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Stocks End Lower on Retail Sales Drop, Pandemic Concerns

Stocks fall as investors weigh the delta variant's impact on the economic recovery, a tumble in U.S. retail sales and a same-store sales miss by Home Depot.

Stocks finished lower Tuesday as investors weighed the highly contagious delta variant's impact on the economic recovery, a tumble in U.S. retail sales in July and a same-store sales miss by Home Depot  (HD) - Get Home Depot, Inc. (HD) Report

Homebuilder sentiment, meanwhile, dropped to a 13-month low in August as builders faced continued supply shortages that have jacked up home prices and affected demand.

The Dow Jones Industrial Average ended down 282 points, or 0.79%, to 35,343, the S&P 500 fell 0.71% and the Nasdaq slumped 0.93%. At its low Tuesday, the Dow fell 502 points.

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The yield on the benchmark 10-year Treasury rose Tuesday to 1.263%. 

Federal Reserve Chairman Jerome Powell, in a virtual town hall Tuesday, said it wasn't yet clear whether the delta strain of COVID-19 will have a major impact on the U.S. economy. 

Boston Federal Reserve Bank President Eric Rosengren said Monday he could be prepared to begin rolling back economic stimulus this fall. But he said he wouldn't boost interest rates until the employment picture improves.

“I think it’s appropriate to start in the fall. That would be October or November,” Rosengren told CNBC. “I certainly wouldn’t want to wait any later than December. My preference would be probably for sooner rather than later.”

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Rising U.S. infections, fueled by the delta variant, has the U.S. government poised to offer coronavirus booster shots as soon as next month, according to reports.

U.S. retail sales fell sharply last month, suggesting the recent surge in delta-variant infections was beginning to impact consumer strength in the world's biggest economy. Retail sales tumbled 1.1% in July, below economists' forecasts for a decline of 0.3%.

Walmart  (WMT) - Get Walmart Inc. Report posted stronger-than-expected second-quarter earnings and raised its full-year profit forecast. The stock ended flat following slower e-commerce sales.

Home Depot also posted stronger-than-expected second-quarter earnings as the red-hot housing market bolstered home-improvement spending. But same-store sales during the quarter rose just 4.5%, missing estimates of 5.4%.

The stock finished down 4.49%.

"[T]he jury is out on how Americans will continue to spend. Some of the trends we saw throughout the pandemic may be shifting, evidenced by Home Depot seeing less customers in stores and home-improvement projects taking a backseat," said Mike Loewengart, managing director of investment strategy at E*Trade. 

"And despite a rise in some restrictions, more could be spending on experiences and services as we close out the summer," he added.