American stocks drifted on Wall Street on Tuesday following a mixed set of profit reports from big US companies. Hopes also built that the Federal Reserve will cut interest rates later this year to boost the economy following a discouraging report on the strength of US shoppers.
The S&P 500 fell 0.3% after briefly rising above its all-time high, which was set a couple weeks ago. The Dow Jones Industrial Average added 52 points, or 0.1%, to its own record, while the Nasdaq composite fell 0.6%.
The yield on the 10-year Treasury sank to 4.14% from 4.22% late on Monday.
On Wall Street, mixed reactions to the latest profit reports from big US companies helped to keep the market in check.
All told, the S&P 500 fell 23.01 points to 6,941.81. The Dow Jones Industrial Average rose 52.27 to 50,188.14, and the Nasdaq composite fell 136.20 to 23,102.47.
US Treasury yields fall
The action was stronger in the bond market, where Treasury yields fell after a report showed US retailers made less money at the end of last year than economists expected. Shoppers spent roughly the same amount in December as they did in November, which was less than the modest growth that economists expected.
That could signal a loss of momentum for spending by US households, which is the main engine of the economy. It also came ahead of two more anticipated reports coming later in the week. On Wednesday, the US government will give the latest monthly update on the unemployment rate, while a Friday report will show how bad inflation is for US consumers.
Fed expectations powering markets
Altogether, the data should help the Federal Reserve decide what to do with interest rates. The Fed has put its cuts to interest rates on hold, and too-hot inflation could keep it on pause for a long time. But a weakening of the job market, on the other hand, could push it to resume cuts more quickly.
One of the reasons the US stockmarket has remained close to records is the expectation that the Fed will continue cutting rates later this year. Lower rates can give the economy a boost, though they can also worsen inflation.
Following Tuesday's disappointing data on sales at US retailers, traders upped bets that the Fed could cut interest rates three times or more this year, according to data from CME Group. Most still see two cuts as more likely.
