Major stock indexes slid and oil posted its fourth straight day of declines as investors grappled with mixed economic data and considered the economic impact of the ongoing spread of the Delta coronavirus variant.
Wall Street closed down sharply on Tuesday, with the most significant declines seen in mega-cap technology-related and consumer discretionary stocks as investors scaled down their risk appetite.
The Dow Jones Industrial Average (.DJI) fell 0.79%, snapping a five-day winning streak. The S&P 500 (.SPX) lost 0.71% after posting a new record high on Monday, and the Nasdaq Composite (.IXIC) dropped 0.93%.
The MSCI world equity index (.MIWD00000PUS), which tracks shares in 45 nations, fell 0.77%.
The prospect of diminished travel demand or new pandemic lockdowns weighed on oil, exacerbated by a belief in OPEC and among its allies that the market does not need more supply.
Brent crude ended the session down 48 cents, or 0.7%, at $69.03 per barrel, while U.S. West Intermediate crude (WTI) settled down 70 cents, or 1% lower at $66.59 a barrel.
Markets opened Tuesday morning on a pessimistic note after the Commerce Department reported U.S. retail sales fell 1.1% in July, well below economist expectations. However, that picture was made murkier by separate data that showed output at U.S. factories surged in July.
Those numbers cast new doubt on whether the United States will get a grip on the pandemic to get the world’s largest economy back on track, particularly as cases rise globally with the spread of the Delta variant of the coronavirus.
“It is possible that rising COVID cases are beginning to dent consumer sentiment, but the fact that restaurant spending increased during the month suggests that such concerns are modest. Retail sales are not adjusted for inflation, and it may be that recent price growth is starting to affect sales volume,” said Curt Long, chief economist and vice president at the National Association of Federal Credit Unions.
Fed Chair Jerome Powell said on Tuesday it remained unclear whether the Delta spread will have a noticeable impact on the economy, adding that many companies have been able to adapt.
Beyond COVID concerns, political turmoil in Afghanistan added to safe-haven demand, boosting the U.S. dollar to its second straight day of gains. The U.S. dollar index rose 0.55% to 93.130 .
U.S. Treasury yields were largely unchanged in choppy trading on Tuesday, as investors sorted through a muddy economic picture. Benchmark 10-year note yields were last at 1.258%, little changed on the day, after earlier falling as low as 1.217%.
Going forward, the U.S. Federal Reserve will give investors fresh fodder to consider on Wednesday when it releases minutes from its July policy-setting meeting. Markets will be looking for indications of how quickly the Fed will move to step back its unprecedented stimulus as it eyes job gains and inflation.
Boston Federal Reserve Bank President Eric Rosengren said on Monday the Fed could begin reducing monthly asset purchases in September if it sees one more strong jobs report.
Gold prices eased on Tuesday after several days of gains, with spot gold dropping 0.14% to $1,784.75 an ounce. U.S. gold futures settled 0.1% lower at $1,787.80 per ounce.