15.05.201821:22:00UTC+00Wall Street Retreats after Interest Rates Soar

U.S. stocks fell on Tuesday after Home Depot posted quarterly sales that fell short of Wall Street's expectations and interest rates breached new highs. The day's losses were widespread and steep, with major indexes seeing their biggest one-day drop in about three weeks.

The Dow Jones industrial average dropped 193 points to end at 24,706.41, with Home Depot among the biggest contributors of losses. The index also snapped an eight-day winning streak.

The S&P 500 fell 0.7 percent to 2,711.45 as health care and real estate stocks underperformed. The Nasdaq composite was down 0.8 percent at 7,351.63 as Amazon, Microsoft and Google-parent Alphabet all lost over one percent.

Markets focused early on economic reports with sales at U.S. retailers rising for a second consecutive month in April, suggesting the economy is accelerating after a slow start to the year. Meanwhile, the Empire State manufacturing index grew in May, also pointed to an improving economy.

Investors are concerned that the Federal Reserve may try to slow down the economy by hiking interest rates more aggressively. Rising rates may be creating the greatest friction for equity investors, as the 10-year Treasury note's yield jumped above the three percent threshold, representing a roughly 7-year high.

Traders implied a 51 percent likelihood of a fourth interest rate hike this year by the Fed, according to the CME. The strong data Tuesday will only increase the ranks of traders and investors with that belief.

Home Depot posted first-quarter earnings that surpassed Wall Street's expectations, but its sales fell short of estimates as a result of what the company categorized as a "slow start" to spring sales. Customer transactions dropped 1.3 percent during the quarter. Shares of Home Depot fell 1.6 percent.