US stocks near records as Wall Street investors digest mixed earnings, falling Treasury yields, and new signs that American consumers may be losing momentum. Markets are balancing optimism about future Federal Reserve rate cuts with caution triggered by weaker retail spending data, creating a narrow trading range near historic highs.
On Tuesday, the S&P 500 hovered just below its all-time high, while the Dow Jones Industrial Average edged higher toward another record. The Nasdaq Composite moved modestly lower, reflecting selective profit-taking in growth stocks. Despite the muted equity moves, the bond market showed clearer direction, with yields falling as investors reassessed economic momentum and inflation risks.
Consumer Spending Data Shifts Rate-Cut Expectations
The latest retail report showed U.S. shoppers spent roughly the same amount in December as in November, missing expectations for modest growth. Because household consumption is the main engine of the U.S. economy, this data point carries significant weight for both markets and policymakers.
This slowdown strengthened expectations that the Federal Reserve could resume interest rate cuts later in 2026. According to futures market data, traders increased bets on three or more rate cuts this year, although two cuts remain the most widely expected scenario. Lower interest rates tend to support stock valuations by reducing borrowing costs and increasing the relative appeal of equities versus bonds.
As a result, Treasury yields declined, with the 10-year yield falling to 4.15% from 4.22%. This drop helped stabilize equity markets and kept US stocks near records despite uncertainty around inflation and employment data still to come later in the week.
Mixed Earnings Keep Markets in Check
Corporate earnings delivered a mixed picture, contributing to the market’s sideways movement. Some companies exceeded expectations, while others disappointed, keeping broad indexes from making decisive moves in either direction.
The Coca-Cola Company (NYSE:KO) slipped after posting quarterly revenue growth below analyst forecasts and issuing a cautious outlook for the coming year. Weak guidance weighed on sentiment toward consumer staples, a sector often seen as defensive during economic uncertainty.
S&P Global Inc. (NYSE:SPGI) fell sharply after delivering a profit forecast that missed expectations. Investor concerns have grown around increased competition from artificial intelligence–driven data platforms, raising fears of long-term margin pressure on traditional financial data services.
In contrast, Hasbro, Inc. (NASDAQ:HAS) surged after beating expectations on both revenue and profit. Strength in its “Magic: The Gathering” franchise and a new $1 billion shareholder return program boosted investor confidence. The results highlighted how strong intellectual property and brand loyalty can still drive growth even in a slowing consumer environment.
DuPont de Nemours, Inc. (NYSE:DD) also posted better-than-expected results and issued a strong 2026 profit outlook, reinforcing optimism in select industrial and materials stocks.
Deal Activity Adds Support to Market Sentiment
Outside of earnings, merger and acquisition news helped support market sentiment. Warner Bros. Discovery, Inc. (NASDAQ:WBD) climbed after an improved acquisition offer from Paramount Global (NASDAQ:PARA). Paramount increased its bid and committed additional funding to resolve existing deal obligations, signaling confidence in regulatory approval and long-term strategic value.
Netflix, Inc. (NASDAQ:NFLX) also rose amid the deal-related optimism, reflecting broader strength in media and entertainment stocks driven by consolidation expectations.
These corporate actions contribute to the resilience of US stocks near records, as investors continue to find growth opportunities even amid macroeconomic uncertainty.
Global Markets Echo US Optimism
International markets showed a similar pattern of cautious optimism. Japan’s Nikkei 225 surged to another record on expectations that new government policies will support economic growth and market reforms. Other Asian markets posted modest gains, while European indexes were mixed.
This global alignment reinforces the idea that investors are positioning for a softer economic landing rather than a sharp downturn, helping sustain high equity valuations worldwide.
Outlook: Data-Driven Volatility Ahead
The coming days will bring key economic releases, including U.S. employment and inflation reports, which will heavily influence Federal Reserve policy expectations. Strong inflation data could delay rate cuts, while weakening labor markets could accelerate them.
For now, US stocks near records reflect a market caught between optimism and caution: optimism that lower rates will support growth and valuations, and caution that consumer weakness may signal broader economic slowing.
This balance is likely to keep markets volatile but supported, with investors rotating between sectors rather than exiting equities altogether. As long as rate-cut expectations remain alive and earnings remain mixed rather than broadly negative, the path of least resistance for U.S. stocks may continue to hover near historic highs rather than break sharply in either direction.
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