NEW YORK (Reuters) - The yield on the benchmark U.S. 10-year Treasury note hit its highest in about seven years on Tuesday on the heels of a report that indicated a pick-up in consumer spending, lifting the dollar to its strongest level this year and weighing on stocks.

FILE PHOTO: The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 16, 2018. REUTERS/Staff/Remote

The 10-year yield neared 3.1 percent, blowing through the 3 percent level, as a wave of selling propelled the yield through a key technical support.

Wall Street’s main indexes slumped, with the Dow industrials snapping an eight-session streak of gains, hurt by concerns that rising bond yields would undercut stock valuations. The dollar’s rise also helped send gold to its low point for the year.

Yields had already been increasing earlier on Tuesday before the release of data that showed a moderate rise in U.S. retail sales in April, but also that consumer spending appeared on track to accelerate after slowing sharply in the first quarter. Other data showed factory activity regaining momentum in May.

A quicker pace of growth could fuel concerns about inflation that might prompt the Federal Reserve to increase interest rates at a quicker pace, investors and traders said.

The data indicated consumer spending is stronger than expected by the market, said Jon Mackay, investment strategist at Schroders North America in New York.

“The implication is that means inflation has more upside potential, which means the Fed is more likely than not to hike four times this year, versus what the market was pricing in a month ago, which is two to three times,” Mackay said.

The 10-year yield’s rise marked its first significant move above 3 percent since breaching that level last month.

Benchmark 10-year notes US10YT=RR last fell 20/32 in price to yield 3.0686 percent, from 2.995 percent late on Monday, after reaching 3.095 percent, its highest point since July 2011.

“It’s taken some time to get through it and this is kind of that breakout day,” said Willie Delwiche, investment strategist at Baird in Milwaukee.

The two-year yield US2YT=RR, which is most sensitive to traders' view on Federal Reserve policy, hit its highest since August 2008.

The dollar index .DXY, which tracks the greenback against six major currencies, rose 0.69 percent to 93.225, after rising as high as 93.457 during the session.

On Wall Street, the Dow Jones Industrial Average .DJI fell 193.00 points, or 0.78 percent, to 24,706.41, the S&P 500 .SPX lost 18.68 points, or 0.68 percent, to 2,711.45 and the Nasdaq Composite .IXIC dropped 59.69 points, or 0.81 percent, to 7,351.63.

“The reason why the equity market is falling today is because we are once again pondering if the strength of the U.S. economy is enough to make the Fed raise faster in the future,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co in Milwaukee, Wisconsin.

After improved trade sentiment helped stocks on Monday, equities were again jostled by developments involving U.S.-China talks.

Earlier on Tuesday, U.S. Ambassador to China Terry Branstad said the United States wanted a timetable on how China would open up its markets to U.S. exports, with the two countries still not close to resolving trade frictions.

“A little bit of today’s jitters are related to a hangover to yesterday’s wrongly placed exuberance that a trade deal was imminent and the reality is we are in for a long slugfest between the U.S. and China,” Mackay said.

Home Depot HD.N shares fell 1.6 percent after the home improvement chain missed Wall Street's sales forecast.

The pan-European FTSEurofirst 300 index .FTEU3 rose 0.14 percent.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.87 percent amid weak economic data from Germany and China.

Oil prices ended a shade firmer after retreating from multi-year highs hit early in the day, supported by concerns that U.S. sanctions on Iran are likely to restrict crude exports from one of the biggest producers in the Middle East.

U.S. crude CLcv1 settled up 0.49 percent at $71.31 a barrel, and Brent LCOcv1 settled at $78.43, up 0.26 percent.

Spot gold XAU= dropped 1.5 percent to $1,292.16 an ounce, its lowest point of the year.