After coming under pressure late in last Friday’s session, stocks are seeing further downside in morning trading on Tuesday. The major averages are all moving to the downside, pulling back further off their recent highs.
In recent trading, the major averages have fallen to new lows for the session. The Dow is down 342.55 points or 1.0 percent at 33,956.57, the Nasdaq is down 97.63 points or 0.7 percent at 13,591.94 and the S&P 500 is down 37.95 points or 0.9 percent at 4,371.64.
The weakness on Wall Street comes as traders continue to cash in on recent strength in the markets, which lifted the Nasdaq and the S&P 500 to their best levels in over a year last week.
Concerns about the outlook for interest rates may also be weighing on the markets ahead of congressional testimony by Federal Reserve Chair Jerome Powell.
Powell is due to testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.
Traders are likely to pay close attention to Powell’s remarks, looking for additional clues about the outlook for rates after the Fed signaled further rate hikes last week.
Comments by a number of other Fed officials are also likely to attract attention in the coming days along with reports on weekly jobless claims and existing home sales.
On the U.S. economic front, a report released by the Commerce Department showed new residential construction in the U.S. unexpectedly skyrocketed in the month of May.
The Commerce Department said housing starts soared by 21.7 percent to an annual rate of 1.631 million in May after tumbling by 2.9 percent to a revised rate of 1.340 million in April.
Economists had expected housing starts to edge down to a rate of 1.400 million from the 1.401 million originally reported for the previous month.
The report said building permits also surged by 5.2 percent to an annual rate of 1.491 million in May after slumping by 1.4 percent to a revised rate of 1.417 million in April.
Building permits, an indicator of future housing demand, were expected to rise to a rate of 1.423 million from the 1.416 million originally reported for the previous month.
Sector News
Gold stocks have moved sharply lower in morning trading, dragging the NYSE Arca Gold Bugs Index down by 3.3 percent to a three-month intraday low.
The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for August delivery plunging $29.30 to $1,941.90 an ounce.
A significant decrease by the price of crude oil is also weighing on energy stocks, as crude for July delivery is tumbling $1.70 to $70.08 a barrel.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 2.3 percent and the NYSE Arca Oil Index is down by 2.2 percent.
Banking, computer hardware and chemical stocks are also seeing notable weakness, while housing stocks are bucking the downtrend following the upbeat housing starts data.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index inched up by 0.1 percent and Australia’s S&P/ASX 200 Index advanced by 0.9 percent, while China’s Shanghai Composite Index fell by 0.5 percent.
The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is down by 0.1 percent and the German DAX Index is down by 0.2 percent.
In the bond market, treasuries have moved to the upside after initially showing a lack of direction. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5/4 basis points at 3.715 percent.
U.S. Stocks Pulling Back Further Off Recent Highs
2023-06-20 14:26:54
