North American markets began the week on a negative note, as a report of strong retail sales in the U.S. sparked concerns about increasing interest rates, driving markets lower.

In Toronto, the S&P TSX dropped 74.32 or 0.89% to 8292.31. The S&P Canadian Venture exchange also dropped today, falling 32.15 to 1527.40.

In the U.S., the Dow Jones industrial average closed down 75.37 points or 0.72% at 10334.73. The Standard & Poor’s 500 Index ended down 11.18 points or 0.98% at 1125.29, while the Nasdaq composite index closed down 29.88 points or 1.49% at 1969.99.

The prospect of higher rates in the U.S. depressed the Canadian dollar, which dipped 0.54 of a cent to US72.74 ¢.

Monday morning, the U.S. Commerce Department reported a 1.2% boost in retail sales in May after a 0.6% dip in April. The increase beat economist expectations. The consensus was for an increase of about 1%.

Adding to the bad news from south of the border was a report that the U.S. trade deficit swelled to a record $48.3 billion in April, reflecting American demand for foreign-made goods, particularly cars, TVs, furniture and clothes.

Investors fear the May consumer price index on Tuesday could prompt the U.S. Federal Reserve Board to send short-term rates up by half a percentage point at the end of the month instead of the quarter-point that markets expect.

In Toronto, only energy and consumer stocks finished higher, with the rest of the TSX sub-indices ending the day in the red. Energy stocks climbed 0.13%. Consumer staples added 0.11%. Financials were off slightly, down 0.86%.