Stock Market Today: Dow Slides After Inflation Data; Defense Stock Shines

Investor’s Business Daily, CNBC, Bloomberg, and the Wall Street Journal contributed to this report.

Wall Street took a bit of a breather Tuesday as investors digested the latest inflation report and company news — and mixed feelings were written all over the major indexes.

After kicking off the week near record highs, the Dow Jones Industrial Average slid more than 300 points, pushing it into the red for the session as traders reacted to fresh consumer price data that broadly matched expectations but still kept inflation above the Fed’s comfort zone. The S&P 500 and Nasdaq quietly slipped as well, while small caps eked out modest gains.

The December Consumer Price Index (CPI) showed US prices ticking up about 0.3% for the month and roughly 2.6–2.7% on the year, broadly in line with forecasts — but enough to keep markets cautious about the Federal Reserve’s next move on interest rates.

Traders seemed to shrug a little at the report — it didn’t shake the markets upside, but it didn’t spark a rally either.

Behind the broad market move, defense stocks were the standout story of the day. L3Harris Technologies surged early after word broke that the Pentagon is putting $1 billion behind its rocket motor division — a rare direct US government investment in a weapons supplier. Shares jumped sharply in premarket trading and stayed elevated even after some profit-taking.

The deal doesn’t just pump cash into the company. It’s part of a broader Pentagon strategy to secure critical supply chains, especially for solid rocket motors used in key missile systems, and L3Harris is planning to spin the business off into its own public company later this year with the government holding a convertible stake.

Outside of defense, bank and tech names showed the usual post-earnings whipsaw. JPMorgan ticked slightly higher after a generally solid quarter, although rival banking news has been mixed, and tech laggards like Nvidia felt pressure as chip-specific decisions weighed on sentiment. Consumer names such as Delta also pulled back on weaker revenue forecasts.

What to watch now: Traders are still figuring out what the inflation picture means for the Fed’s pace of interest-rate cuts in 2026, and earnings season is only just getting started. For now, markets feel a bit caught between inflation data that isn’t outright alarming and news flows — like the Pentagon investment — that spotlight sector-specific opportunities.