Wall Street Stocks Trade Near Record Highs on Rate Cut Optimism
Wall Street stocks traded near record levels on Tuesday as investors digested weak US retail sales data and a mixed set of corporate earnings, boosting expectations that the Federal Reserve could cut interest rates later this year. The S&P 500 was marginally higher, briefly sitting just above its all-time high, while the Dow Jones Industrial Average rose around 0.4 percent to hover near record territory. The Nasdaq Composite also edged up slightly.
Markets Indecisive as Traders Balance Economic Concerns
Markets were largely indecisive early in the session as traders balanced concerns about slowing consumer spending with optimism over possible monetary easing. US retail sales data showed no growth in December, missing economists' expectations and raising concerns about the momentum of the world's largest economy. Shoppers spent roughly the same in December as in November, signalling potential weakness in household demand, which is the main engine of US economic growth.
Rate-Cut Bets Strengthen as Bond Yields Fall
The softer retail data pushed Treasury yields lower, with the benchmark 10-year yield falling to around 4.13 percent from 4.22 percent a day earlier. Traders also increased bets that the Federal Reserve could cut interest rates three times or more this year, according to CME Group data, though most still expect two cuts. The retail sales report comes ahead of key US data releases later this week, including unemployment figures on Wednesday and inflation numbers on Friday. These updates are expected to play a crucial role in shaping the Fed's interest rate outlook. While stubborn inflation could keep rates higher for longer, signs of labour market weakness may prompt quicker easing.
CFRA Research's Sam Stovall said the data could strengthen the case for additional rate cuts but warned investors must balance this against "the possibility of an economic slowdown."
Mixed Corporate Earnings Keep Stocks in Check
Corporate earnings offered a mixed picture. Coca-Cola shares slipped after the company reported quarterly revenue growth that fell short of expectations and issued a cautious outlook. S&P Global tumbled after giving a weaker-than-expected profit forecast, amid concerns about competition from AI-driven rivals.
In contrast, Hasbro jumped after beating profit and revenue estimates and announcing plans to return up to $1 billion to shareholders through share buybacks. DuPont also gained after posting stronger-than-expected quarterly results and issuing an upbeat profit outlook for 2026.
Global Market Movements
Outside the US, Japan's Nikkei 225 surged more than 2 percent to a fresh record, driven by expectations that a newly elected parliament will support tax cuts and pro-growth measures. Other Asian markets saw modest gains, while European indices traded mixed. Overall, markets remained supported by hopes of lower interest rates, even as investors weighed signs of a cooling US economy against resilient corporate performance.
