Wall Street Hits the Snooze Button After Hot GDP Report Sends Yields Higher

Reuters, AP, Axios, and CNBC contributed to this report.

Wall Street tried to keep the good vibes rolling Tuesday, but the bond market had other plans.

After three straight winning sessions, US stocks mostly drifted around flatline in choppy trading, as Treasury yields climbed on the back of a surprisingly strong read on the economy. By mid-morning, the Dow was down 0.11%, while the S&P 500 edged up 0.06% and the Nasdaq ticked up 0.08%—basically a market shrug with holiday music playing in the background.

The big mood-changer was fresh GDP data showing the US economy grew at a 4.3% annualized pace in the third quarter, powered by strong consumer spending. That was well above expectations for around 3.3% growth, and it was enough to push the 10-year Treasury yield up to about 4.19%, its highest level in more than a week. When yields rise, stocks—especially the pricey, growthy kind—often get a little twitchy.

Even so, traders didn’t completely rewrite their rate-cut bets. Markets were still pricing in at least two quarter-point cuts next year, but the odds of a cut as early as January slipped to around 15%, down from 18% before the GDP surprise. Next up on the calendar: December consumer confidence data, which could either calm nerves or pour more caffeine into the day.

Under the hood, it was a mixed bag. Six of the 11 S&P 500 sectors were higher, led by energy and communication services, while consumer staples and real estate lagged. Translation: investors were still buying “risk-on” stuff, but not exactly sprinting.

A big part of the market’s recent momentum has come from a tech bounce and cooling inflation data in November—enough to pull the S&P 500 back within about half a percent of its Dec. 11 record close. But that rally has also come with a warning label: volatility. As one strategist put it, the AI-heavy trade has been “touch and go,” and it’s starting to feel like that’s going to be a theme heading into 2026.

And yes, the calendar matters here. This is a holiday-shortened week with trading volumes already thinning out. US markets close early on Wednesday and shut entirely on Thursday for Christmas—conditions that can make even small headlines feel bigger than they are.

While stocks paused, precious metals kept partying. Shares of US-listed miners extended gains after gold and silver pushed to fresh all-time highs, helped along by a softer dollar and a classic cocktail of safe-haven demand and geopolitical nerves. The rally in bullion has become one of the loudest market signals of late: when uncertainty rises, shiny stuff gets popular.

In single-stock land, Huntington Ingalls climbed after President Donald Trump unveiled plans for a new “Trump-class” battleship—bigger, faster, and, according to Trump, “100 times more powerful” than anything built before. Whether that turns into contracts or just a headline boost remains to be seen, but the market liked the sound of it.

Tuesday wasn’t a selloff. It was more like the market checking its pulse.

Stocks are still hovering near record levels, but a stronger economy can be a double-edged sword: great for earnings, not always great for rate-cut timing. With yields rising and trading conditions thin, investors looked happy to lock in gains, keep an eye on the Fed, and let the so-called Santa Claus rally try to do its thing—quietly, and maybe a little cautiously.