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Wall Street’s record run loses steam, GE surges on split

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November 9, 2021

By Shreyashi Sanyal and Devik Jain

(Reuters) – U.S. stock indexes retreated from record highs on Tuesday as a solid rise in producer prices last month deepened concerns over inflation, while General Electric surged on its plan to split into three public companies.

The Labor Department 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.

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“I think most investors realize right now that inflation is on the rise. It’s not growing as quick as it was once feared, but it’s still on the rise,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

Six of the 11 major S&P 500 sector indexes were lower in early trading, with financials and energy dropping the most.

The S&P 500 and the Nasdaq closed at all-time highs on Monday for the eighth straight session, while the Dow clocked its second consecutive record closing high.

“I think what you’re seeing is just a little bit of profit-taking from yesterday. Interest rates are still really favorable, so it’s not a bad environment to be in,” Pavlik said.

A better-than-expected earnings season, positive news around COVID-19 antiviral pills and the loosening of travel curbs have recently helped the market continue its record run.

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General Electric Co shares jumped 5.4% after the U.S. conglomerate said it would split itself into three companies focused on aviation, healthcare and power.

Tesla Inc shed 4.6%, extending declines from the previous session after Chief Executive Officer Elon Musk’s Twitter poll proposing to sell a tenth of his holdings garnered a 57.9% vote in favor of the sale.

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

At 9:54 a.m. ET, the Dow Jones Industrial Average was down 109.98 points, or 0.30%, at 36,322.24, the S&P 500 was down 10.15 points, or 0.22%, at 4,691.55 and the Nasdaq Composite was down 54.66 points, or 0.34%, at 15,927.70.

Robinhood Markets Inc slipped 3.1% 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.

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Zynga Inc jumped 4.9% after the “FarmVille” creator beat quarterly net bookings estimates, while Tripadvisor Inc fell 8.5% after reporting downbeat quarterly earnings and announcing the departure of Chief Executive Officer Stephen Kaufer.

Declining issues outnumbered advancers for a 1.08-to-1 ratio on the NYSE and a 1.89-to-1 ratio on the Nasdaq. The S&P index recorded 25 new 52-week highs and no new lows, while the Nasdaq recorded 59 new highs and 34 new lows.

(Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Bernard Orr and Aditya Soni)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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