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Wall Street Opens Mixed as PPI Reinforces Fed Concerns; Dow up 40 Pts

Stock Markets2 hours ago (Dec 14, 2021 15:26)

© Reuters.

By Geoffrey Smith — U.S. stock markets opened mostly lower on Tuesday after another higher-than-expected producer price inflation print reinforced fears that the Federal Reserve will speed up the tightening of monetary policy at its meeting this week.

U.S. producer prices rose 9.6% in the year through November, with a thumping 0.7% monthly rise underlining the fact that this is not just down to base effects from a pandemic-distorted year. Core prices rose 0.7% on the month and by 7.7% on the year. That comes hot on the heels of data last week showing consumer inflation running at a near-40% high.

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was up 44 points, or 0.1% at 35,695 points, but the S&P 500 was down 0.4% and the Nasdaq Composite was down 0.9%, both extending Monday’s losses. 

Analysts expect the Fed will accelerate the phase out of its bond purchases, meaning that financial markets could go from seeing $120 billion in liquidity creation a month to zero in as little as three or four months. That tightening of liquidity conditions is likely to push up money market rates even before the Fed starts to raise official ones. 

“For some time now the data has been pointing to a strong and increasingly broad economic recovery in the U.S., and yet the Fed will enter 2022 with rock-bottom rates and asset purchases still in the tens of billions,” said David Norris, head of U.S. credit at Twenty Four Asset Management. “The sense that the Fed is behind the curve will be a difficult one to shift.”

Among major movers, Tesla slid further below the $1,000 mark as CEO Elon Musk continued to reduce his holdings. Musk sold another $906 million worth of stock on Monday, according to an SEC filing. Tesla (NASDAQ:TSLA) stock was down 1.4% at $952.52.

Apple (NASDAQ:AAPL) stock meanwhile inched closer to the $3 trillion valuation mark, rising 0.1% after price target upgrades from Morgan Stanley (NYSE:MS) and Evercore. 

Adobe (NASDAQ:ADBE) stock fell 6.2% after it announced it will the launch of a cut-price version of its key suite of software tools, in what was seen as an admission of weakening pricing power.

GameStop  (NYSE:GME) stock and AMC Entertainment (NYSE:AMC) stock both saw choppy trade, with the former gaining 4.6% a day after it slumped to a 10-month low, and the latter rising 1.6% after being down as much as 13% in premarket. 

Elsewhere, Oscar Health (NYSE:OSCR) fell 12% to under $10 a share after Goldman Sachs (NYSE:GS), the lead underwriter at its IPO at $39 only a few months ago, put out a sell note on the company with a price target of $6.50. Another small heathcare stock feeling the strain was Generation Bio (NASDAQ:GBIO) which fell 54% after publishing pre-clinical trial results showing its experimental hemophilia drug still needed extensive “optimization”.

Wall Street Opens Mixed as PPI Reinforces Fed Concerns; Dow up 40 Pts

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