S&P 500 Pauses Record Run as Consumer Discretionary, Financials Stumble By

© Reuters.

By Yasin Ebrahim

– The S&P 500 fell Tuesday, paced by a Tesla-led slump in consumer discretionary stocks and weakness in financials as U.S. Treasury yields slipped following signs of slowing inflation.

The S&P 500 fell 0.6%, the Dow Jones Industrial Average lost 0.6%, or 228 points, the Nasdaq slipped 0.7%.

Tesla (NASDAQ:TSLA) fell nearly 11%, adding to its 10% slump from Monday as investors anticipate that CEO Elon Musk will offload 10% of his stake in the electric vehicle maker after followers backed the move in a recent twitter poll.

General Motors (NYSE:GM), and Ford Motor (NYSE:F) also dragged the sector deeper into the red.

Financials were weighed down by weakness in banking stocks amid a fall in U.S. bond yields following signs of slowing producer inflation.

Lincoln National (NYSE:LNC), Prudential Financial (NYSE:PRU), Wells Fargo (NYSE:WFC) were down more than 1%.

The producer price index, or wholesale inflation rose 0.5% in September, missing expectations for a 0.6% gain expected. But core ppi inflation fell short of estimates.

“Core goods inflation, however, looks to be peaking […] this is not definitive, yet, but it is encouraging, at the margin,” Pantheon Macroeconomics said in a mote.

Energy shrugged off rising oil prices as investors seemingly took some profit on run-up in the Diamondback Energy (NASDAQ:FANG), Occidental Petroleum (NYSE:OXY), and Devon Energy (NYSE:DVN).

Industrials outperformed the broader market following a 2% climb in General Electric (NYSE:GE) after the conglomerate outlined plans to split into three business.

GE will split its business into health care, energy, and aviation, but would eventually focus on the latter amid plans to sell health care and energy in 2023 and 2024, respectively.

The earnings front, meanwhile, offered mixed results from corporates.

PayPal (NASDAQ:PYPL) fell 12% after the payments company reported mixed third-quarter results, with a miss on revenue estimates, while guidance also disappointed.

The quarterly results drew a slew of negative reactions from Wall Street analysts, with Morgan Stanley cutting its price target on the stock to $265 from $340, but kept its overweight rating.

 "PayPal is being adversely impacted from hangover impacts of the pandemic, [which is] creating a bigger drag on growth than we had previously anticipated, negatively impacting our ’22 estimates," Morgan Stanley (NYSE:MS) said in a note.

Palantir Technologies (NYSE:PLTR) slumped more than 9% despite reporting third-quarter results that topped Wall Street estimates.

Roblox (NYSE:RBLX), meanwhile, was one of the standout performers, rising 35% after reporting better-than-expected Q3 results underpinned by stronger user activity despite the easing of pandemic restrictions and back-to-school seasonality.

In other news, speculation over whether Jerome Powell will retain his position as Federal Reserve Chairman intensified following a Bloomberg report that President Joe Biden had interviewed Fed Governor Lael Brainard as a possible candidate for the top job.

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