New York markets showed a divided response on Tuesday, as the S&P 500 slipped 0.3% after briefly surpassing its recent all-time high established weeks prior. The Dow Jones Industrial Average inched up 0.1% to reach a new record, while the Nasdaq Composite retreated by 0.6%, reflecting divergent reactions across market sectors.
Investor attention was drawn to a disappointing retail sales report indicating that US consumers spent roughly the same amount in December as in November, falling short of economists' expectations for modest growth. This stagnation in retail spending raises concerns about diminishing momentum in household consumption, the primary engine driving economic progress.
Bond markets reacted decisively to the retail figures; yields on the 10-year Treasury note dropped from 4.22% to 4.14%, signaling increased demand for safer assets amid economic uncertainty. This movement underlines growing investor anticipation that the Federal Reserve may respond to the evolving economic conditions by lowering interest rates later this year to stimulate growth.
Looking ahead, two significant government data releases are poised to influence market sentiment further. On Wednesday, updates on the national unemployment rate are expected, followed by a report on Friday detailing consumer inflation pressures. These releases will provide additional clarity on economic trends and influence Federal Reserve policy decisions.
Federal Open Market Committee members have maintained a pause on interest rate cuts amid persistent inflation concerns. However, observed weaknesses in the labor market may compel the Fed to accelerate rate reductions to avoid a prolonged economic slowdown. The market has increasingly priced in a higher likelihood of multiple rate cuts this year, with some traders anticipating three or more reductions, although the consensus still favors about two cuts.
Corporate earnings added to the market's mixed performance. Coca-Cola's shares declined 1.5% following quarterly revenue that missed market estimates and a conservative forecast for a key measure of growth in the coming year. S&P Global's stock fell 9.7% after issuing a profit forecast below analysts' expectations amid competitive pressures from artificial intelligence-driven rivals, amplifying concerns over its data service market share. The company's stock had already declined 15% year-to-date prior to the report.
Conversely, Hasbro's shares surged by 7.5% after exceeding profit and revenue projections for the quarter. The company highlighted strong performance driven by its "Magic: The Gathering" game and announced a substantial stock buyback program valued at up to $1 billion intended to return cash to shareholders.
DuPont also outperformed expectations, with better-than-anticipated quarterly results and a favorable profit forecast for 2026, boosting its shares by 4.9%. In the entertainment sector, Warner Bros. Discovery’s shares increased 2.2% following an augmented acquisition offer from Paramount. Paramount raised its bid by 25 cents per share for each quarter the deal remains unclosed beyond the year-end deadline, reinforcing confidence in regulatory approval. Additionally, Paramount committed $2.8 billion to facilitate Warner Bros. Discovery’s exit from prior acquisition arrangements with Netflix. Shares of Paramount Skydance and Netflix gained 1.5% and 0.9%, respectively.
By the close, the S&P 500 stood at 6,941.81, down 23.01 points; the Dow Jones Industrial Average increased 52.27 points to 50,188.14; and the Nasdaq composite fell 136.20 points to 23,102.47.
International markets exhibited varied activity. Japan’s Nikkei 225 extended gains for a second day, rising 2.3% to another record high, fueled by optimism surrounding the newly elected parliament's support for the prime minister’s economic initiatives, including tax cuts. Other Asian markets gained modestly, while European indexes displayed mixed outcomes.