Wall Street Today | US Housing Starts Drop to Lowest Since 2020 While Permits Rise

New US home construction dropped in August to the lowest level since June 2020, highlighting the toll of declining housing affordability.

According to government data released Tuesday, residential starts decreased 11.3% to a 1.28 million annualized rate last month. A sharp decline in multifamily construction largely drove the drop, while applications to build future construction picked up to 1.54 million.

Treasury yields rose on the eve of the Federal Reserve decision, with traders betting interest rates will be higher for longer to prevent an inflation flare-up. Oil wavered after Brent briefly topped $95 a barrel.

Ten-year US yields hovered near the highest since 2007 amid speculation Fed Chair Jerome Powell and his colleagues are widely expected to hold rates steady Wednesday. Still, supply shocks such as climbing oil prices give the central bank a quandary as they simultaneously boost inflation and curb economic growth. Surging energy costs played a role in tipping the US into recession in the mid-1970s and the early 1980s and 1990s.

According to Pimco's Erin Browne, skyrocketing fuel costs are one of the forces threatening to upend the stock market as policymakers try to navigate the US economy to a soft landing.

Equity investors are failing to factor in the chances of a recession while hazards, such as higher oil prices, could drive the S&P 500 Index down roughly 15%, the portfolio manager for multi-asset strategies at Pacific Investment Management Co. said in an interview.

The non-stop rally in oil is forcing investors to rethink their bets across global markets.

Airline stocks, currencies of oil-importer nations, and bond yields are just a handful of the asset classes already starting to reflect the reality of Brent at $95 a barrel. Meanwhile, Goldman Sachs Group Inc. and Barclays Plc strategists have rolled out macro reports telling clients how to trade the energy price shock.

CVC Capital Partners is gearing up for a potential listing as soon as November amid improved investor sentiment for new stock offerings, people with knowledge of the matter said.