Stocks opened higher Thursday following the latest inflation data but didn't stay there for long. A late-afternoon speech from Federal Reserve Chair Jerome Powell failed to reignite sentiment, with all three main benchmarks closing the day in the red.
Ahead of the opening bell, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are paying subscribers for goods, increased 0.2% month over month in October. Year over year, the headline PPI was up 2.4% – the quickest pace since July.
Core PPI, which excludes food and energy prices, rose 0.3% on a monthly basis and 3.5% year over year.
"We should expect a bit more volatility in producer prices, especially as businesses manage supply chains amid the risk of tariffs," says Jeffrey Roach, chief economist for LPL Financial.
The impact of tariffs on consumers "vary widely and are industry-specific as businesses often apply for exclusions or bear part of the costs," he adds. "Consumer prices actually decelerated down to 1.7% in late 2019 after businesses adjusted to the trade war with China."
Powell's in no hurry to rush rate cuts
In a late-afternoon panel discussion in Dallas, Fed Chair Powell said the central bank is in no hurry to rush rate cuts.
The Federal Open Market Committee (FOMC) has lowered the federal funds rate by 75 basis points since September to a target range of 4.50% to 4.75%. But today, Powell said that economic data "is not sending any signals that we need to be in a hurry to lower rates."
Rather, the strength in the economy "gives us the ability to approach our decisions carefully," he added.
The next Fed meeting occurs in mid-December and futures traders are pricing in a 62% chance for a quarter-point rate cut, according to CME Group's FedWatch Tool.
SMCI keeps sliding on delisting concerns
In single-stock news, Super Micro Computer (SMCI) stock continued to slide after the company delayed the filing of its quarterly report – sparking delisting fears. The Securities and Exchange Commission (SEC) requires publicly traded companies to file annual reports to maintain their listings on U.S. stock exchanges, which SMCI has yet to do for its year ended June 30, 2024.
SMCI has until November 16 to file or submit a plan to the Nasdaq Stock Exchange to regain compliance with its listing rules or face potential delisting, according to Barron's.
Shares of the AI server, software and infrastructure firm plunged 11.4% today, bringing their six-month loss to 77%.
Cisco slips despite beat-and-raise quarter
Cisco Systems (CSCO) stock fell 2.1% even after the networking equipment specialist reported higher-than-expected fiscal first-quarter results and raised its full-year forecast.
Still, Wall Street remains bullish on Cisco. "Cisco reported solid results and guidance, bolstered by depleted customer inventory and positive artificial intelligence (AI) commentary," says Jefferies analyst George Notter, who has a Buy rating on the blue chip stock and raised his price target to $66 from $53.
"Margins are looking good too as the company continues to manage costs tightly," Notter notes, adding that he believes "the risk/reward in the shares is tilted positively."
Disney tops the Dow after earnings
Looking elsewhere on the earnings calendar, Walt Disney (DIS) soared 6.2%, making it the best Dow Jones stock today, after the media and entertainment giant disclosed its quarterly results.
DIS said fiscal fourth-quarter earnings jumped 39% year over year to $1.14 per share while revenue was up 6% to $22.6 billion – more than analysts were expecting. The company also posted modest subscriber growth for both its Disney+ Core and Hulu streaming segments and issued a strong outlook for fiscal 2025.
"With a strong lineup of beloved intellectual property in the works, Disney's content pipeline is looking particularly robust," says Third Bridge analyst Albie Amankona. The company's upcoming releases, including "Moana 2," highlight its strategy of leaning into fan-favorite franchises, Amankona adds. "This approach maximizes cross-platform monetization, creating synergy across streaming, theaters, and the parks."
Tesla sinks after Trump's EV tax credit proposal
Elsewhere, Tesla (TSLA) surrendered a portion of its election-inspired gains after a Reuters report indicated President-elect Donald Trump's transition team is planning to end the $7,500 electric-vehicle tax credit.
In Tesla's second-quarter earnings call, CEO Elon Musk said that ending the EV tax credit "would be devastating for our competitors," but only "slightly" for Tesla. He added that doing so "probably actually helps Tesla" over the long term.
The mega-cap stock slumped 5.8% today, but remains nearly 25% higher for the month to date.
As for the main indexes, the Dow Jones Industrial Average fell 0.5% to 43,750, the S&P 500 shed 0.6% to 5,949, and the Nasdaq Composite surrendered 0.6% to 19,107.
