U.S. stocks are falling after housing data stoked rate fears
Story by Investing.com • 10h ago
Investing.com — Stocks were falling at the start of a holiday-shortened week after housing data stoked worries about interest rates.
U.S. single-family housing starts jumped 21.7% in May from the prior month its highest in more than a year, and permits issued for future construction also climbed, indicating that the housing market may be turning a corner.
At 12:06 ET (16:06 GMT), the Dow Jones Industrial Average was down 306 points or 0.9% while the S&P 500 was down 0.7% and the NASDAQ Composite was down 0.8%.
A recovery in the housing market despite higher mortgage rates than a year ago could mean the economy isn’t cooling as fast as the Federal Reserve would like. The Fed paused on another interest rate increase last week but indicated it could raise rates again this year after raising them 10 times since March 2022 to crush inflation.
Futures traders are expecting another quarter of a percentage point rate increase when the Fed next meets in July. The Fed raised expectations for interest rates for the full year, saying last week that the rate could reach 5.6% by the end of the year, which is higher than the 5.1% it previously forecast.
Markets have been on an upswing on expectations that the Fed could be nearing the end of its tightening phase. Chair Jerome Powell will appear on Capitol Hill this week to give his semi-annual testimony to the House and the Senate, and lawmakers will likely ask him about the decision to pause and the raised outlook on rates.
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Tesla Inc (NASDAQ:TSLA) shares rose 4.8% after Reuters reported that Rivian Automotive Inc (NASDAQ:RIVN) would be the latest automaker to adopt Tesla’s charging technology standard.
PayPal (NASDAQ:PYPL) rose 2.9% after private equity firm KKR & Co (NYSE:KKR) said it would buy up to €40 billion ($43.71 billion) worth of its “buy now, pay later” loans in Europe.
Alibaba Group Holdings Ltd ADR (NYSE:BABA) said Daniel Zhang would step down from his roles as CEO and chairman to focus on the company’s cloud division. Shares fell 4.9%.
Source: MSN
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