That paves the way for higher borrowing costs on mortgages and other loans. The Russell 2000 index of smaller-company stocks finished flat at 1,600.34.
Banks, which stand to prosper because of higher interest rates on loans, bucked the downward trend.
The rise in bond yields pulled down shares in real estate investment trusts and other high-dividend paying stocks.
The chip maker stocks also posted a price jump on Monday after a report suggesting that Chinese regulators will re-examine the proposed acquisition of Qualcomm's NXP Semiconductors. The blue-chip Dow Jones grew by 68.24 points, with UnitedHealth and Walmart being the best-performing stocks in the index. Meanwhile the Nasdaq Composite declined 59.69 points, or 0.8% to 7,351.63. Vaneck Vectors Semiconductor's stock rose 1.7% after the news.
Technology and health care companies took some of the worst losses.
All three major US stock indexes closed down, with the S&P 500 ending a four-day winning streak and the Dow Jones Industrial Average posting its first loss in eight sessions.
The surge came after the Commerce Department said retail sales climbed 0.3 percent in April.
Retail sales reported a monthly increase of 0.3%. Mortgage rates, which have been rising this year, tend to track the 10-year Treasury yield. The technological Nasdaq Composite expanded by 0.1% and ended at 7,411.32 points. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent.
Stocks are opening moderately lower across the board on Wall Street, led by declines in technology and consumer-focused companies.
A surge in USA government bond yields to their highest level in nearly seven years sent Wall Street shares sliding on Tuesday after strong retail sales data stoked inflation concerns and investors fretted about looming trade talks between the United States and China.
The yield on the benchmark 10-year Treasury note rose to 3.05 percent, its highest level since July 2011.
The Dow Jones industrial average lost 162 points, or 0.6 percent, to 24,739. The S&P 600 closed at 982.43 for a gain of 0.30 points or 0.03%.
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