Wall Street’s major indexes fell on Tuesday as better-than-expected housing data fueled fears the U.S. Federal Reserve will raise interest rates, while Tesla shares rose after electric car company Rivian agreed to adopt its charging standard.
The rate of construction of single-family homes in the United States rose in May to its highest level in more than a year, and permits for future construction also rose, indicating that the housing market is stabilizing.
Sam Stovall, chief investment strategist at CFA Research, said, “We’ve seen housing and building permits data come in much stronger than expected, and the economy appears to be stronger than expected, despite all the speculation about a possible slowdown.”
Traders now see a 74.4 percent chance in the CME FedWatch index that the central bank will raise interest rates by 25 basis points in July.
Markets await comments from Federal Reserve Vice Chairman Michael Barr and Federal Reserve Chairman Jerome Powell on Wednesday before the US House of Representatives’ Finance Committee, the two-year monetary policy testimony.
US markets edged lower on Friday as comments from Federal Reserve officials dampened confidence that the central bank was nearing the end of aggressive interest rate hikes.
The Dow Jones industrial average was down 312.03 points, or 0.91 percent, at 33,987.09 by 15:25 GMT.
The S&P 500 index fell 35.13 points, or 0.79 percent, to 4,374.71, and the Nasdaq Composite dropped 100.83 points, or 0.73 percent, to 13,589.53.
Tesla shares rose 1.3% after Reuters reported that Rivian Automotive had agreed to certify Tesla’s charging standard, adding momentum to the electric car company’s push to position its own vehicle charging standard as a larger and more desirable industry standard.
Eight of the 11 subsectors in the S&P 500, the energy index declined, and the price-sensitive real estate sector fell 1.4 percent.
PayPal shares rose 2.6 percent after KKR & Co agreed to buy up to 40 billion euros ($43.71 billion) of PayPal’s “buy now, pay later” loans in Europe.
Shares of Nike fell 3 percent after Morgan Stanley pointed to risks to the company’s profit margins from a surge in inventory.
Shares of U.S.-listed Chinese companies, including Alibaba Group, fell 4.77 percent and JD fell 7.4 percent, as China cut lending rates less than expected.
Alibaba Group also said Daniel Zhang will step down as CEO and chairman of the board to focus on the company’s cloud services division.
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