US Stocks were falling at the start of a holiday-shortened week after housing data stoked worries about interest rates.

In May, there was a significant surge of 21.7% in U.S. single-family housing starts compared to the previous month, marking the highest level observed in over a year. Additionally, permits issued for future construction showed an upward trend, suggesting a potential turning point in the housing market.

At 12:06 ET (16:06 GMT), the Dow Jones Industrial Average dropped by 306 points or 0.9%. Similarly, the S&P 500 experienced a decline of 0.7%, and the NASDAQ Composite was down by 0.8%.

Despite higher mortgage rates than a year ago, the housing market is showing signs of recovery. This suggests that the economy may not be slowing down as quickly as the Federal Reserve would prefer. Last week, the Fed decided to hold off on another interest rate increase. However, they did mention the possibility of raising rates later this year. Before that, they had increased rates 10 times since March 2022 to curb inflation.

Futures traders anticipate a further increase of a quarter of a percentage point in interest rates during the upcoming July meeting of the Federal Reserve. The Fed has revised its projections for interest rates for the entire year, indicating that by the end of the year, the rate could potentially reach 5.6%. This forecast is higher than their previous estimate of 5.1%.

The markets have been increasing because people believe the Federal Reserve might be finishing their plan to raise interest rates. This week, the head of the Federal Reserve, Jerome Powell, will be talking to lawmakers in Congress. They will likely ask him why they decided to stop raising rates for now and why they think rates will go up more in the future.

Shares of Tesla Inc (NASDAQ:TSLA) surged by 4.8% following a Reuters report that Rivian Automotive Inc (NASDAQ:RIVN) plans to adopt Tesla’s charging technology standard.

After private equity firm KKR & Co (NYSE:KKR) announced its intention to purchase up to €40 billion ($43.71 billion) worth of “buy now, pay later” loans in Europe, PayPal (NASDAQ:PYPL) saw a 2.9% increase in its stock price.

Alibaba Group Holdings Ltd ADR (NYSE:BABA) said Daniel Zhang would step down from his roles as CEO and chairman to focus on the company’s cloud division. Shares fell 4.9%.