Stock Market Today: Stocks Turn Lower After Disappointing Housing Data
Markets finished lower yet again after data showed a notable decline in homebuilder sentiment.
Stocks hinted at a potential rebound early Monday, but hopes for a bounce from last week's Fed-induced selloff faded as the session wore on. This week will likely see lower trading volume than usual in the lead up to the Christmas holiday.
As for market participants who were around today, they were hit with another sign of a slowing economy courtesy of the latest housing data, which only elevated fears of a potential recession in 2023. The major market indexes reacted by adding to their already steep December losses.
The National Association of Home Builders (NAHB) this morning said its monthly housing market index, which measures homebuilder confidence, fell to 31 in December from November's reading of 33. That marked the 12 straight month the index has declined, and was the lowest reading since 2012, outside of the pandemic.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The U.S. housing market is the most interest-sensitive sector of the economy and is reflecting the strong increase in interest rates engineered by the Federal Reserve," says Raymond James economist Giampiero Fuentes. Today's NAHB data confirms "that the U.S. housing market is already in recession, and the expectation is for it to remain there until interest rates start to decline."
Energy was the lone sector that finished higher, eking out a marginal gain as U.S. crude futures climbed 1.2% to $75.19 per barrel. Meanwhile, rate-sensitive communication services (-2.3%) and information technology (-1.3%) stocks suffered significant losses. As such, the tech-heavy Nasdaq Composite led the path lower for the major indexes, shedding 1.5% to 10,546. The broader S&P 500 Index (-0.9% at 3,817) and the blue-chip Dow Jones Industrial Average (-0.5% at 32,757) also closed in the red.
Looking ahead, there are a few notable names on this week's earnings calendar, with quarterly results from FedEx (FDX) and Nike (NKE) due out tomorrow. Earnings from the logistics giant and the athletic footwear and apparel retailer are often seen as a harbinger of activity in the broader economy.
The Best Energy Stocks for 2023
The market needs to mind the Fed. That's according to former Federal Reserve Vice Chair Bill Dudley. "Try as it might, the Federal Reserve can’t seem to break the market’s relative optimism about the outlook for interest rates," Dudley wrote in a weekend opinion piece for Bloomberg. He says that despite the central bank's best efforts at being as clear as it can in its intentions to bring down inflation no matter the cost, "investors aren't getting the message."
This divergence in outlooks could continue to make markets volatile in the new year as investors keep getting disappointed by a hawkish Fed. As such, Ryan Grabinski, investment strategist at institutional brokerage and advisory firm Strategas, says he's "a bit more cautious" heading into the new year, and favors defensive sectors like consumer staples and healthcare.
Grabinski is also upbeat on energy, given its focus on returning capital to shareholders via dividends and stock buybacks. "And while energy probably would fall in the event of a deep recession, so would most sectors," Grabinski adds. "It's just a matter of picking the ones that sell off the least, and we think there are some structural forces in favor of energy." With that in mind, here are the best energy stocks to buy now. Oil and gas prices are likely to cool in the new year, but analysts are targeting major upside for these eight names.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
Stock Market Today: Nasdaq Soars Ahead of Tesla Earnings
The EV stock rose nearly 2% ahead of its highly anticipated Q1 earnings report, due after tonight's close.
By Karee Venema Published
-
GM Stock Accelerates After Earnings Beat
General Motors beat expectations for the first quarter and raised its outlook for the year. Here's what you need to know.
By Joey Solitro Published
-
Stock Market Today: Nasdaq Soars Ahead of Tesla Earnings
The EV stock rose nearly 2% ahead of its highly anticipated Q1 earnings report, due after tonight's close.
By Karee Venema Published
-
Stock Market Today: Markets Rebound Ahead of Big Week for Earnings
Equities rallied on easing geopolitical tensions, upcoming quarterly results.
By Dan Burrows Published
-
Stock Market Today: Nasdaq Spirals as Netflix Nosedives
A big earnings boom for credit card giant American Express helped the Dow notch another win.
By Karee Venema Published
-
Stock Market Today: S&P 500, Nasdaq Extend Losing Streaks
The two indexes have closed lower for five straight sessions.
By Karee Venema Published
-
Stock Market Today: Dow Slips After Travelers' Earnings Miss
The property and casualty insurer posted a bottom-line miss as catastrophe losses spiked.
By Karee Venema Published
-
Stock Market Today: Stocks Stabilize After Powell's Rate-Cut Warning
The main indexes temporarily tumbled after Fed Chair Powell said interest rates could stay higher for longer.
By Karee Venema Published
-
Stock Market Today: Stocks Reverse Lower as Treasury Yields Spike
A good-news-is-bad-news retail sales report lowered rate-cut expectations and caused government bond yields to surge.
By Karee Venema Last updated
-
Stock Market Today: Nasdaq Leads as Magnificent 7 Stocks Rise
Strength in several mega-cap tech and communication services stocks kept the main indexes higher Thursday.
By Karee Venema Published