A spoonful of hot inflation makes the markets go down. Tesla shares appear ripe to potentially move up over the longer term after the EV selloff. Flight Centre could be due for a rally

A spoonful of hot inflation makes the markets go down… That could be the song of the day, and markets are hit with a dose of reality. US producer inflation came in hotter than expected, and the Fed Chair signaled the central bank is not in any hurry to cut rates as the US economy is in “remarkably good” shape. So, the S&P 500 $S&P 500 Index (.SPX.US)$ fell 0.6%, closing at the low of the day. This suggests selling pressure picked up in the session, with dip buyers unable to save the day.

The most selling in stocks overnight was in automakers, while investors bought into fashion names, movies, and entertainment stocks like Walt Disney, which jumped on reported stronger profits. Meanwhile, investors were buying lower-volatility stocks in the Invesco S&P 500 Low Volatility ETF $Invesco S&P 500 Low Volatility ETF (SPLV.US)$ , which garnered US$1.5 billion in buy orders last night. This suggests traders are not overly bearish, yet believe markets could be strong but bumpy ahead, as inflation and interest rates could cause market jitters. So, while there’s room for a pullback, some investors are positioning for the long term, taking a positive view on markets in the year ahead, which is why US$3.2 billion was bought in the S&P 500 overnight.

Tesla $Tesla (TSLA.US)$ shares fell 6%, and Rivian $Rivian Automotive (RIVN.US)$ slumped 14%—its biggest drop since February—as President-elect Donald Trump is said to be planning to kill the $7,500 EV subsidy as part of tax reform. The potential removal of US federal electric vehicle tax credits would dent EV makers' sales and future earnings. But you’d think Trump’s administration would introduce another incentive to replace it. Regardless, Musk actually called for the “removal of all government subsidies, including those for EVs, oil, and gas.” That’s what he posted on X.

Well, Australia’s tech sector $Alphatec (ATEC.US)$ and travel stocks are worth watching for several reasons. They look like they could be supported higher as Australian bond yields are lower today.

Flight Centre’s $Flight Centre Travel Group Ltd (FLT.AU)$ shares rose over 3% as it continued its 11% jump up from its October low. FLT’s chart suggests its shares could move higher as it’s oversold. Consensus sees its shares growing 19% in a year.