After coming under pressure early in the session, stocks regained some ground over the course of the trading day on Tuesday but still closed mostly lower. The major averages extended the pullback seen late in last Friday’s session.
The major averages all finished the day in negative territory. The Dow slid 245.25 points or 0.7 percent to 34,053.87, the S&P 500 fell 20.88 points or 0.5 percent to 4,388.71 and the Nasdaq dipped 22.28 points or 0.2 percent to 13,667.29.
The early weakness on Wall Street came as traders continued 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.
Selling pressure waned over the course of the session, however, as traders look ahead to 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.
Gold stocks saw substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 4.0 percent to a three-month closing low.
The sell-off by gold stocks came amid a steep drop by the price of the precious metal, with gold for August delivery tumbling $23.50 to $1,947.70 an ounce.
A significant decrease by the price of crude oil is also weighing on energy stocks, as crude for July delivery slumped $1.28 to $70.50 a barrel.
Reflecting the weakness in the energy sector, the NYSE Arca Oil Index slid by 2.2 percent and the
Philadelphia Oil Service Index fell by 1.4 percent.
Computer hardware, networking and telecom stocks also saw notable weakness, while housing stocks bucked the downtrend following the upbeat housing starts data.
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.
Meanwhile, the major European markets all moved lower on the day. While the German DAX Index slid by 0.6 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both fell by 0.3 percent.
In the bond market, treasuries 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, fell by 4.0 basis points to 3.729 percent.
Powell’s congressional testimony is likely to be in the spotlight on Wednesday, while remarks by several other Fed officials may also attract attention.
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