• Housing starts in May gained by 4.3% month-over-month to 974,000
  • Applications to buy a home rose by 4% last week from the prior week
  • China, Brazil and Iran reported a spike in covid-19 infections

U.S. stocks closed a volatile trading session mixed on Wednesday as lingering fears of the coronavirus pandemic offset some strong data on housing.

The Dow Jones Industrial Average dropped 170.37 points to 26,119.61, while the S&P 500 slipped 11.25 points to 3,113.49 and the Nasdaq Composite Index rose 14.66 points to 9,910.53.

Wednesday’s volume on the New York Stock Exchange totaled 3.97 billion shares with 988 issues advancing, 56 setting new highs, and 1,989 declining, with no stocks setting a new low .

Active movers were led by Urban One Inc. (UONEK), American Airlines Group Inc. (AAL) and Genius Brands International Inc. (GNUS).

Federal Reserve Chairman Jerome Powell said the central bank’s purchases of corporate bonds will eventually shift away from exchange-traded funds and into individual bond issues.

“Over time we’ll gradually move away from ETFs and move to buying bonds,” Powell said. “It’s a better tool for supporting liquidity and market functioning.”

Housing starts in May gained by 4.3% month-over-month to 974,000, somewhat below expectations of 1.1 million. Builder permits jumped by 14.4% to a 1.22 million rate.

The Mortgage Bankers Association said applications to buy a home rose by 4% last week from the prior week and were 21% higher than one year ago. That marked the ninth straight week of gains.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said MBA economist Joel Kan.

“The market sure seems to be favoring the good news over bad these days, and supportive measures like [Federal Reserve] bond buying, [covid-19] vaccine hopes and optimism on a V-shaped economic rebound seem to be getting a lot more traction than rising COVID rates in [the South and West],” said Mark Newton, managing member at Newton Advisors.

However, worries about the coronavirus persist, as China, Brazil and Iran reported a spike in infections. Beijing will reportedly close all schools due to a resurgence in coronavirus cases. More than 2.1 million cases have been confirmed in the U.S.

“The attitude of many Americans seems to be that they are done with the coronavirus, but the coronavirus is not done with us,” said Marc Odo, portfolio manager at Swan Global Investments. “The large run-up in the market was predicated upon everything going right and a return to normal in short order. However, the regional spikes in infections is challenging that optimism.”

Some analysts worry the stock market has ramped up too high.

“We’re likely due for a period of consolidation as we work off technically overbought conditions,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “As we move forward over the next couple of weeks, we’ll be in kind of a doughnut hole between corporate earnings and following the Fed’s meeting last week, so there’s not too much new data.”

Border skirmishes between India and China in the Himalayas intensified.

Overnight in Asia, markets finished mixed. The Shanghai Composite edged up 0.14%; Hong Kong’s Hang Seng gained 0.56%; while Japan’s Nikkei-225 slipped 0.56%.

In Europe markets finished higher, as Britain’s FTSE-100 edged up 0.17%, while France’s CAC-40 rose 0.88% and Germany’s DAX gained 0.54%.

Crude oil futures fell 1.88% at $37.66 per barrel, Brent crude slipped 0.49% at $40.51. Gold futures edged down 0.02%.

The euro slipped 0.22% at $1.124 while the pound sterling fell 0.17% at $1.2552.

The yield on the 10-year Treasury fell 2.38% to 0.738% while yield on the 30-year Treasury slipped 0.32% to 1.534%.