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U.S. stocks are falling after housing data stoked rate fears

Published 06/20/2023, 12:34 PM
© Reuters.
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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%.

Latest comments

Excuse da jour, everyday there's another reason to wreck the market.
These data only proves that economy is strong and we will see strong Q2 results from all companies and the recession is not appearing as foretold….meanwhile shared rise while lots of cash is waiting to get in….
Just not a good time to invest
falling? are we looking at same market? markets don't go down, only way is up!!
If there is fear of rate hikes why are the yields falling. The market is totally rigged by animal spirits, all of this to be blamed on the cheap money that was distributed during covid
its all the negative press.
The question isn't are there fear of rate hikes.   The question is: Is that fear increasing or not?
totally agree, pathetic liquidity, weak fed , protective of speculation. damaged economy
The magic show is back in action, as losses miraculously vanish into thin air.  Remarkable how "rallies" don't suffer an inverse fate.  No, the sellers are nowhere to be found during a flagrant, criminally manufactured "rally."  Manipulated JOKE.
Don't you get tired of whining about the same thing every day? If you're so sure of what's going on in the markets, then use it to make yourself rich.
"losses miraculously vanish into thin air"  --  No, the market has not been in the black any time today.
mitch likes to annoy people he likes the attention and being a constant looser appeals to mitch and his adolescent attitude.....he gets to complain....
House prices will double in the next 5 years. Buy now while you still can
Hope nobody took your advice to buy gold at $2,000 ounce.
No rate increase in July. In September FED will hit the market with +0.25 or even 0.5, since we will have a inflation increase in August and September reports.
  More may depend on what the Kremlin will do.
certainly the weak USD over the past few months will likely end up in higher prices coming through the pipeline - however, with China rapidly moving into recession and Europe already in one, commodities may remain subdued in price - but all the same, a weak USD means more expensive imports and the balance of trade is totally out of balance with very few exports and still loads of imports from China!!!
  Weak US$ due to market anticipation the US is pausing rate hikes earlier than other countries.  The US can pause earlier because the US has a better handle on inflation, which is a good thing.
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