By Geoffrey Smith
Investing.com -- U.S. stock markets opened a tad higher on Tuesday but stronger-than-expected housing market data struggled to inject any real momentum, against a background of ongoing political uncertainty.
By 10:48 AM ET (1448 GMT), the Dow Jones Industrial Average was down 111 points, or 0.4%, at 27,733 . The S&P 500, which failed in an attempt to post a new record high on Monday, hit an intraday record on Tuesday and then turned negative, falling 0.1%, while the Nasdaq Composite was up 0.26%.
Earlier, the Census Bureau reported that U.S. housing starts had risen by 22% last month, their biggest monthly rise since 2016, to 1.496 million. That was well above analysts' forecasts for an increase to 1.24 million, as was a similar increase in building permits to 1.495 million.
Market participants took the numbers with a grain of salt, as analysts said they spoke to a surge in interest for single-family houses outside of major cities. As a result, city real estate prices may come under pressure, with attendant negative wealth effects on city home owners.
By the same token, the market also quickly shed its initial enthusiasm for Walmart (NYSE:WMT)'s quarterly earnings. seeing them as less an illustration of consumer strength, than as a result of consumers concentrating their spending in the few outlets that were allowed to remain open during lockdown. Walmart stock still rose 0.6%.
Home Depot (NYSE:HD) stock also reversed after trading higher in premarket on the back of results which beat expectations for both revenue and profit by over 20%.
The bifurcation of the retail sector was again in evidence, though, as department store group Kohls reported a drop of nearly 25% in sales in the second quarter. While that was still above expectations and its net loss was also less than feared, Kohls stock still fell 14%, dragging down Macy’s (NYSE:M)stock and Nordstrom (NYSE:JWN) stock with it.
There are still big question marks over the strength of U.S. consumer spending, given that some 30 million Americans are out of work and there is still no agreement in Washington, D.C., over how to go forward with enhanced unemployment assistance. On the plus side, the drop in new infections of Covid-19 across the U.S. in recent weeks is making it less and less likely that states will need to reintroduce economically damanging lockdown measures. The 35,000 new cases reported on Monday was the lowest such number since late June.
In other markets, gold returned above $2,000 as the dollar weakened to its lowest in 28 months against a basket of other major world currencies. The dollar also hit its lowest against the yuan since January, when the Chinese economy was the only wrestling with Covid-19.
Crude oil futures fell 1.0% to $42.45 ahead of the release at 4:30 PM of the American Petroleum Institute's weekly report on crude oil stocks.