Tech and health care lead U.S. stocks lower; bond yields rise

Losses in technology and health care companies helped pull U.S. stocks lower Tuesday, snapping an eight-day winning streak by the Dow Jones industrial average.

The broad sell-off followed a slide in bond prices, which sent the 10-year Treasury yield to its highest level in almost seven years. That paves the way for higher borrowing costs on mortgages and other loans.

The prospect of higher mortgage interest rates weighed on homebuilders, while the rise in bond yields sent shares in high-dividend paying stocks lower.

The S&P 500 index fell 18.68 points, or 0.7 percent, to 2,711.45. The Dow lost 193 points, or 0.8 percent, to 24,706.41. The drop pulled the 30-company average to a slight loss for the year.

The Nasdaq composite dropped 59.69 points, or 0.8 percent, to 7,351.63. The Russell 2000 index of smallerstocks finished flat at 1,600.34.

The market slide comes in the midst of a strong May for stocks. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent. The Nasdaq is up 4 percent.

On Tuesday, it was the bond market that appeared to hold investors’ focus.

The yield on the 10-year Treasury rose to 3.07 percent from 3 percent late Monday. That’s the highest level since July 2011 for the yield, which is used to set interest rates on mortgages and other kinds of loans.

The surge came after the Commerce Department said retail sales climbed 0.3 percent in April. The agency also revised March sales higher to 0.8 percent from 0.6 percent. The retail sales data suggest that consumers are spending more after a weak first quarter. Bond yields tend to rise when investors expect faster economic growth and higher inflation.

The Federal Reserve has signaled that it will raise rates twice more this year, after having done so initially in March, and most economists foresee the next increase in June. Some Fed watchers have been cautioning that any lasting uptick in inflation or in economic growth might spur the Fed to pursue an additional rate increase before year’s end.

The rise in bond yields pulled down shares in real estate investment trusts and other high-dividend paying stocks. Essex Property Trust fell 3.4 percent to $233.78.

It also put investors in the mood to sell their shares in homebuilders. Mortgage rates, which have been rising this year, tend to track the movement in the 10-year Treasury yield. Higher mortgage rates can make it harder for would-be buyers to afford to purchase a home. D.R. Horton slid 6.7 percent to $40.58.

Some banks got a boost from the higher rates, which make loans more profitable. Capital One Financial rose 1.6 percent to $94.65.

Technology and health care sector companies took some of the worst losses. Chipmaker Nvidia fell 3.8 percent to $245.56. Drugmaker Celgene slid 3.9 percent to $81.98.

Benchmark U.S. crude oil reversed an early side, rising 35 cents to settle at $71.31 a barrel in New York. Brent crude, used to price international oil, added 20 cents to close at $78.43 a barrel in London.

In other energy futures trading, heating oil was little changed at $2.25 a gallon. Wholesale gasoline added a penny to $2.21 a gallon. Natural gas dipped a penny to $2.84 per 1,000 cubic feet.