WSJ.com:
U.S. stocks slid Tuesday, retreating from a stretch of records as weaker-than-expected economic data and concerns about the Delta variant of the coronavirus weighed on investor optimism.
All three major U.S. indexes pulled back more than 1% for the first time in nearly a month. The S&P 500 fell 1.2%, while Dow Jones Industrial Average lost tumbled 435 points, or 1.2%.
The Nasdaq Composite, meanwhile, slid 1.4%, putting it on pace for its worst day since May. The Russell 2000 index of small cap-stocks dropped 1.8%.
The pullback marks a sharp turnaround from the recent performance of U.S. stocks, which have largely ground higher throughout August, thanks to strong earnings and thin trading volumes. The S&P 500 and Dow on Monday closed at records as both notched a five-day winning streak—the Dow’s first such run in almost four years.
But on Tuesday, concerns about the spread of the Delta variant of Covid-19 sparked investor worries that it could crimp the economic rebound. Disappointing economic data released Tuesday exacerbated fears.
“The Delta variant has hit the confidence of the average American, so we need to watch that for ripple effects on the economy,” said David Donabedian, chief investment officer at CIBC Private Wealth. “This is going to be a chronic issue causing some volatility in markets.”
Data from the Commerce Department showed Tuesday that spending at U.S. retailers pulled back sharply in July. Retail sales—a measure of purchases at stores, at restaurants and online—fell 1.1% in July from the prior month, the Commerce Department said. Economists surveyed by The Wall Street Journal had expected a 0.3% decline.
As a result, shares of retailers and other cyclical companies tumbled. Retailer Home Depot tumbled 4.5%, on pace for its biggest percentage decline since November, after the company reported that the number of customer transactions fell in the latest quarter. Lowe’s fell 5.2% ahead of the company’s earnings report Wednesday.
Retailers Gap, Hanesbrands and Bed Bath & Beyond each fell nearly 4% or more.
Meanwhile, shares of home builders also pulled back after new data showed that home-builder confidence in the U.S. declined in August, falling to its lowest level since July of last year. Higher construction costs and supply shortages contributed to the fall. D.R. Horton, Toll Brothers and PulteGroup each fell more than 4%.
Beyond Tuesday’s data figures, expectations that the Federal Reserve will soon move to ease its stimulus measures are also hanging over investors.
Fed policy makers are moving toward an agreement to start scaling back their easy-money policies in about three months if the economic recovery continues, the Journal reported Monday. Boston Fed President Eric Rosengren said in an interview he expects to see enough job growth by the September meeting to meet the criteria for reducing bond purchases.
In the bond market, the yield on the benchmark 10-Year U.S. Treasury note ticked down to 1.249% from 1.255% on Monday. Bond yields and prices move in opposite directions.
Meanwhile, oil prices continued to slide for another consecutive session. Brent crude, the international oil benchmark, fell 0.9% to $68.92 a barrel.
Among individual stocks, Tesla fell 4.6%, adding to a loss of more than 4% Monday, driven by a probe into its autopilot system. Videogame company Roblox declined 1.2% after reporting earnings late Monday that missed Wall Street forecasts.
Healthcare stocks, in contrast, were a bright spot. Moderna climbed 5.2%, while Pfizer added 1.4%. The Biden administration is expected to announce that Americans who have been fully vaccinated against Covid-19 should receive a booster shot for continued protection, according to people familiar with the matter.
Industrial stocks largely traded lower, despite data showing Tuesday that industrial production—which includes factory, mining and utility output—increased at a seasonally adjusted 0.9% in July compared with June, beating expectations from economists.
Overseas, the Stoxx Europe 600 ticked up 0.1%.
Chinese technology stocks came under pressure again after China took aim at business practices that could harm consumers and limit market competition. Draft guidelines released by China’s top market regulator Tuesday attempt to prevent internet companies from adopting forced exclusivity and blocking competitors’ links and apps. Alibaba’s U.S.-traded American depositary receipts fell 4.7%.
Hong Kong’s Hang Seng Index shed 1.7%, while in mainland China, the Shanghai Composite Index slipped 2%. Among individual tech stocks during the session in Asia, Tencent Holdings Ltd. retreated more than 4% while Tencent-backed China Literature fell more than 10%.
Elsewhere, Japan’s Nikkei 225 edged down 0.4%.
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