NEW YORK (`) – Stocks on Wall Street fell on Tuesday after Home Depot warned of falling sales, the latest disheartening signal for a troubled economy.
The S&P 500 fell 26.38 points, or 0.6%, to 4,109.90. The Dow Jones Industrial Average fell 336.46, or 1%, to 33,012.14 and the Nasdaq Composite slipped 22.16, or 0.2%, to 12,343.05.
Energy producers were among the heaviest weights on the market as Exxon Mobil fell 2.4% and Chevron fell 2.3%.
Home Depot also slipped 2.2% after announcing that sales in the most recent quarter fell more than expected. The company described broad pressure across its business after years of strong growth and lowered its revenue guidance for this fiscal year amid uncertainty ahead.
Other major retailers, including Target and Walmart, are expected to report results later this week.
They’re under scrutiny because robust US household spending was one of the biggest positives that kept the economy from sliding into recession. If it bounces, a recession may be certain and the pressure is on because buyer confidence has plummeted.
Manufacturing and other sectors of the economy have already collapsed under the weight of much higher interest rates designed to lower inflation.
A separate report on Tuesday said spending at US retailers across the country rose across the board last month, but not by as much as economists had expected.
“There’s often a gap between what people are saying and how they are spending their money, but the retail sales report shows that people are starting to cut back on large items and discrete categories like sporting goods,” said Brian Jacobsen, chief economist at Annex wealth management.
Economists pointed to some bright spots beneath the surface of the retail sales report, including stronger-than-expected gains after ignoring fuel costs for cars. A separate report released later in the morning also provided some encouraging data: The country’s industrial production grew unexpectedly in April.
Government bond yields in the bond market rose after the reports. The yield on the 10-year Treasury bond rose to 3.54% from 3.51% late Monday. It helps set interest rates on mortgages and other major loans.
The two-year Treasury yield, which is more in line with expectations of Federal Reserve action, rose to 4.07% from 4.01%.
The general expectation on Wall Street is that the Fed will hold rates on hold in June. That would be the first time in more than a year that the central bank has not hiked rates at a meeting as it struggles to bring down inflation. A Fed pause could give the economy and financial markets some breathing room.
Big tech and other high-growth stocks tend to be among the biggest beneficiaries of lower interest rates and helped limit Wall Street’s losses on Tuesday.
Amazon was up 2% and Google’s parent Alphabet was up 2.6%. They were the two strongest forces driving the S&P 500 higher as nearly 90% of stocks in the index fell.
On Wall Street, too, there is a risk that the US government will default on its debt for the first time. That could happen as early as June 1 unless Congress approves an increase in the country’s borrowing credit limit.
In the afternoon, leaders of Congress met at the White House to discuss the debt limit. The stakes are enormous, and economists say it could mean enormous pain for both the economy and financial markets if the federal government is not allowed to borrow more.
Most of Wall Street expects Washington to come to an agreement because failure would be so traumatic. But Congress has historically waited until the eleventh hour on such matters, which again could be a cause for concern.
In overseas markets, shares in Shanghai fell 0.6%.
China’s post-pandemic economic recovery is under pressure from sluggish consumer and export demand, a government official said Tuesday, with retail sales and other activity in April coming in weaker-than-expected.
Tokyo’s Nikkei 225 rose 0.7%, continuing its climb to its highest level since the early 1990s. Inventory levels across Europe were down slightly.
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` business journalists Matt Ott, Elaine Kurtenbach and Joe McDonald contributed.
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