U.S. stocks recovered off their opening lows but continue to trade defensively as another sell-off in shares of General Electric ( GE ) coupled with accelerating inflation and heavy losses in the energy sector sour Wall Street’s appetite for risk.
Stock futures were lower as a result of bearish Chinese retail sales and factory data, Venezuela’s default, and Wall Street’s reaction to GE’s Investor Day presentation on Monday in which the conglomerate outlined its underwhelming turnaround plan. GE shares continued to unravel, touching a two-year low and taking the industrial sector down in sympathy.
The energy share is also underwater after an International Energy Agency report warned of slowing demand growth due to high prices and as warm weather overshadowed supply disruptions from the Middle East and OPEC production cuts. Brent crude fell to a seven-day low, a 2% drop from the previous day.
Economic data and remarks from global central bankers was also instrumental in Tuesday’s negative tone. Led by a surge in gas and drug prices, producer prices increased 0.4% in October, nudging up the annual growth rate to 2.8%, the fastest level of growth since 2012. Analysts forecasted Oct PPI to increase by just 0.1%.
Even with the exclusion of food and fuel, the producer price index was 0.4% higher last month, beating estimates for up 0.2%.
At a European Central Bank conference, the heads of the US, EU, UK and Japanese central banks indicated accommodative monetary policies helped guide their economies out of recession, but Fed Chair Janet Yellen cautioned the Fed needs the tools to cope with negative shocks.
St. Louis Fed president James Bullard warned another rate hike could push inflation lower, but Dallas Fed president Rob Kaplan raised the likelihood for a Dec rate hike.
European bourses are all lower after upbeat German GDP elevated the euro to a three-week high. Multi-nationals were weighed by the stronger euro, while mining stocks wobbled on Chinese industrial production data.
Crude oil was down $1.26 to $55.50 per barrel. Natural gas was down $0.07 to $3.10 per 1 million BTU. Gold was down $0.30 to $1,278.60 an ounce, while silver was down $0.04 to $17.01 an ounce. Copper was down $0.06 to $3.06 per pound.
Among energy ETFs, the United States Oil Fund was down 2.11% to $11.14 with the United States Natural Gas Fund was down 1.24% to $6.38. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 0.33% to 22.58 while SPDR Gold Shares were up 0.10% to $121.43. The iShares Silver Trust was down 0.12% to $16.07.
Here’s where the markets stand at mid-day:
NYSE Composite Index was down 35.75 points (-0.29%) to 12,281.07
Dow Jones Industrial Index was down 44.48 points (-0.19%) to 23,395.22
S&P 500 was down 6.75 points (-0.26%) to 2,578.12
Nasdaq Composite Index was down 22.84 points (-0.34%) to 6,734.50
FTSE 100 was down 0.76 points (-0.01%) to 7,414.42
DAX was down 40.94 points (-0.31%) to 13,033.48
CAC 40 was down 26.05 points (-0.49%) to 5,315.58
Nikkei 225 was down 0.98 points (0.00%) to 22,380.01
Hang Seng Index was down 30.06 points (-0.10%) to 29,152.12
Shanghai China Composite Index was down 17.87 points (-0.52%) to 3,492.97
NYSE SECTOR INDICES
NYSE Energy Sector Index was down 147.64 points (-1.33%) to 10,914.38
NYSE Financial Sector Index was down 13.29 points (-0.17%) to 7,852.64
NYSE Healthcare Sector Index was down 10.48 points (-0.07%) to 13,934.73
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