The stock market fell amid weak housing construction data.
The volume of new home construction in the US shows the situation in the housing market, which helps the analysis of the economy. If the indicators exceed the forecasted level, this is considered a positive factor for the market; if more minor, then harmful.
The S&P 500 broad market index lost 0.85% and closed at 4,127.83 points. According to the WSJ, banks, industrial, energy, and commodity stocks were among the worst in S&P 500. All four sectors were falling more than 1% in a wave of selling that accelerated towards the close. The NASDAQ tech index fell 0.56% to 13,303.64 points.
According to a Bank of America survey, 69% of investors expect inflation to rise above the trend, a record high. According to the bank, the risk is inflation. Only 9% of those surveyed consider COVID-19 to be the most significant risk.
Investment strategist Edward Jones Craig Fehr says the high earnings of retailers have reminded investors that the consumer is “coming back” as pandemic fears recede. Housing data show that rising prices for building materials are hindering the industry. Inflation continues to be the main risk to the economy.
These factors influence investor sentiment as they grapple with many unknowns.
For example, will the price increase be temporary or sustainable? Will the Federal Reserve raise interest rates earlier than planned?
Brian O’Reilly, head of the market strategy at Mediolanum International Funds, noted that inflation in the 2-4% range would benefit equities. The economic recovery will continue to help the shares of banks and travel companies. Pharmaceutical companies and home improvement companies must do well as well.
The 10-year Treasury yield rose to 1.641% from 1.639% on Monday. Bond yields rise as stock prices fall.
The Stoxx Europe 600 Index added 0.2%. Britain’s FTSE 100 gained less than 0.1% after data showed that the UK unemployment rate fell in April. Most of the major Asian indices closed higher. Japan’s Nikkei 225 gained 2.1%, while the Hong Kong Hang Seng Index rose 1.4%. Taiwanese Taiex jumped 5.2%. In mainland China, the Shanghai Composite rose 0.3%.
