Stocks closed lower after a day of meandering as investors parsed conflicting signals on the economy and testimony from Federal Reserve Chairman Jerome Powell and more in Tuesday’s Stock Market Update.
The market changed course several times Tuesday, then fell steadily in the last half-hour of trading.
Health care companies and banks did the most to pull stocks lower.
Traders also had their eye on Fed Chairman Jerome Powell, who told the Senate Banking Committee that the central bank is taking its time to decide when to change interest rates this year.
“When I say that we are going to be patient what that really means is that we are in no rush to make a judgment about changes in policy,” Powell told the panel. “We are going to be patient. We are going to allow the situation to evolve … and allow the data to come in. And I think we are in a very good place to do that.”
It was Powell’s first appearance before Congress since the Fed signaled in December that it would hold off on raising interest rates. Powell said he expects solid, but slower growth in 2019 and warned of growing risks, including a global slowdown, volatile financial markets and uncertainty about U.S. trade policy.
Corporate earnings continued rolling out. Home improvement retailer Home Depot felt the brunt of a weakening housing market and fell after weak results in the fourth quarter. Auto parts retailer Autozone rose after reporting earnings that beat analysts’ forecasts.
Lawmakers are scrutinizing drugmakers over high prescription drug prices, in a sign that Congress and the White House could move to curb costs. CEOs for AstraZeneca, AbbVie, Bristol-Myers Squibb, and Johnson & Johnson are scheduled to testify, among others.
Stock Market Update
THE QUOTE: “Powell was the big news today,” said Karyn Cavanaugh, senior markets strategist at Voya Investment Management. “He solidified that’s he’s going to remain wait-and-see, patient, somewhat dovish (on rate hikes). And the market likes a Fed that’s not going to be at cross purposes with the market.”
KEEPING SCORE: The S&P 500 slipped 2 points, or 0.1 percent, to 2,793. The Dow Jones Industrial Average fell 33 points, or 0.1 percent, to 26,057. The Nasdaq edged down 5 points, or 0.1 percent, to 7,549.
Bond prices rose. The yield on the 10-year Treasury fell to 2.64 percent.
THE FED SPEAKS: In delivering the Fed’s semiannual monetary policy report to Congress, Powell says the Fed will be “patient” in determining when to boost its benchmark policy rate in light of the various “crosscurrents and conflicting signals.” He says the Fed’s rate decisions will be “data dependent” as the economic outlook evolves.
The Fed in December indicated it could raise rates two times this year, after four increases in 2018. Many private economists believe the Fed will keep rates unchanged until late this year and may not raise them at all.
Powell is due to testify before the House Financial Services Committee on Wednesday.
HOME IMPROVEMENT RUT: A weak housing market helped slam the brakes on growth for home improvement retailer Home Depot. The stock slid 1 percent after a key sales measure fell short of Wall Street’s forecasts. The company also expects weak sales this year. Rival Lowe’s Cos. is due to report quarterly results Wednesday.
The housing market initially cooled last year as average 30-year mortgage rates climbed to nearly 5 percent. Home prices have consistently risen faster than wages and the inventory of homes listed for $250,000 or less is tight, suggesting a sluggish market going forward.
Homebuilders also traded lower Tuesday, with LGI Homes dropping 4.1 percent, one of the biggest decliners.
MANAGEMENT MAKEOVER: Macy’s will trim its management structure in a move that could save it $100 million as it gears up for fiercer competition in the retail sector. The company also surged past Wall Street’s profit forecast for the quarter. The stock rose 1.9 percent.
The department store operator warned investors about a weak fourth quarter earlier this year because of soft holiday sales. Its competitors also faced a tough holiday sales season. The Commerce Department reported overall retail sales in December marked the biggest drop since September 2009.
PRICEY EATS: J.M. Smucker gained 5.1 percent after the food maker reported higher demand for premium products during its most recent quarter. Its results beat Wall Street’s forecasts.
IN GEAR: AutoZone climbed 5.1 percent after the auto parts retailer’s sales and profit rose in its most recent quarter, surpassing Wall Street forecasts.
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