Stock Market Rally Cools On Hot Inflation

The stock market rally pulled back from record highs, as Tesla (TSLA) and Nvidia (NVDA) pulled back from massive runs, while tech megacaps fell modestly and many hot IPOs tumbled, such as Upstart (UPST). Red-hot inflation weighed on stocks. But Rivian Automotive (RIVN) had a strong debut after pricing the biggest IPO since Alibaba (BABA). Affirm (AFRM) was a big earnings winner. Meanwhile, General Electric (GE) announced plans to split into three companies, while Dow component Johnson & Johnson (JNJ) will split in two.

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Stock Market Rally Pauses

The stock market rally lost ground, ending several weeks of gains, on a stronger-than-expected inflation report that sent Treasury yields rebounding. Many growth names lost ground. Tesla (TSLA) tumbled as Elon Musk sold some of his huge TSLA stake, while Rivian (RIVN) soared after a strong IPO.

Inflation Hits 30-Year High

The consumer price index surged 6.2% in October, the highest increase since November 1991, with energy prices up 30%. Yet inflation is becoming more broad-based. While the CPI jumped 0.9% last month, the core CPI, which excludes volatile food and energy prices, darted 0.6% higher vs. September and 4.6% vs. a year earlier, a longtime high. Rising housing costs are only just beginning to show up in the inflation data, which has rent up 2.7% from a year ago and owner’s equivalent rent rising 3.1%. Although average hourly earnings are up a strong 4.9% from a year ago, real, or inflation-adjusted, wages are down 1.2% over the same period. The risk is that inflation pressures will feed on themselves, as cost pressures push employees to demand higher wages, leading to more price increases.

While Fed chief Jerome Powell preached patience on Nov. 3, at the close of the last policy meeting, Wall Street isn’t quite buying his message. As of early Friday, markets were pricing in slightly better-than-even odds of three rates hikes in 2022.

Rivian Stock Soars After Monster IPO

EV startup Rivian (RIVN) surged 29% in Wednesday’s debut, then kept climbing Thursday, giving it a bigger market cap than General Motors (GM) or Ford (F). The Rivian IPO priced an upsized 153 million shares at $78 a share Tuesday night, above the already-raised price range of $72-$74. The RIVN IPO raised $11.9 billion, the largest IPO since Alibaba (BABA) in 2014. Rivian has started deliveries of its R1T electric pickup, with the R1S large SUV launching by year end. But it’s also set to make 100,000 electric vans for Amazon (AMZN), which owns 20% of the company. Ford owns 12%.

Tesla CEO Musk Unloads Stock

Tesla (TSLA) stock tumbled — ending an 11-week win streak — after CEO Elon Musk began selling 10% of his stake in the EV maker. Musk owns roughly 21% of Tesla stock. So far, Musk has sold around $5 billion worth of Tesla shares. Wall Street had expected a 5%-6% sale to offset a looming tax bill Musk must pay for exercising stock options. Meanwhile, the China Passenger Car Association says Tesla sold 54,391…