Markets flirt with fresh highs as weak holiday sales nudge yields — and hopes for Fed cuts — higher

With input from the Wall Street Journal, AP, Reuters, CNBC, and Bloomberg.

US stocks were skirting record territory on Tuesday after a mixed batch of corporate results and a soggy retail-sales report that sent bond yields lower and traders betting the Fed might loosen up later this year. The S&P 500 dipped about 0.1% but spent part of the day sitting just above its recent peak, the Dow kept climbing toward its own record, and the Nasdaq lagged a touch.

Investors cheered the idea that softer consumer spending gives the Federal Reserve room to cut rates, after data showed December retail sales were essentially flat instead of rising — a surprise that pushed the 10-year Treasury yield down toward the low-4% area. That move in the bond market picked up odds that the Fed will trim rates this year.

Earnings painted a mixed picture: Hasbro jumped after beating expectations and announcing a hefty buyback, while Coca-Cola slid after missing revenue forecasts and trimming a key growth guide. Other names bounced or sank on guidance and AI worries — S&P Global, for example, took a hit on cautious profit guidance.

Traders are now parsing a busy data week — jobs on Wednesday and inflation on Friday — for clues about how fast the Fed might pivot. For now, the market is balancing hopes for cheaper money with lingering concerns about consumer strength and Big Tech’s massive AI spending plans.

Bottom line: stocks are treading water near all-time highs, but the undercurrent has changed — it’s less about runaway corporate growth and more about whether cooling consumer demand will finally give the Fed the green light to cut rates.