By Joyce Yu
Philadelphia, PA–The Dow fell over 200 points on open Tuesday after Home Depot missed revenue estimates on the top line. Home Depot saw its customer transactions fell 1.3% during the quarter, normally an important season for the home improvement retailer as shoppers spend on gardening supplies and renovation materials.
Interest rates also surpassed new highs which in turn weighed on utilities and real estate stocks. S&P 500 fell 0.8%, while the Nasdaq composite lost more than 1% as Apple, Amazon, Microsoft and Google-parent Alphabet all fell.
Analysts, however, are optimistic about today’s market retreat. “The consumer being alive and well is a positive, but just after eight days of being higher, the market’s looking for a reason” to pull back, said Art Hogan, chief market strategist at B. Riley FBR.
Accompanied by an uptick in interest rates was solid reading on consumer spending as the Commerce Department reported retail sales increased 0.3% in April. The U.S. 10-year Treasury yield hit 3.06% on Tuesday, its highest read since 2011, reaffirming speculation that the Fed will raise interest in June.
However, any rise of consumer spending could be limited by gasoline prices, which have risen about 31 cents per gallon this year. Crude oil prices has been remain elevated since the U.S. decided to pull out of the Iran nuclear deal, pushing up gasoline price which currently standing near $3.00 per gallon.
“Looking ahead, the consumer now faces the added burden of higher gasoline prices,” said Michael Feroli, an economist at JPMorgan in New York.
Separately, data elsewhere showed global growth is moderating. The eurozone economy expanded 0.4% in the first quarter, down from 0.7% in the fourth quarter of last year. Economic activity cooled in Germany, France and the Netherlands. Over in China, industrial output quickened last month from a year earlier, but investment and retail sales slowed.
“We still see the global economy as growing but perhaps not at the previous furious pace,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told the Reuters.
