US STOCKS-Wall Street dips as strong retail data boosts Treasury yields

BY Reuters | TREASURY | 09/16/21 02:35 PM EDT

* Retail sales unexpectedly rise in August

* Crude prices retreat, pressuring energy shares

* Ford announces increased production of electric pickup

* Indexes down: Dow 0.17%, S&P 0.17%, Nasdaq 0.01%

By Stephen Culp

NEW YORK, Sept 16 (Reuters) - Wall Street lost ground on Thursday as unexpectedly robust retail sales data underscored the strength of the U.S. economic recovery, boosting bond yields and prompting a sell-off in market-leading tech stocks.

All three major U.S. stock indexes reversed the previous session's rally as rising Treasury yields provided an increasingly attractive alternative to stocks, and the dollar's advance put pressure on U.S. exporters.

Megacap tech and tech-adjacent stocks, such as Apple Inc (AAPL) , Microsoft Corp (MSFT) and Alphabet Inc (GOOG), which are sensitive to higher interest rates, weighed heaviest on the S&P.

"We're at a point where sentiment is weighing on the market more than decent data is helping it," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "It's the opposite of the melt-up we saw earlier in the summer."

Transports, a barometer of economic health, were among the few outperformers.

Data released before the opening bell showed an unexpected bump in retail sales as shoppers weathered Hurricane Ida and the COVID Delta variant, evidence of resilience in the consumer, who contributes about 70% to U.S. economic growth.

"Despite everything on the policy and supply side, the consumer is in a good spot," Mayfield added. "COVID might dictate how and where they might spend, but it's a difficult task to keep Americans from spending money if they have it."

The Dow Jones Industrial Average fell 60.9 points, or 0.17%, to 34,753.49; the S&P 500 lost 7.82 points, or 0.17%, at 4,472.88; and the Nasdaq Composite dropped 2.02 points, or 0.01%, to 15,159.51.

Eight of the 11 major sectors in the S&P 500 were lower, with materials suffering the largest percentage drop.

Energy stocks tumbled after crude prices retreated from the previous session's surge as threats to the Gulf of Mexico from Hurricane Nicholas abated.

Select companies got a boost from the positive surprise from Commerce Department's retail sales report.

Apparel company Gap Inc (GPS) gained 2.5%. Online marketplace Etsy Inc (ETSY) and luxury accessory company Tapestry Inc (TPR) rose between 2.3% and 3.3%.

U.S.-listed Chinese stocks extended losses, with Beijing's overhaul of gambling in Macau marking the government's latest move in a regulatory crackdown.

U.S.-based casino operators Las Vegas Sands Corp (LVS), Wynn Resorts Ltd (WYNN) and MGM Resorts International (MGM) fell between 1.4% and 2.3%.

Ford Motor Co (F) rose 1.7% after it announced plans to boost production of its F-150 electric pickup model.

Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and one new low; the Nasdaq Composite recorded 68 new highs and 90 new lows. (Reporting by Stephen Culp; Additional reporting by Ambar Warrick in Bengaluru; Editing by Richard Chang)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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