U.S. stock markets exhibited a mixed performance on Tuesday, observing the Dow Jones Industrial Average achieving its third consecutive record close, while the S&P 500 and Nasdaq Composite experienced declines. This divergence follows the release of unexpectedly stagnant retail sales data, triggering a wave of vital economic indicators ahead of the highly anticipated monthly jobs report.
The Dow climbed approximately 0.1%, contrasting with the S&P 500, which dipped by around 0.3%. The Nasdaq Composite faced a more significant decline of 0.6%, influenced particularly by losses among major technology companies like Nvidia and Alphabet.
Retail sales data for December showed little change compared to the previous month, indicating a slowdown in consumer spending as the holiday season wound down. This stagnation was notably below economists’ forecasts and marked a decline from November’s month-on-month growth of 0.6%. Following the report, traders increased their bets on potential interest rate cuts by the Federal Reserve, although a majority still expect the Fed to maintain rates steady in the upcoming months. Expectations have shifted, with over 75% predicting rate reductions by June.
The subdued consumer data sets the stage for the critical January jobs report expected on Wednesday, especially in light of recent indications of softening in the labor market. Additionally, the Consumer Price Index report is scheduled for release on Friday, which will provide further insight into inflation trends as the Fed navigates its dual mandate.
In corporate news, stocks in the wealth management sector took a hit after an AI startup revealed a potentially disruptive tool, reigniting concerns similar to those experienced in the software industry. Major players like Charles Schwab, Raymond James Financial, and LPL Financial all saw shares plunge by over 6%.
Investors also turned their attention to quarterly earnings reports from companies like Coca-Cola and CVS Health, with Ford’s earnings release drawing particular interest after market hours.
Additionally, gold and bitcoin remain in focus as they attempt to regain stability following last week’s sharp declines. Gold briefly rallied above $5,000 but saw a slight retreat early on Tuesday, though analysts remain optimistic about its future prospects this year. In contrast, a risk-averse sentiment has affected bitcoin, causing it to drift back to around $69,000 amid significant volatility and a perceived “crisis of confidence.”
The mixed results highlight the complexity of the current economic landscape, as both positive and negative signals continue to emerge. Investors remain vigilant as key economic indicators unfold in the coming days, which could significantly influence market dynamics.