US close: Stocks firmly lower following PPI reading

dl nyse new york stock exchange wall st street city finance dow jones nasdaq sp finance dollar dollars us usa united states of america 2 — New York Stock ExchangeSharecast photo / Josh White

Wall Street stocks closed lower on Tuesday as market participants thumbed over last month's producer price index and concerns related to the Covid-19 omicron variant continued to weigh on sentiment.

At the close, the Dow Jones Industrial Average was down 0.30% at 35,544.18, while the S&P 500 was 0.75% weaker at 4,634.09 and the Nasdaq Composite saw out the session 1.14% softer at 15,237.64.

The Dow closed 106.77 points lower on Tuesday, extending losses recorded in the previous session as the omicron variant returned to focus.

Tuesday's primary focus was news inflation data that revealed producer prices rose at a quicker than expected pace in November amid widespread gains across the various categories of goods. According to the Department of Labor, so-called final demand prices increased 0.8% versus October, pushing the annual rate of increase to 9.6%. Economists had pencilled-in growth of 0.5% on the month and 9.2% year-on-year.

Food prices rose by 1.2% on the month, while energy was 2.6% dearer. Prices also bounded ahead of forecasts of 0.5% growth at the core level, which excludes the often-volatile prices for food and energy, rising by 0.8%.

Also drawing an amount of investor attention, the Federal Reserve kicked off its latest two-day policy meeting on Tuesday, with the central bank set to release a statement on quarterly projections for the economy, inflation and interest rates on Wednesday.

Elsewhere on the macro front, the NFIB's small business optimism index came in at 98.4 in November up from 98.2 in the previous month. However, the headline reading buries some of the more negative parts of the report, with the uncertainty index slipping four points to 63 and expectations falling by one point to -38 - tying a 48-year record low reading.

In the corporate space, Tesla shares closed lower in early trade after chief executive Elon Musk revealed he had sold a further $906.5m shares in the electric carmaker, while Ford stock slumped on news that competitor Toyota will pour $35.0bn into battery-powered electronic vehicles by 2030.

No major corporate earnings were released on Tuesday.

Dow Jones - Risers

Travelers Company Inc. (TRV) $156.67 2.32%
Amgen Inc. (AMGN) $213.74 1.11%
Johnson & Johnson (JNJ) $170.29 1.09%
Goldman Sachs Group Inc. (GS) $388.82 1.09%
Dow Chemical Co. (DOW) $53.85 1.05%
International Business Machines Corporation (CDI) (IBM) $123.72 0.96%
Walmart Inc. (WMT) $144.94 0.95%
JP Morgan Chase & Co. (JPM) $159.13 0.77%
Verizon Communications Inc. (VZ) $50.65 0.74%
Merck & Co. Inc. (MRK) $73.72 0.41%