Market Snapshot: Dow drops nearly 400 points from record high after retail sales data

What’s driving the market?

Stocks were trading lower early Tuesday, with a report showing the weakest retail sales in months, driving markets from their early records to start the week.

Data showed that October retail sales rose 0.3% in October — matching the consensus forecast produced by a MarketWatch survey of economists, but confirming the weakest rise in six months.

Stocks rose Monday after Moderna Inc. MRNA, -4.95% said its COVID-19 vaccine candidate was 94.5% effective in preventing infections during a late-stage trial. A week earlier, Pfizer Inc. PFE, +2.29% and BioNTech SE BNTX, -3.73% announced their vaccine candidate was more than 90% effective.

Prospects for a vaccine prompted a rotation away from pandemic winners, including large-cap tech and internet stocks, in favor of more economically sensitive stocks.

While progress toward a vaccine is encouraging for 2021, investors have looked past a continued surge in COVID-19 cases and a lack of progress toward additional aid spending from Washington.

But analysts said uncertainty about the consumer could undercut the rally, putting the focus on retail sales data and other measures of consumer activity.

“If the consumer can prop up the U.S. economy while the vaccine comes online and a new fiscal package is passed early next year, the market would have all the ingredients for a strong rally despite the challenges posed by the pandemic,” said Boris Schlossberg, managing director at BK Asset Management, in a note.

“If however, the second wave shows that it is clearly taking its toll on mobility and consumer spending, the markets could begin to correct sharply given little evidence of any immediate relief,” he said.

In other data, October industrial production rose 1.1%, in line with forecasts. Data on September business inventories and a November home builders index are set for release at 10 a.m. In the afternoon, several Fed bank presidents are slated to speak at a conference on racism and the economy.

Which companies are in focus?

• Walmart Inc. WMT, -1.12% shares were down 1.3% after the retail giant and Dow component reported results that topped expectations.
• Fellow Dow component Home Depot Inc. HD, -2.60% shares fell 2.6%, despite the home improvement retailer reporting fiscal third-quarter profit that beat expectations and sales that rose well above forecasts.
• Shares of Tesla Inc. TSLA, +11.17% rose more than 11% after S&P Dow Jones Indices late Monday said it would add the electric-car maker to the S&P 500 beginning Dec. 21.
• Shares of drugstore chains tumbled after e-commerce giant Amazon.com Inc. AMZN, +1.19% said it would launch an online pharmacy. Walgreens Boots Alliance Inc. WBA, -9.00% shares were down 9.5%, while CVS Health Corp. CVS, -7.47% shares dropped 7.6% and Rite Aid Corp. RAD, -12.71% shares were off nearly 16%. Amazon shares were up 1.1%.

How are other markets faring?

The 10-year Treasury note yield TMUBMUSD10Y, 0.866% fell 3.4 basis points to 0.875%. Bond prices move inversely to yields.

December gold futures GCZ20, were little changed near $1,88.20 an ounce on Comex. The U.S. crude benchmark CL.1, -0.67%  pulled back on Tuesday, falling 0.9% to $40.96 a barrel on the New York Mercantile Exchange.

In Asian stock trading, China’s CSI 300 000300, -0.19% closed 0.2% lower on Tuesday and Japan’s Nikkei NIK, +0.41% finished 0.4% higher.

The Stoxx Europe 600 SXXP, -0.55%  was down 0.5%, while the U.K.’s FTSE 100 benchmark UKX, -1.42%  was off 1.4%.

The ICE U.S. Dollar Index DXY, -0.29%, a measure of the currency against a basket of six major rivals, was off 0.3%.