Wall Street takes a breather after record rally, GE jumps on split

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(Reuters) – Wall Street’s main indexes retreated from record highs on Tuesday as a solid rise in producer prices last month deepened concerns over inflation, while General Electric (NYSE:GE) jumped on its plan to split into three public companies.

Seven of the 11 major S&P 500 sector indexes were lower in afternoon trading, after the benchmark U.S. stock index and the Nasdaq notched record closing highs on Monday for the eighth straight session.

A better-than-expected earnings season, positive news around COVID-19 antiviral pills and the loosening of travel curbs have recently fueled a record-breaking rally in U.S. stocks.

“We’re at a point where the market is just taking a few chips off the table. It’s been a pretty good run, money managers may be lightening up thinking that we get a little bit of a correction,” said Dennis Dick, a trader at Bright Trading LLC.

The Labor Department’s producer prices data indicated high inflation, which has become a bigger concern for investors than the COVID-19 crisis, could persist for a while amid supply chain issues.

“The only way to keep pace on the control is probably to raise rates, so Federal Reserve is stuck. They’re going to continue to just hope that it goes away but I don’t think it’s going away,” Dick said.

Market focus now turns to U.S. consumer prices data for October on Wednesday, which will likely highlight the impact of strained supply chains on American consumers.

The Labor Department’s core CPI index, a gauge excluding prices of volatile items such as food and energy, is expected to have risen 4.3% last month.

Among the top performers on Tuesday, General Electric Co jumped 3.6% after the U.S. conglomerate said it would split itself into three companies focused on aviation, healthcare and power.

Tesla (NASDAQ:TSLA) Inc tumbled 10.2%, pulling down the consumer discretionary sector and extending losses after Chief Executive Elon Musk’s Twitter (NYSE:TWTR) poll proposing to sell a tenth of his holdings garnered a 57.9% vote in favor of the sale.

Musk’s proposal also raised questions about whether he may have again violated his settlement with the U.S. securities regulator.

At 12:06 p.m. ET, the Dow Jones Industrial Average was down 242.70 points, or 0.67%, at 36,189.52, the S&P 500 was down 26.74 points, or 0.57%, at 4,674.96 and the Nasdaq Composite was down 110.77 points, or 0.69%, at 15,871.59.

Robinhood Markets Inc (NASDAQ:HOOD) slipped 2.8% after the online retail brokerage said a third party had obtained access to the email addresses of about five million of its customers in a security breach incident.

Zynga (NASDAQ:ZNGA) Inc jumped 9.5% after the “FarmVille” creator beat quarterly net bookings estimates, while D.R. Horton added 4.7% to top the S&P 500 index after reporting upbeat fourth-quarter results.

Declining issues outnumbered advancers for a 1.56-to-1 ratio on the NYSE and a 1.91-to-1 ratio on the Nasdaq. The S&P index recorded 29 new 52-week highs and two new lows, while the Nasdaq recorded 84 new highs and 60 new lows.

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