The Dow Jones industrial average gained 68 points, or 0.3 percent, to 24,899.
KEEPING SCORE: The S&P 500 index fell 25 points, or 1 percent, to 2,704 as of 3:30 p.m. The Nasdaq composite dropped 78 points, or 1.1 percent, to 7,332.
A surge in US 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.
That paves the way for higher borrowing costs on mortgages.
The probability that the US central bank will raise its benchmark rate a fourth time this year went above 50 percent for the first time, according to the CME's FedWatch tracking tool for the fed funds futures market. A move in the yield above 2.9 percent earlier this year triggered a correction for US equities.
Treasury yields surged higher after April retail sales came in as expected with a 0.3% month-over-month increase, but the March increase was revised higher to 0.8% from 0.6%, and core retail sales jumped 0.4%. 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.
It also put investors in the mood to sell their shares in homebuilders.
The yield curve steepened from near its flattest levels since 2007, with the spread between the 2 year and 10 year bond yields widening 5bps to 50bps.
Technology and health care sector companies took some of the worst losses. Chip maker Nvidia fell 3.8 percent; drug maker Celgene slid 3.9 percent. Brent crude, used to price worldwide oil, added 20 cents to $78.43 in London.
Champions Parade: Manchester is Blue!
Ederson has committed himself to Manchester City for the next seven years, the Premier League champions have announced. Along the way, they amassed a record-equalling 11 successive away wins, a feat previously achieved by Chelsea in 2008.
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Kensington Palace issued a statement Monday following a report Meghan Markle's father wont attend her wedding to Prince Harry . The retired television cinematographer had been due to walk his daughter down the aisle Saturday at Windsor Castle's St.