U.S. stock indexes veered lower in afternoon trading Tuesday as investors weighed conflicting reports on how the U.S. economy is doing and remarks by the head of the Federal Reserve.
Health care companies and banks took some of the heaviest losses, outweighing gains in technology stocks.
The indexes slipped shortly following the opening bell after the government reported that the number of homes being built last month plunged to the lowest level in more than two years, the latest sign that the housing market is cooling. Homebuilders were trading broadly lower following the report.
That downbeat housing report was countered by a subsequent survey from The Conference Board that shows consumers were far more confident last month than economists had expected, reversing three months of declines.
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.
KEEPING SCORE: The Dow Jones Industrial Average fell 12 points, or 0.1 percent, to 26,079 as of 1:54 p.m. ET. The benchmark S&P 500, which has finished higher the past four weeks in a row, dropped 1 point, while the Nasdaq slid 8 points. The Russell 2000 index of smaller companies gave up 9 points.
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 fell 2.1 percent after a key sales measure fell short of Wall Street's forecasts. The company also expects weak sales this year.
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 3.7 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 1.3 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 4.7 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 5.5 percent after the auto parts retailer's sales and profit rose in its most recent quarter, surpassing Wall Street forecasts.