Wall Street slides on inflation fears, trade jitters
New York: A surge in U.S. government bond yields to their highest level in almost 7 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 U.S. stock indexes were down nearly 1percent, on track to post their worst daily declines in three weeks.
Investors remain preoccupied by the run-up to high-level talks between China and the United States set to commence this week in Washington. U.S. 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.
But core retail sales - which exclude gasoline, automobiles, building materials and food services - rose at a brisker 0.4 monthly pace over March, suggesting consumer spending is accelerating after its first quarter slowdown.
The yield on 10-year U.S. Treasury notes rose to its highest level since July 2011 on the news, raising expectations for further rate hikes from the Federal Reserve.
“It really tells you that there’s no justification at all for the Federal Reserve to slow down the growth pace, which tells you that maybe this hiking thing and long term yields is real,” Chan said.
At 2:28 p.m. ET, the Dow Jones Industrial Average .DJI fell 215.3 points, or 0.86 percent, to 24,684.11, the S&P 500 .SPXlost 22.13 points, or 0.81 percent, to 2,708 and the Nasdaq Composite .IXIC dropped 73.69 points, or 0.99 percent, to 7,337.62.
The losses were broad based, with all 11 major S&P sectors in negative territory.
Smaller rival Lowe’s (LOW.N) was down 0.9 percent.
Declining issues outnumbered advancing ones on the NYSE by a 2.28-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored decliners.