuesday, the fear-gauge CBOE Volatility Index (VIX) increased 3.3%, to close at 17.78. Declining issues outnumbered advancing ones on the NYSE by a 1.13-to-1 ratio. A total of 11.02 billion shares were traded yesterday, higher than the last 20-session average of 10.76 billion.
Investors Take Profit From October Rally
Benchmarks slipped to the negative territory on Tuesday, as investors took profit from the extended period of market rally. Specifically, the consumer discretionary, financials, technology and communications sectors were under pressure. Investors previously cheered positive economic recovery reports from the labor department and also news from Congress that the House of Representatives passed infrastructure spending legislation late on Friday. The bill is expected to be signed into law by President Joe Biden soon. The technology sector also came under pressure from nearly 12% loss in Tesla’s shares after the company’s founder Elon Musk conducted a Twitter poll over the weekend asking if he should sell 10% of his stock. Majority of the respondents responded positively towards the poll.
Producer Price Index Hits Record High
On Tuesday, the Labor Department reported that its producer price index (PPI) rose 0.6% in October, putting the year over year rise to 8.6%, the highest annual pace in records going back nearly 11 years. The core PPI, that excludes foods, energy, and trade services moved up 0.4%. The index gauges final demand prices from goods producers and indicates that the inflation pressure is continuing to weigh on the U.S. economy. However, food prices have declined slightly due to decline in wholesale cost of eggs and beef, which offsets a sharp increase in vegetables cost. The report also shows that one-third of the increase in price of goods came from surge in gasoline, with prices rising 6.7%. Construction prices has also risen 6.6% year over year.
Investors now await the consumer price index report to draw a conclusion on the ongoing inflation as the Federal Reserve prefers PCE price gauge to make fund rate calls.
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