By Geoffrey Smith
Investing.com -- U.S. stock markets were choppy in early trade on Friday, reversing early gains after economic data that showed no meaningful increase in short-term inflation pressures.
The price index for U.S. personal consumer expenditures, the Federal Reserve’s preferred measure of inflation, just a fraction above expectations in January. In year-on-year terms, it remains at a historically low level of 1.5% growth.
The figures sparked something of a rotation back into growth names over value ones, a reversal of the trend seen over most of the week. However, selling quickly returned to the fore as the University of Michigan's consumer sentiment index slumped to a six-month low.
By 10 AM ET (1440 GMT), the Dow Jones Industrial Average was down 273 points, or 0.9%, while the S&P 500 was up 0.3% and the Nasdaq Composite, which has borne the brunt of the week’s selling, was flat, completely reversing an early gain of 1.3%.
Separately, Tesla Inc (NASDAQ:TSLA) stock lost another 1.2% after Bloomberg data showed outflows of over $500 million from fund manager Cathie Wood's suite of ARK funds which have invested heavily in Tesla, Bitcoin and other names synonymous with the tech-focused rally of the last year. The redemptions put pressure on ARK to liquidate some of its holdings. On Thursday, Bloomberg had reported on Thursday that Tesla had become the latest carmaker to be hit by a global shortage of semiconductors, temporarily idling its Fremont plant in California.
Salesforce (NYSE:CRM) stock also fell 4.3% after a disappointing outlook in the software provider's quarterly update late on Thursday.
Overall sentiment had been lifted at the start of the day by figures showing that personal income in January rose by 10%, above expectations for a figure of 9.5%, as a fresh round of stimulus payments approved in the dying days of the last Congress hit consumers' accounts. The numbers indicated that the damage to household balance sheets from the surge in unemployment last year will be contained. Personal spending also increased, by a more restrained 2.5%.
The numbers come at the start of a day on which the House of Representatives is expected to vote on the Biden administration's $1.9 trillion stimulus package. One element that has been pulled from that package is the proposal for a $15/hour national minimum wage, which Senate officials said couldn't be decided under Budget Reconciliation provisions. That is now likely a dead letter, given the opposition from Republican Senators.
In other moves, Airbnb (NASDAQ:ABNB) stock rose 3.7% after its fourth-quarter update showed a faster-than-expected rebound in bookings, something it said expects to continue as the first phase of the travel sector's reopening benefits the private rental sector more than the hotel sector. Virgin Galactic stock slumped 14% after the space tourism company said it had delayed its next test flight until May, and DoorDash (NYSE:DASH) stock fell by 4.6% after it said it expected the reopening of restaurants nationwide to slow its growth in the coming months.