U.S. stocks traded lower Tuesday as investors weighed weaker-than-expected housing data ahead of the Federal Reserve’s highly anticipated two-day policy meeting that kicks off later in the day. The financial markets have been volatile over the last week in anticipation of the meeting, driven by speculation that the Fed could raise interest rates in late spring.
In morning trading Tuesday, the Dow (INDEXDJX:.DJI), which measures the share prices of 30 large industrial companies, dropped 154.77 points, or 0.86 percent, to 17,822.65. The Standard & Poor's 500 stock index (INDEXNASDAQ:.IXIC) lost 10.76 points, or 0.52 percent, to 2,070.45. The Nasdaq composite (INDEXSP:.INX) fell 11.42 points, or 0.25 percent, to 4,917.34.
Following the Federal Open Market Committee’s meeting, market professionals will be anxiously awaiting a statement from Fed Chairwoman Janet Yellen on Wednesday at 2:30 p.m. EDT. Economists will be watching to see whether the Fed will drop the word "patient" from its monetary policy statement when describing its timetable for raising current rates from historic lows.
Data on Tuesday showed U.S. housing starts tumbled last month to their lowest level in a year, driven by harsh winter weather. Groundbreaking on new homes dropped 17 percent in February to a seasonally adjusted annual pace of 897,000 units, the lowest level since January 2014, the Commerce Department said Tuesday. Meanwhile, building permits, a bellwether for construction activity in the coming months, rose 3 percent in February to a seasonally adjusted annual rate of 1.09 million units.
While poor weather is partially to blame, there were signs that the housing sector will remain slow to recover. "All regions of the U.S. saw a decline in starts, suggesting that the weakness in February was not solely due to bitter temperatures and snowstorms," Gregory Daco, head of U.S. macroeconomics at Oxford Economics, said in a research note Tuesday."This latest batch of housing data, however, reiterates -- as we've highlighted in the past -- that the rebound will be sluggish."
Separately, oil prices continued to trend lower Tuesday after dropping to six-year lows a day earlier. West Texas Intermediate crude, the benchmark for U.S. oil prices, fell 1.23 percent to $43.34 a barrel, for April 15 delivery on the New York Mercantile Exchange. Brent crude, the benchmark for global oil prices dropped more than 2 percent, to $53.44 a barrel, for May 15 delivery on the London ICE Futures Exchange.