Wall Street drops as Treasury yields spike to 7-year high

Wall Street drops as Treasury yields spike to 7-year high

The broad sell-off followed a slide in bond prices, which sent the 10-year Treasury yield to its highest level in nearly seven years.

Higher borrowing costs sent stocks sharply lower.

Home Depot Inc (HD.N) shares slipped 1.6 percent after the home improvement retailer missed sales forecasts as the long winter put a damper on demand for spring products.

The S&P 500 is down 16.27 points, or 0.6 percent. The Commerce Department said retail sales rose 0.30% in April, in-line with economist expectations, and revised March growth to 0.8% from 0.6%. The Nasdaq composite climbed 32 points, or 0.4 percent, to 7,435. Smaller rival Lowe's Companies Inc (LOW.N) was down 1.0 percent.

Banks bucked the downward trend Tuesday and rose along with bond yields.

The Dow's eight-session winning streak came to an abrupt end as Treasury yields spiked, returning to multi-year highs.

The proximate trigger for the rise in yields was the release of U.S. retail sales data, which contained some upward revisions to prior months, and an Empire manufacturing survey that showed the highest prices paid component since 2011. The 10-year rose above 3.08% on the back of strong economic data. The Nasdaq composite tumbled 1% and the S&P 500 0.8%.


JAPAN ECONOMY: Japan's economy contracted at an annualized rate of 0.6 percent in the January-March quarter, as private investment and public spending declined, according to Cabinet Office data released Wednesday.

The Nasdaq is down 51.26 points, or 0.7 percent.

Stocks struggled to a mixed finish on Wall Street as weakness in smaller-company stocks offset gains in large companies.

USA stocks dropped sharply on Tuesday after Home Depot reported quarterly sales that fell short of Wall Street's expectations and interest rates breached new highs.

The yield curve steepened from near its flattest levels since 2007, with the spread between the 2 year and 10 year bond yields widening 5bps to 50bps. That yield is used to set interest rates on mortgages and other kinds of loans.

The S&P 500 rose 9 points, or 0.3 percent, to 2,736. The blue-chip Dow Jones grew by 68.24 points, with UnitedHealth and Walmart being the best-performing stocks in the index.

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