The U.S. stock market pared gains in afternoon trading Tuesday. Indexes slid after a report on Twitter that two rockets hit a town in Poland.
The Nasdaq composite surged 2.5% at midday but cut its gain to 0.6% at 1:40 p.m. ET. The S&P 500's earlier gain of 1.5% was nearly entirely gone.
The S&P 500 is getting closer to the 200-day moving average. The line has been a resistance level for the index, most notably in April and August. Watch how the S&P handles the next test of the line, which is still trending down.
The 4,000 level is another important benchmark for the S&P 500. The index met resistance there on Friday and Monday. While it climbed past it today, the index was below 4,000 in afternoon trading.
The Dow Jones Industrial Average reversed lower 0.5%.
Indexes took a sharp drop after a report on the Twitter account of Faytuks News said two rockets hit the town of Przewodow in Poland, on the border with Ukraine. Two people were killed, the report said.
There was no confirmation from U.S. news organizations. The Wall Street Journal reported earlier that Russian missiles struck parts of Ukraine. Oil prices jumped on the news.
Walmart, Home Depot Report Earnings
Dow Jones component Walmart gapped up, gaining 7% after beating sales and profit estimates in the premarket. The world's largest retailer by revenue saw same-store sales jump 8.2% and also raised guidance. Walmart has topped its previous best day of July 7, 2020, when it jumped 6.7%, according to Dow Jones Market Data.
Another big Dow retailer, Home Depot beat profit and sales expectations for the October-ended quarter and reaffirmed its outlook. The stock reversed higher nearly 1%.
The small-cap Russell 2000 vaulted 2.1%.
Lincoln Electric is breaking out of a cup-without-handle base, but volume on the welding systems maker is light. The buy point is 148.60.
Volume rose on the NYSE and Nasdaq compared with the same time on Monday.
In another bit of good news for the economy, the October producer price index (PPI) rose 8% on a yearly basis and 0.2% from the previous month. Both readings were smaller than economists expected. Core wholesale prices, which exclude food and energy, rose 6.7% on an annual basis and were flat from September, according to the Bureau of Labor Statistics.
The report offers more evidence that businesses are losing pricing power in a cooling economy, says Bill Adams, chief economist for Comerica Bank.
"But even after the PPI report's good news on inflation, the Fed is likely to strike a fairly hawkish tone at its decision next month," Adams said. "Home heating costs will be considerably higher this winter than last, which could be behind the uptick in consumer inflation expectations reported by the New York Fed's survey released yesterday. Inflation expectations in the University of Michigan's survey have also ticked higher in the last two monthly reports."
The yield on the 10-year Treasury note fell 6 basis points to 3.8% in afternoon trading.
Stock Market Gets Boost From China Stocks
Chinese stocks contributed to the U.S. stock rally.
The iShares MSCI China ETF surged 5.1% and the KraneShares China Internet ETF jumped 9.4%. The Shanghai Composite closed 1.6% higher while the Hong Kong Hang Seng rallied 4.1%.
President Joe Biden and Chinese leader Xi Jinping are meeting in Indonesia in hopes of improving a frayed relationship between the two countries. The initial reaction from both sides was optimistic.
The Innovator IBD 50 ETF rose 1% after lagging the stock market earlier.
Flex LNG surpassed earnings and revenue expectations amid strong demand in the liquefied natural gas market. Yet the stock slid more than 7% in heavy volume. Flex LNG is still forming a cup base with a 37.09 buy point.
Chips Also Boost Stock Market
Lattice Semiconductor led the IBD 50, leaping 6.7% to the highest price since January. Susquehanna raised the price target from 72 to 75.
Lattice and other chip stocks appear to be rising on news that Warren Buffett's Berkshire Hathaway has made its first purchase of Taiwan Semiconductor shares. Taiwan Semi gapped up 12%.
The Philadelphia semiconductor index rallied nearly 4%.
Also in the IBD 50, steelmaker Tenaris is breaking out past the 34.19 buy point of a cup-with-handle base. Medpace Holdings regained a 231.10 buy point.
On the downside, lithium producer Livent slid 7% in heavy volume. Other lithium stocks also fell.
