(Updates prices)
* U.S. retail sales drop in July
* Home Depot, tech sector weighs on Wall Street
* U.S. dollar gains on safe-haven appeal
WASHINGTON, Aug 17 (Reuters) - Major stock indexes slid and defensive investments posted gains amid fears about an uneven economic recovery in the United States and the continuing spread of the Delta coronavirus variant.
Wall Street slid sharply Tuesday, led by declines in
mega-cap technology-related stocks and Home Depot
Safe-haven demand helped boost other risk-averse sectors, as
the U.S. dollar gained on other currencies for the second
straight session.
The Commerce Department reported Tuesday morning that U.S.
retail sales fell by much more than expected by economists,
injecting fresh concern into how the world's largest economy
will emerge from the pandemic as it grapples with supply chain
disruptions and consumer concern over Delta's
spread.
After posting record highs last week, the Dow Jones
Industrial Average fell 1.26% Tuesday, while the S&P 500
lost 1.20% and the tech-heavy Nasdaq Composite
dropped 1.4%.
The MSCI world equity index, which tracks
shares in 45 countries, fell 1.05%.
"While we expect marginal growth in retail sales in August,
there are downside risks. ... We have seen a clear pullback in
spending on travel," said Bank of America Securities analysts in
a note. "The main story is slowing consumption coupled with
pandemic-related disruptions to global supply chains which
disrupt trade flows and keep inventories restrained."
Concerns about weakening travel demand and potential new
lockdown restrictions to combat the spread of Delta weighed on
oil markets Tuesday, as prices weakened for a fourth straight
session. Brent crude was last down 0.45% at $69.2 a
barrel, while U.S. crude was down 0.79%, at $66.76 per
barrel.
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
Monday the Fed could begin reducing monthly asset purchases in
September if it sees one more strong jobs report.
Further weighing on investor optimism were new restrictions
from China on its technology sector as Beijing tightens its grip
on internet platforms. Adding to concerns was continued turmoil
out of Afghanistan, although Deutsche Bank analysts said in a
note the impact on the developed world appears limited so far.
However, they noted the longer-term risk is Afghanistan
becoming a haven for terrorist groups, whose attacks can carry
serious market ramifications. Another risk is the events in
Afghanistan could complicate U.S. President Joe Biden's push to
pass his economic proposals and raise the debt ceiling.
Risk aversion among investors was seen in the dollar, which
gained for the second straight session. The U.S. dollar index
rose 0.54% to 93.122.
"The dollar is on a roll as global risks rise," said Joe
Manimbo, senior market analyst at Western Union Business
Solutions in Washington.
Treasury yields bounced from session lows Tuesday, shaking
off an earlier yield drop on concerns about global economic
growth. Benchmark 10-year note yields US10YT=RR were last at
1.245%, up on the day, after earlier falling as low as 1.217%.
However, gold prices eased after several days of gains
Tuesday, with spot gold dropping 0.15% to $1784.68 an
ounce. U.S. gold futures GCv1 were down 0.15% at $1,787.10 per
ounce.
(Editing by Richard Pullin, Jacqueline Wong, Susan Fenton,
Timothy Heritage, Dan Grebler and Jonathan Oatis)