Stocks Ease From Record Levels as Inflation Data and Bank Earnings Fall Short of Fresh Catalysts

U.S. equities edged lower on Tuesday, pulling back modestly from the prior session’s record highs as a busy morning of inflation data and earnings reports failed to provide a compelling catalyst for further upside. The S&P 500 slipped 0.2%, the Nasdaq Composite declined 0.1%, and the Dow Jones Industrial Average underperformed with a 0.8% drop.

Investors were focused early on the December Consumer Price Index report. Headline CPI rose 0.3%, in line with expectations, while core CPI increased 0.2%, slightly below consensus forecasts. Although the softer core reading initially lifted equity futures, the data did little to shift expectations for Federal Reserve policy. Markets continue to price in the next rate cut around June, and the inflation figures ultimately failed to generate sustained buying interest as the session unfolded.

Earnings also weighed on sentiment, particularly within the financial sector. JPMorgan Chase reported mixed results, missing expectations on GAAP earnings per share and revenue, despite an adjusted EPS beat. The report set a cautious tone across the banking group ahead of additional earnings later this week, pushing several major banks lower in sympathy.

Financials were the weakest-performing sector, falling 1.8%, as pressure extended beyond earnings into credit card issuers. Visa and Mastercard both saw sharp declines following renewed commentary from President Trump calling for a one-year cap of 10% on credit card interest rates, adding another layer of uncertainty for the group.

Consumer discretionary stocks also lagged, down 0.5%. Weakness in several large-cap leaders overshadowed gains in many smaller components within the sector. Mega-cap growth stocks were choppy throughout the day and finished mostly lower, with the mega-cap growth ETF closing near session lows after briefly turning positive midday.

Technology ended the session little changed, down 0.1%, as losses in several heavyweight names offset strength elsewhere. Chipmakers were a notable bright spot, helping lift the semiconductor index by 1.0%. Shares of Advanced Micro Devices and Intel outperformed sharply after both were upgraded to Overweight by KeyBanc Capital Markets, though the broader sector faded from its intraday highs.

Health care extended its recent weakness, declining 0.4%, despite a standout performance from Moderna, which surged after management raised confidence around its 2025 sales outlook. Defensive areas of the market attracted more consistent demand. Consumer staples rose 1.1%, led again by Walmart, which continued to build on its strong start to the year, while utilities gained 0.6%.

Energy delivered the strongest sector performance, climbing 1.5% as crude oil prices jumped 2.7% to $61.17 per barrel. The rally in oil was driven by heightened geopolitical tensions involving Iran, following comments from President Trump indicating a hardening stance and reports that military options were under consideration.

Industrials added 0.5% despite post-earnings weakness in Delta Air Lines, while real estate, materials, and communication services also finished higher, rounding out the seven advancing S&P 500 sectors.

Outside of large caps, the Russell 2000 slipped 0.1%, while the S&P MidCap 400 edged up 0.2%, modestly outperforming the broader market.

Overall, stocks took a measured step back as neither inflation data nor earnings delivered upside surprises. Attention now turns to another potentially active session, with the release of the November Producer Price Index and additional earnings reports from major banks expected to provide the next set of market-moving inputs.

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