Stocks opened sharply higher, but saw their best levels a short time after the open. The early strength was attributed to the market's oversold condition and a decent consumer prices report. Before long, though, the averages had given up most of their gains, then crossed into negative ground and picked up downside momentum in the second hour of trading. The averages are now at their worst levels of the day while oil is sitting near its best levels of the session, bouncing back after hitting a 2018 low yesterday.
ECONOMIC EVENTS: In the U.S., the consumer prices index rose 0.3% in October, with the core rate up 0.2%, both of which matched consensus estimates. In China, October data was mixed, with retail sales falling short but industrial production and fixed asset investment both better than expected. In Europe, German GDP growth wound up being a bit softer than planned at a 0.2% decline in Q3 versus the consensus call for a decline of 0.1%.
COMPANY NEWS: Shares of Macy's (M) are down 3% despite the fact that the company's third quarter earnings beat expectations and the retailer raised its full-year profit forecast. Macy's said its higher sales and earnings were driven by strong digital and continued improvement from brick & mortar, with chairman and CEO telling investors that Macy's has "the right merchandise, the right marketing and the right customer experiences in place to deliver a strong fourth quarter."
PG&E (PCG) said in a regulatory filing that it has drawn its entire $3.3B credit revolver, which Citi analyst Praful Mehta thinks is driven by concern around a downgrade to a non-investment grade credit rating and the liquidity requirements as a result of such an action. Given the level of structural damages and the loss of 48 lives in the California wildfires, PG&E's damage could be $15B or higher, Mehta contended in a note to investors. Near noon, PG&E shares are down 29% and the stock has lost over half its value over the last five days.
Shares of Canopy Growth (CGC) and Tilray (TLRY) are lower at midday following their first earnings reports after Canada legalized recreational cannabis. Tilray CEO Brendan Kennedy said the company's increase in revenue this quarter is from medical use, not adult use, adding that he expects to see Canadian adult use revenue next quarter following Canada's legalization of cannabis in October.
MAJOR MOVERS: Among the noteworthy gainers was Tahoe Resources (TAHO), which surged 45% after it agreed to be acquired by Pan American Silver (PAAS) for $3.40 per share. Pan American Silver was 12.5% lower after the announcement. Also higher were Macom (MTSI) and Canada Goose Holdings (GOOS), which gained a respective 19% and 14% after reporting quarterly results.
Among the notable losers was Sangamo (SGMO), which slid 16% after JPMorgan analyst Eric Joseph downgraded the stock to Neutral from Overweight on "growing skepticism" about the company's lead development programs and "their potential for value creation over the foreseeable future." Also lower were Switch (SWCH) and Wix.com (WIX), which fell 19% and 5%, respectively, after reporting quarterly results.
INDEXES: Near midday, the Dow was down 116.38, or 0.46%, to 25,170.11, the Nasdaq was down 41.38, or 0.57%, to 7,159.49, and the S&P 500 was down 12.41, or 0.46%, to 2,709.77.