Written by DAMIAN J. TROISE AP Business Writer
Stocks ended moderately lower on Tuesday, ending an eight-day winning streak for the market that had been fueled by strong company earnings and economic data.
The S&P 500 index lost 16.45 points, or 0.4%, to close at 4,685.25. The last time the S&P 500 had eight straight days of gains was April 2019. The Dow Jones Industrial Average fell 112.24 points, or 0.3%, ending at 36,319.98 and the Nasdaq lost 95.81, or 0.6%, to 15,886.54.
The market was pulled lower by companies that rely on consumer spending and technology stocks, which had driven the market higher in recent days.
Tesla lost 12% after its founder Elon Musk said he would sell 10% of his holdings in the electric car maker, based on the results of a poll he conducted on Twitter. The company’s stock is down more than 16% so far this week, however the stock is still up 45% so far this year.
Meanwhile PayPal — coincidentally a company co-founded by Musk more than two decades earlier — dropped 11% after the company’s cut its full-year outlook and revenue forecasts.
PayPal is facing increased competition from other financial technology companies like Square, Affirm and even traditional banks, who have moved decisively into PayPal’s online payments kingdom.
Robinhood fell 3.4% after the popular trading app reported a data breach the day before.
Bond yields also fell Tuesday. That pulled down the stock prices of banks, which rely on higher yields to charge more lucrative interest on loans. The yield on the 10-year Treasury fell to 1.44% from 1.49% late Monday.
Bank stocks like Citigroup, Bank of America and JPMorgan Chase closed down roughly 1% or more.
One stock that did well was General Electric, which rose 2.6%. The once-unstoppable corporate behemoth that made everything from lightbulbs to nuclear reactors announced it would break itself into three separate companies.
The combination of chronic mismanagement, years of asset sales, as well as new regulations after the Great Recession made GE a shell of what it used to be. It no longer makes appliances, no longer owns NBCUniversal and spun off its financing arm, GE Capital, years before.
Sectors that are considered less risky, including household product makers and utilities, held up better than the rest of the market.
Investors received another reminder from the Labor Department that rising inflation remains persistent. The agency reported that inflation at the wholesale level rose 8.6% in October from a year earlier, matching September’s record annual gain.
A wide range of companies are facing higher costs for raw materials and energy while contending with supply chain problems. That has been cutting into their operations and prompting them to raise prices on finished goods, which in turn has been making products and services more costly for consumers.
The Labor Department will release its Consumer Price Index for October on Wednesday, giving a more detailed picture on how inflation is impacting consumers.
Inflation remains a key concern for investors, especially as the Federal Reserve moves ahead with plans to trim back, or taper, its bond purchases that have helped maintain low interest rates.
“The Fed did such a good job of telegraphing it, but there is still the mechanics of the actual tapering,” said Ross Mayfield, investment strategist at Baird.
The latest round of earnings is nearing its end, but investors still have several big corporate report cards to review. Walt Disney will report its results on Wednesday. Tapestry, the owner of Coach and other luxury brands, will report its results on Thursday.