Stocks closed lower to start the holiday-shortened week as investors took some profits off the table following lengthy weekly win streaks for all three benchmarks. Anticipation surrounding this week's congressional testimony from Federal Reserve Chair Jerome Powell also pressured the broader market.
"Fed Chairman Powell testifies before Congress on Tuesday and Wednesday," writes Argus Research in a note to clients. "He will be detailing the Fed’s aggressive monetary policy and its attempt to control inflation."
Ahead of this highly anticipated event, today's housing data underscored a resilient U.S. economy. Specifically, housing starts surged 21.7% month-over month in May, handily beating economists' expectations for a slight decline. Building permits, which are an indicator for future construction, were up 5.2%.
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 strong recovery in both permits as well as starts is further confirmation that the housing market has continued to improve," says Eugenio Alemán, chief economist at Raymond James. "The question is whether this strength can be sustained with higher mortgage interest rates as the Federal Reserve is expected to increase rates at least one more time this year."
Alibaba stock sinks on CEO news
In single-stock news, Alibaba Holdings (BABA) plunged 4.5% after Daniel Zhang said he will step down as both chairman and CEO of the Chinese e-commerce company. Zhang will transition into the chairman and CEO roles at Alibaba Cloud Intelligence Group, the first of BABA's five business segments slated to go public following the company's major restructuring announced earlier this year. Several other Chinese stocks closed lower today, too, including JD.com (JD, -6.7%) and NetEase (NTES, -3.3%).
Energy stocks were another area of weakness Tuesday, with APA (APA, -2.6%) and Devon Energy (DVN, -3.1%) among the day's biggest decliners. The selloff occurred as U.S. crude futures plunged 1.8% to $70.50 per barrel after China cut its key lending rates, sparking concern over slowing growth in the world's second-largest economy.
As for the major indexes, the Dow Jones Industrial Average slipped 0.7% to 34,053, the S&P 500 shed 0.5% to 4,388, and the Nasdaq Composite gave back 0.2% to 13,667.
Where to invest right now
Today's modest pullback could be considered "healthy" for a market whose recent run higher put it in overbought territory for the first time since August 2022, says Jay Woods, chief global strategist at Freedom Capital Markets.
Looking out to the rest of the year, market participants should brace for more "price choppiness and elevated volatility" as uncertainties surrounding "inflation, the Federal Reserve and interest rates, earnings and economic growth" continue to swirl, says Brian Belski, chief investment strategist at BMO Capital Markets.
Tactical investors trying to figure out how to survive the stock market amid this laundry list of concerns will want to check out Kiplinger's roadmap for where to invest in the second half of 2023. Whether it be sturdy blue chip stocks or the best dividend stocks, many of the experts we talked to believe investors have plenty of opportunities for decent returns going forward.
Related Content
-
Stock Market Today: Trump Retreats, Markets RejoiceStocks rally, yields soften, the dollar rises, and even beaten-down names enjoy the wages of potential trade peace.
-
In Trump’s Economy Should 401(k) Savers 'Set It and Forget It?'It’s hard to bury your head in the sand when the markets are volatile. Here’s when it makes sense and when it doesn’t.
-
Stock Market Today: Dow Dives 748 Points as UnitedHealth Sells OffA services-sector contraction and a worse-than-anticipated consumer sentiment reading sent bulls scrambling Friday.
-
Stock Market Today: Growth Concerns Drag on StocksForward-looking commentary from a major retailer outweighed its backward-looking results as all three major equity indexes retreated on Thursday.
-
Why Alibaba Stock Is Soaring After EarningsAlibaba stock is higher Thursday after the China-based e-commerce platform beat expectations for its fourth quarter. Here's what you need to know.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Fed Cuts Rates Again: What the Experts Are Saying
Federal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
