Late drop breaks S&P 500 win streak
NEW YORK — Wall Street pumped the brakes on its recent rally Tuesday, as a late slide in big technology companies left stocks broadly lower, erasing an early gain.
The reversal left the S&P 500 with a 0.8 percent loss after having been up 0.6 percent earlier. The decline in big-name technology stocks like Apple and Microsoft, plus losses in health care and communications stocks, outweighed gains in financial, industrial and energy companies. Tech stocks have far outpaced the rest of the market this year as investors bet they could still thrive in a stay-at-home economy.
The pullback ended the S&P 500's seven-day winning streak. Despite the sell-off, the benchmark index remains within 2 percent of the all-time high it reached in February, reflecting a stunning turnaround from a nearly 34% tumble in March when the coronavirus pandemic sent stocks into a nosedive.
Investors have grown more confident in recent weeks amid some positive economic data and better-than-expected second-quarter results from companies, suggesting corporate profits could be headed higher in the second half of this year and in 2021. Traders are also increasingly optimistic that the many pharmaceutical companies working on ways to treat COVID-19 will deliver a working vaccine in the coming months.
"What is a risk worth taking is the assumption that a vaccine will be made available around year-end, and that this vaccine will help eliminate the virus in the coming year," said Sam Stovall, chief investment strategist at CFRA Research.
Rising GM star bolts for Silicon Valley
SILVER SPRING, Md. — The chief financial officer at General Motors, Dhivya Suryadevara, is trading Detroit for Silicon Valley in a surprise departure to join Jack Dorsey's startup, Stripe.
A rising star in the auto sector, Suryadevara became GM's first female CFO in 2018 at the age of 39, and quickly became a trusted voice for CEO Mary Barra, the first woman to head a major U.S. auto manufacturer.
"Dhivya has been a transformational leader in her tenure as CFO," said Barra. "She has helped the company strengthen our balance sheet, improve our cost structure, focus on cash generation and drive the right investments for our future. We wish her every success."
Stripe, which developed a rapid, mobile payment system that has become ubiquitous during the pandemic, is a company that appears tailor built to sail through the global disruption. It has launched in 15 countries in the past year. After its latest round of funding, the company puts its value at around $36 billion, not too far behind GM, which is valued at $41.5 billion.
Adding to Stripe's client roster this year alone are the companies Caviar, Coupa, Just Eat, Mattel, NBC, and Paid.
General Motors named John Stapleton, GM North America finance chief, as acting global CFO, effective Saturday.
Producer prices post top gain since '18
WASHINGTON — U.S. wholesale prices shot up an unexpected 0.6 percent in July, biggest gain since October 2018, as energy prices moved sharply higher.
The Labor Department said Tuesday that the jump last month in its producer price index — which measures inflation before it reaches consumers — followed a 0.2 percent drop in June and a 0.4 percent uptick in May. The increase last month was about twice what economists had expected.
Wholesale energy prices shot up 5.3 percent in July, including a 10.1 percent surge in gasoline prices. Food prices slid 0.5 percent. Excluding the volatile food and energy prices, so-called core producer prices rose 0.5 percent last month.
Over the past year, producer prices are down 0.4 percent, and core prices are up 0.3 percent. Inflation has been held in check by the sharp recession caused by the coronavirus outbreak and the resulting lockdowns and fear that have kept Americans away from restaurants, airplanes and shopping centers. Producer prices for airline services plummeted 7 percent last month.
"Core inflation readings will likely remain muted over coming months in response to ongoing weak demand and ample excess capacity,'' Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research report.
SC paper maker is cutting production
ASHDOWN, Ark. — South Carolina paper company Domtar will not restart operations on its paper machine in Arkansas, putting about 109 employees out of work, the company said.
The paper machine at the Ashdown mill was put on idle in April. Now, the mill will only produce pulp, according to a press release.
"The COVID-19 pandemic and resulting economic slowdown continue to negatively affect demand for communications paper grades. Some recovery in demand for communications paper has occurred as the economy has started to re-open. But unfortunately, Domtar has not seen enough demand recovery to justify restarting operations on the A62 paper machine at the Ashdown Mill," said Tammy Waters, spokesperson for the mill.
Canadian-owned and Fort Mill-based Domtar also will also shut down some production at Tennessee and Michigan mills and a converting center in Tennessee.
"We are taking the appropriate steps to optimize our operations and to remain an agile, reliable partner to our customers," CEO John Williams said in a statement. "Despite the significant challenges we faced in pulp and paper markets, we have been able to manage costs while initiating cash and cost conservation initiatives across the network."
China car sales up in July, down for year
BEIJING — China's auto sales rose by 16.4 percent in July over a year earlier to 2.1 million units in a sign of sustained recovery for the industry's biggest global market, an industry group said Tuesday.
The China Association of Automobile Manufacturers reported that sales of passenger cars jumped 8.5 percent from a year earlier to 1.67 million.
In the first seven months of the year, passenger vehicle sales tumbled 18.4 percent from a year earlier, to 9.5 million, the CAAM said, as many cities in China imposed wide shutdowns during the first quarter to battle the new coronavirus pandemic.
Demand already was weak before the pandemic hit, due to consumer jitters over a slowing economy and trade tensions with Washington. Sales fell 9.6 percent last year, the second straight annual decline. But customers appear to have returned to showrooms, looking for deals.
"The trend is good after recovering momentum in the second quarter of the year," the group said in a statement.
Weakness in the China market has hurt global automakers that are looking to China to propel sales growth.
TVA reviews CEO pay after Trump complaint
CHATTANOOGA, Tenn. — A federal utility's board plans to review its CEO pay amid ongoing criticism from President Donald Trump, the board's chairman said Monday.
Tennessee Valley Authority interim chairman John Ryder told the Chattanooga Times Free Press the board will look at the compensation of CEO Jeff Lyash, who topped $8.1 million in 2019 total compensation in his first six months in the position.
Last week, Trump called on the board to fire Lyash and pay the new CEO at most $500,000 annually.
The TVA Act requires competitive compensation with other utilities.
"The issue is not Jeff's performance — everybody agrees he is doing a great job," Ryder said. "There is an issue of compensation that the board is going to take a serious look at and how we structure that so that we are in compliance with the TVA Act."
Last week, Trump fired TVA's former chairman and another board member over TVA's hiring of foreign workers. Days later, TVA rescinded a decision to lay off more than 200 in-house technology workers and outsource 20 percent of its technology jobs to foreign-based companies.
TVA has said it doesn't get any taxpayer money and the CEO salary is in the bottom fourth of other big utilities.