Wall Street’s main indexes fell on Tuesday as better-than-expected housing data fueled worries of more interest rate hikes by the U.S. Federal Reserve, while Tesla climbed after Rivian agreed to adopt its charging standard. U.S. single-family home building surged in May to its highest in more than a year and permits issued for future construction also climbed, suggesting the housing market may be turning a corner. The Associated Press has the story:
Wall Street slips, takes a pause after big rally
Newslooks- NEW YORK (AP)
Stocks are slipping Tuesday in Wall Street’s first trading after a five-week rally carried it to its highest level since the spring of last year.
The S&P 500 was 0.3% lower in early trading. The Dow Jones Industrial Average was down 184 points, or 0.5%, at 34,114, as of 9:50 a.m. Eastern time, while the Nasdaq composite was 0.1% higher.
The U.S. stock market is taking a breather after rising on hopes the economy can avoid a recession and inflation is easing enough for the Federal Reserve to stop raising interest rates soon. A frenzy around artificial intelligence has also vaulted a select group of tech stocks to huge gains.
Those hopes are battling against worries that sticky inflation will force the Fed to keep interest rates higher for longer, which could grind down the economy. With some of the easiest improvements in year-over-year inflation soon to be lapped, a tougher road may be ahead.
“Leaning on the lessons of the 1970s, the Fed is right to be cautious, even if that represents an inconvenient truth for stock investors,” said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management.
In China, meanwhile, the world’s second-largest economy is stumbling in its recovery following the relaxation of anti-COVID restrictions.
Stocks in Hong Kong tumbled 1.5% Tuesday after China’s central bank cut interest rates by less than some investors had hoped. Stocks in Shanghai slipped 0.5% amid disappointment Chinese authorities didn’t do more to support one of the world’s main drivers of economic growth.
One of China’s biggest corporations, Alibaba Group, also fell after it shook up its top management and announced a new chief executive officer. Its stock trading in the U.S. dropped 3.8%.
Tuesday marked the first trading for Wall Street following a meeting between Chinese leader Xi Jinping and U.S. Secretary of State Antony Blinken. It yielded no signs of progress from either side on Taiwan, human rights, technology and other issues of contention.
Most stocks were falling on Wall Street, but the movements were generally modest.
Ball Corp., which makes aluminum cans and other products, dropped 4.5% for one of the larger losses in the S&P 500. It said Tuesday that it’s considering options for its aerospace business, but that “there is no certainty that any formal decision will be made.” Its stock had jumped 7.2% Friday following a report that it was looking to sell the unit.
Dice Therapeutics soared 37.8% for a big gain after Eli Lilly said it would buy the biopharmaceutical company for $2.4 billion in cash. Lilly added 1%.
In the bond market, the yield on the 10-year Treasury fell to 3.72% from 3.77% late Friday. It helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for the Fed, slipped to 4.70% from 4.72%.
A report Tuesday morning showed that U.S. homebuilder broke ground on more new homes last month than economists expected. The number of building permits, an indication of future activity, also accelerated faster than expected.
This upcoming week doesn’t have many potentially market-moving events after coming off a Monday closure in observance of the Juneteenth national holiday.
Fed Chair Jerome Powell will testify before Congress on Wednesday and Thursday. Last week, the Federal Reserve held its benchmark lending rate steady, the first time in 10 straight meetings it hasn’t announced an increase. But it also warned it could raise rates as twice more this year.
The Bank of England will meet on interest-rate policy Thursday. Central banks around the world are heading in diverging directions as they battle inflation amid worries about a pressured global economy.
