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NEW YORK (Reuters) – The S&P 500 and the Dow lost ground on Tuesday and benchmark Treasury yields continued to climb as mixed economic data, weak corporate results and impending debt ceiling negotiations in Washington kept equity buyers on the sidelines.
The tech-heavy Nasdaq was nominally positive, pinned by momentum megacaps including Amazon.com (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT).
President Joe Biden and House of Representatives Speaker Kevin McCarthy were expected to work on details for an agreement to raise the U.S. debt ceiling in the face of a looming deadline to avoid a catastrophic default.
“There is a question whether there’s enough time to get a full deal done rather than a temporary extension, but it doesn’t mean they can’t come to an agreement in a few weeks,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis. “It’s just the timeline is more compressed this time, and these negotiations play out in the public sphere and that leads to increasing volatility until we get to an agreement.”
Disappointing results from Home Depot (NYSE:HD), the largest U.S. home improvement chain, combined with weaker-than-expected retail sales data suggested consumer spending is losing some momentum as restrictive monetary policy dampens demand.
However, a core measure of retail sales suggested the American consumer continues to bolster the economy.
“We have a cautious outlook for the year, but so far we’ve made it through the first quarter with consumer spending fairly robust and corporate profits not as bad as expected,” Hainlin said. “But we’re not out of the woods yet.”
The Dow Jones Industrial Average fell 265.26 points, or 0.8%, to 33,083.34, the S&P 500 lost 17.14 points, or 0.41%, to 4,119.14, and the Nasdaq Composite added 0.94 points, or 0.01%, to 12,366.15.
European shares ended lower as downbeat earnings and the U.S. retail sales data stoked worries about softer consumer spending.
The pan-European STOXX 600 index lost 0.42% and MSCI’s gauge of stocks across the globe shed 0.39%.
Emerging market stocks rose 0.12%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.13% lower, while Japan’s Nikkei rose 0.73%.
U.S. Treasury yields continued to rise on the heels of the retail sales data, suggesting that the Federal Reserve’s efforts to toss cold water on the economy in order to rein in inflation has yet to take full effect.
Benchmark 10-year notes last fell 11/32 in price to yield 3.5471%, from 3.508% late on Monday.
The 30-year bond last fell 17/32 in price to yield 3.8729%, from 3.842% late on Monday.
The greenback inched higher against a basket of world currencies after the retail sales data showed underlying signs of consumer resiliency as focus shifted to the wrangling over the debt ceiling in Washington.
The dollar index rose 0.14%, with the euro down 0.04% to $1.0868.
The Japanese yen weakened 0.14% versus the greenback at 136.31 per dollar, while sterling was last trading at $1.2488, down 0.31%.
Oil prices dipped as weaker-than-expected economic data in both the U.S. and China shot down a higher global demand forecast from the International Energy Agency (IEA).
U.S. crude edged down 0.35% to settle at $70.86 per barrel, and Brent settled at $74.91, down 0.43% on the day.
Gold prices slid in opposition to the rising dollar.
Spot gold dropped 1.5% to $1,990.19 an ounce.
