Wall Street Opens Lower on Weak Output, High Oil Prices; Dow Down 130 Pts

© Reuters.

By Geoffrey Smith — U.S. stock markets opened lower on Monday after a sharp and unexpected fall in U.S. industrial output in September once again cast doubt over the strength of the recovery. 

By 9:50 AM ET (1350 GMT), the was down 130 points, or 0.3% at 35,183 points. The was down 0.1% and the was effectively unchanged.

Earlier, new data had shown U.S. industrial output fell by 1.3% in September, after August’s data were also revised down to show a modest drop instead of the increase initially reported. Manufacturing output also fell for a second straight month, by a steeper-than-expected 0.7%. The figures strengthened perceptions that the world is struggling with extended disruptions to global supply chains, a problem exacerbated in the short term by surging fuel prices. 

Wholesale prices in the U.S. hit $2.50 a gallon for the first time in seven years in early trading in New York, against a backdrop of reports that key producers in the Organization of the Petroleum Exporting Countries are struggling to produce even the volumes that they are allowed to produce under their agreement with Russia and other key exporters. 

The figures reflect the aggregate of problems announced with varying degrees of severity by industrial companies across the U.S. in recent weeks, as regards their ability to source semiconductors and other key components. They also reflect in increasingly troublesome backlog of ships bringing imports to U.S. ports, the result of aggressive stimulus policies kept in place over the last 18 months.  The data came hard on the heels of numbers showing a sharper-than-expected slowdown in Chinese gross domestic product growth in the third quarter of the year. 

The downward move hit both old- and new-economy stalwarts, though to varying degrees. U.S. Steel (NYSE:) stock fell 6.5%, on fears that much of the supply-chain woe is concentrated in an auto sector that is a key customer for it. However, even at the top end of the manufacturing food chain, Apple (NASDAQ:) stock fell 0.4%. Reports last week had flagged that even the iPhone maker can’t get hold of all the silicon chips that it needs right now. 

Among individual movers, Zillow (NASDAQ:) stock fell 10% after Bloomberg reported that the online realtor is temporarily suspending its home-flipping service, unable to keep up with strong demand from customers. The service has been a surprise hit for the company since launching, but has been arguably over-stimulated by loose monetary policy and by the pandemic, which has triggered an unprecedented shift in customer preferences for housing with more space – even if that means moving out of town.

Elsewhere, Medtronic (NYSE:) stock fell 4.8% after reports that it is expanding a recall of devices inserted into the arteries of patients that are aimed at preventing aneurisms. The so-called pipeline embolization devices are reportedly susceptible to breaking and creating fresh and potentially fatal problems with patients’ blood circulation.

On a more positive note, Albertsons Companies (NYSE:) stock rose 3.8% to its highest in two weeks after the grocery store chain raised both its quarterly dividend and its full-year earnings guidance on the back of a strong third quarter.


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