Stocks - Wall Street Opens Lower on Wholesale Inflation Jitters
Stocks in New York started lower Friday on inflation concerns and the continued decline in oil prices, which hit energy shares.
The Dow fell 135.16, or 0.52%, to 26,056.06, while the broader S&P 500 index fell 21.38, or 0.76%, to 2,785.45. The tech-heavy Nasdaq composite lost 95.62, or 1.27%, to 7,435.26.
The producer price index (PPI) rose 0.6% in October, while the core PPI, which excludes volatile food and energy prices, rose 0.5%. Both were hotter than expected, with economists forecasting a 0.2% rise for each.
The unexpectedly high rise in wholesale inflation just lent more credence to the market’s belief that the Federal Reserve will hike rates by another quarter point at its December meeting.
The Fed’s statement yesterday, where it kept rates steady, indicated little that would alter its course for slow and steady increases in December and through next year.
Global markets were also hit by producer inflation, although a drop in this case, as producer prices in China fell for the fourth-straight month, raising more concerns that the world’s second-largest economy is struggling as it battles the U.S. in a trade war.
Energy stocks took a hit as oil fell below $60, extending its move into bear-market territory as traders focused on increasing U.S. supply and the lack of real impact of oil sanctions on Iran.
Dow component Exxon Mobil (NYSE:XOM) dropped 1.4%, while fell Dow member Chevron (NYSE:CVX) fell 1.5%.
But Disney (NYSE:DIS) lent some strength to the blue-chip index, rising 3% after its earnings after the bell Thursday topped forecasts.
Among other companies moving on earnings report, Hertz (NYSE:HTZ) jumped 14% on solid numbers, while Yelp (NYSE:YELP) plunged 29% on downside guidance.
And GE (NYSE:GE) sank further, losing 4%, after J.P. Morgan cut its price target on the stock to $6 from $10.
In Europe, Germany’s DAX fell 0.2%, while in France the CAC 40 decreased 0.7% and in London the FTSE 100 was down 0.7%.