The S&P 500 (-0.2%), Nasdaq Composite (-0.1%), and DJIA (-0.8%) drifted modestly lower from yesterday's record highs after a busy morning of economic data and earnings reports failed to provide a strong enough catalyst for further growth. 

Investors eagerly awaited this morning's December CPI (0.3%; Briefing.com consensus: 0.3%) and Core CPI (0.2%; Briefing.com consensus: 0.3%) readings. While the initial reaction to the data gave equity futures a modest lift, with the core figure coming in slightly better than expected, the data did not change the market's expectations for Fed easing in 2026 and failed to materialize into a catalyst throughout the session. Expectations for the next rate cut remain pushed out to June, according to the CME FedWatch Tool.

In other pre-market developments, JPMorgan Chase (JPM 310.78, -13.71, -4.23%) posted a mixed earnings report, in which the company missed on GAAP EPS, although adjusted EPS came in better than expected, while also missing revenue expectations. The report set up a tough session for other banking names such as Citigroup (C 116.28, -1.42, -1.21%), Wells Fargo (WFC 93.48, -1.48, -1.56%), and Bank of America (BAC 54.48, -0.71, -1.29%), which report earnings tomorrow before the open.  

Additionally, the financials sector (-1.8%) faced a continuation of yesterday's pressure in credit card names such as Visa (V 328.05, -15.15, -4.41%) and Mastercard (MA 544.79, -21.49, -3.79%) after President Trump called for a one-year 10% interest rate cap on credit cards. 

The consumer discretionary sector (-0.5%) closed with the next widest loss, as weak leadership from Amazon (AMZN 242.60, -3.87, -1.57%) and Tesla (TSLA 447.09, -1.87, -0.42%) masked gains in over half of the sector's components. 

The mega-caps saw some bumpy action today but finished mostly lower, with the Vanguard Mega Cap Growth ETF (-0.4%) finishing a touch off of session lows despite briefly entering positive territory around midday. 

Microsoft (MSFT 470.67, -6.51, -1.36%) was another mega-cap laggard, which contributed to weakness in the top-weighted information technology sector (-0.1%). The sector also had a midday stint in positive territory amid another strong day for chipmakers, which briefly pushed the major averages above their flatlines. The PHLX Semiconductor Index (+1.0%) finished with a respectable gain, though well off of session highs. Advanced Micro Devices (AMD 220.97, +13.28, +6.39%) and Intel (INTC 47.29, +3.23, +7.33%) outperformed after KeyBanc Capital Markets upgraded both stocks to Overweight from Sector Weight.

Elsewhere, the health care sector (-0.4%) saw a continuation of yesterday's weakness despite Moderna (MRNA 39.60, +5.76, +17.02%) finishing as the top-performing S&P 500 name after CEO Stephane Bancel said the company projects 2025 sales to come in above the midpoint of early guidance. 

Meanwhile, the other defensive sectors, the consumer staples (+1.1%) and utilities (+0.6%) sectors, notched solid gains amid the mega-cap weakness. Walmart (WMT 120.36, +2.39, +2.03%) posted another day of solid leadership for the consumer staples sector, widening its week-to-date gain to 5.1%.

The energy sector (+1.5%) finished with the widest gain, supported by crude oil futures settling today's session $1.62 higher (+2.7%) at $61.17 per barrel. The rising price of oil is largely attributed to geopolitical tensions in Iran, with President Trump announcing via Truth Social that he has cancelled all meetings with Iranian officials while urging protesters to "take over your institutions."  The New York Times also reports that the president was presented with options to attack the country. 

The industrials sector (+0.5%) also finished higher despite a post-earnings retreat from Delta Air Lines (DAL 69.34, -1.69, -2.38%), while the real estate (+0.8%), materials (+0.3%), and communication services (+0.1%) sectors round out the seven advancing S&P 500 sectors.

Outside of the S&P 500, the Russell 2000 (-0.1%) finished with a slight loss, while the S&P Mid Cap 400 (+0.2%) outperformed. 

Ultimately stocks took a slight step back today as this morning's developments failed to deliver upside surprises.  Tomorrow's session carries many of the same potential catalysts, as investors brace for the November PPI report (Briefing.com consensus 0.2%) and additional earnings from major banks.

U.S. Treasuries finished Tuesday with gains across the curve with some assistance from today's $22 billion 30-year bond reopening, which made for a strong finish to this week's good note and bond auction slate. The 2-year note yield settled down two basis points to 3.53%, and the 10-year note yield settled down two basis points to 4.17%. 

• Russell 2000: +6.1% YTD
• S&P Mid Cap 400: +5.1% YTD
• DJIA: +2.4% YTD
• Nasdaq Composite: +2.0% YTD
• S&P 500: +1.7% YTD

Reviewing today's data:

• December NFIB Small Business Optimism 99.5; Prior 99.0
• December CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.2%, December Core CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.2%
  • The key takeaway from the report is that core CPI was a touch cooler than expected, which prevented the year-over-year rate from rising. While this is a small victory, it is a welcome sight for a market that hopes to see some more future disinflation that would encourage the Fed to keep cutting rates.
• October New Home Sales 737K; Prior 738K
  • The key takeaway from the report is that the South region-the nation's largest housing sector-was the sole source of strength in October. Home sales declined in all other regions, with higher home prices, on average, acting as a headwind.
• September New Home Sales 738K (Briefing.com consensus 710K); Prior was revised to 711K from 800K
• December Treasury Budget -$145 bln vs. -$233.0 bln Briefing.com consensus; prior -$173.0 bln