Wall Street drops as Treasury yields surge

A SURGE in US government bond yields to their highest level in almost seven years sent Wall Street shares sliding on Tuesday after strong retail sales data stoked inflation concerns and investors fretted about looming trade talks between the United States and China.

All three major US stock indexes closed down, with the S&P 500 ending a four-day winning streak and the Dow Jones Industrial Average posting its first loss in eight sessions.

The yield on 10-year US Treasury notes jumped to its highest level since July 2011, suggesting an uptick in inflation and sending the dollar index to its highest close in 2018, raising expectations for further interest rate hikes from the Federal Reserve.

Core April retail sales — which excludes gasoline, automobiles, building materials and food services — rose at a brisker 0.40% monthly pace over March, as consumer spending is quickening its pace after a first-quarter slowdown.

Investors also remain preoccupied by the run-up to high-level talks between China and the US set to commence this week in Washington. US ambassador to China Terry Branstad said the two countries remain “very far apart” regarding a tariff resolution, after which White House economic adviser Larry Kudlow told Politico he supports efforts to reach an agreement.

The Dow Jones Industrial Average fell 193 points or 0.78% to 24,706.41; the S&P 500 lost 18.68 points or 0.68% to 2,711.45; and the Nasdaq Composite dropped 59.69 points or 0.81% to 7,351.63.

The losses were broad-based, with all 11 major S&P sectors except energy closing down. Real estate, health care and technology stocks posted the biggest percentage losses.

Home Depot, Inc. shares slipped 1.6% after the home improvement retailer missed sales forecasts as the long winter put a damper on demand for spring products. Smaller rival Lowe’s Companies, Inc. was down 1%.

Declining issues outnumbered advancing ones on the NYSE by a 1.87to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favored decliners.

The S&P 500 posted 10 new 52week highs and seven new lows; the Nasdaq Composite recorded 82 new highs and 51 new lows. —