Wall Street indexes fell on Tuesday as investors worried about a lack of progress in US-China trade talks and Treasury yields rose after US retail sales data indicated rising inflation.
The United States and China are still “very far apart” on resolving trade frictions, US Ambassador to China Terry Branstad said, as a second round of high-level talks were set to begin in Washington.
Adding to the trade woes, Mexico’s economy minister Ildefonso Guajardo said he does not expect to meet a deadline this Thursday to reach a new North American Free Trade Agreement that could be presented to the US Congress.
US retail sales increased a moderate 0.3 per cent in April, compared with an upwardly revised 0.8 per cent surge in March, as rising gasoline prices weighed on discretionary spending, the Commerce Department said.
However, the rise in core retail sales, which excluded automobiles, gasoline, building materials and food services, showed consumer spending appeared on track to accelerate after slowing sharply in the first quarter.
Following the data, benchmark US Treasury yield hit 3.037 per cent, a key breakout level, before gaining further to 3.058 per cent, their highest since July 2011.
“It’s a combination of less good news from China trade situation, a bit of a seasonal miss on Home Depot and tick up in the yield on 10-year that conspires to be the story ... and unravelled some of that positive feeling we had yesterday,” said Art Hogan, chief market strategist at B. Riley FBR in Boston.
“The (retail sales) data is impressive, the yield on the 10-year is reflective of that, and that we get further noise on 3 per cent and that becomes an issue.” The losses were broad based with all the 11 major S&P sectors and all the 30 Dow components in the red.
Home Depot Inc slipped 1.7 per cent in premarket trading after the No. 1 US home improvement chain missed Wall Street forecasts for sales at established stores as an unusually long winter hit demand for typical spring products.
Smaller rival Lowe’s was down 0.8 per cent.
At 9:46am. EDT the Dow Jones Industrial Average was down 175.28 points, or 0.70 per cent, at 24,724.13, the S&P 500 was down 20.54 points, or 0.75 per cent, at 2,709.59 and the Nasdaq Composite was down 72.66 points, or 0.98 per cent, at 7,338.66.
Agilent Technologies dropped 9.1 per cent after posting a disappointing quarterly forecast late on Monday.
Ford dipped 0.8 per cent after Piper Jaffray cut its rating to “neutral” on the automaker’s shares.
Declining issues outnumbered advancers for a 3.96-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.98-to-1 ratio on the Nasdaq.
The S&P index recorded 1 new 52-week highs and 5 new lows, while the Nasdaq recorded 21 new highs and 20 new lows.