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Treasury yields surge pushes Wall Street lower
16 May 2018, 10:07 | Hattie Nash
Daily June E-mini Dow Jones Industrial Average
The Dow Jones industrial average fell 193 points to close at 24,706.41, with Home Depot among the biggest contributors of losses.
A surge in USA government bond yields to their highest level in nearly seven 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. That paves the way for higher borrowing costs on mortgages and other loans. Homebuilders fell sharply as a result. Vaneck Vectors Semiconductor's stock rose 1.7% after the news.
Meanwhile, the technology-heavy NASDAQ Composite Index (NYSEARCA:QQQ) fell 0.8% to close at 7,351.63. The Russell 2000 was down only 0.1% thanks mainly to relative strength in small-cap banks. Sectors leading losses for the day included real estate, health care and technology.
Banks bucked the downward trend Tuesday and rose along with bond yields.
In Asia, shares declined on Wednesday in morning session after North Korea pulled out of high-level talks with Seoul and as US Treasury yields rose to the highest level in seven years overnight.
Tuesday ended an eight-day run of consecutive gains for the Dow Jones.
Markets focused early on economic reports with sales at U.S. retailers rising for a second straight month in April. Mortgage rates, which have been rising this year, tend to track the 10-year Treasury yield.
The S&P 500 index fell 18 points, or 0.7 percent, to 2,712.
"Yields on treasuries with shorter maturities are at their highest closing and intraday points in about a decade, continuing the basis point increases that began in September 2017 and have sustained so far this year", Tradeweb noted.