By Stephen Culp
NEW YORK (Reuters) - U.S. stocks closed lower on Tuesday and benchmark Treasury yields extended their rise as mixed economic data, weak corporate results and ongoing debt ceiling negotiations in Washington dampened investor risk appetite.
While all three major U.S. stock indexes ended down, the tech-heavy Nasdaq's losses were held in check by momentum megacaps including Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) Inc and Microsoft Corp (NASDAQ:MSFT).
President Joe Biden and House of Representatives Speaker Kevin McCarthy met to try to hammer out details of an agreement to raise the U.S. debt ceiling to avoid a catastrophic default in the face of a looming deadline.
"There is a question whether there's enough time to get a full deal done rather than a temporary extension, but it doesn't mean they can't come to an agreement in a few weeks," said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis. "It's just the timeline is more compressed this time, and these negotiations play out in the public sphere, and that leads to increasing volatility until we get to an agreement."
Disappointing results from Home Depot (NYSE:HD), the largest U.S. home improvement chain, combined with weaker-than-expected retail sales data suggested consumer spending is losing some momentum as restrictive monetary policy dampens demand.
However, a core measure of retail sales suggested the American consumer continues to bolster the economy.
"We have a cautious outlook for the year, but so far we've made it through the first quarter with consumer spending fairly robust and corporate profits not as bad as expected," Hainlin said. "But we're not out of the woods yet."
The Dow Jones Industrial Average fell 336.46 points, or 1.01%, to 33,012.14, the S&P 500 lost 26.38 points, or 0.64%, to 4,109.9 and the Nasdaq Composite dropped 22.16 points, or 0.18%, to 12,343.05.
European shares ended lower as downbeat earnings and the U.S. retail sales data stoked worries about softer consumer spending.
The pan-European STOXX 600 index lost 0.42% and MSCI's gauge of stocks across the globe shed 0.54%.
Emerging market stocks rose 0.05%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.14% lower, while Japan's Nikkei rose 0.73%.
U.S. Treasury yields continued to rise on the heels of economic data, which suggest economic resilience despite the Federal Reserve's restrictive policy.
Benchmark 10-year notes last fell 7/32 in price to yield 3.5339%, from 3.508% late on Monday.
The 30-year bond last fell 10/32 in price to yield 3.8601%, from 3.842% late on Monday.
The greenback inched higher against a basket of world currencies after the retail sales data showed underlying signs of consumer resiliency as focus shifted to the wrangling over the debt ceiling in Washington.
The dollar index rose 0.2%, with the euro down 0.1% to $1.0861.
The Japanese yen weakened 0.14% versus the greenback at 136.32 per dollar, while sterling was last trading at $1.2482, down 0.36%.
Oil prices dipped as weaker-than-expected economic data in both the United States and China shot down a higher global demand forecast from the International Energy Agency (IEA).
U.S. crude edged down 0.35% to settle at $70.86 per barrel, and Brent settled at $74.91 per barrel, down 0.43% on the day.
Gold prices slid in opposition to the rising dollar.
Spot gold dropped 1.5% to $1,990.68 an ounce.