Highlights

  • Major U.S. equity indexes ended Tuesday modestly lower after early advances faded.
  • Software and credit card stocks weighed on sentiment during the session.
  • Inflation data came in largely in line, while energy shares tracked higher crude prices.

U.S. equity markets finished Tuesday’s session in negative territory, reversing earlier gains as sector-specific pressures and policy-related developments influenced trading. The S&P 500 Index closed down 0.19%, while the Dow Jones Industrial Average declined 0.80%. The Nasdaq 100 Index also slipped 0.18%. Futures markets reflected similar movement.

Early Optimism Gives Way to Sector Pressure

Stocks initially moved higher after inflation concerns eased, supported by data showing U.S. December core consumer prices rose less than expected. The December Consumer Price Index remained unchanged from November at 2.7% year over year, matching forecasts. Core CPI also held steady at 2.6% year over year, below expectations of a 2.7% increase.

However, the positive momentum proved short-lived. Software stocks retreated following news that artificial intelligence startup Anthropic released a preview of a new tool aimed at a broader range of work-related tasks beyond coding. The development contributed to selling pressure across parts of the technology sector.

Credit Card Stocks and Policy Comments

Credit card companies declined for a second consecutive day, adding to broader market pressure. The move followed comments from U.S. President Donald Trump, who said credit-card lenders would be “in violation of the law” if they do not cap interest rates at 10% for one year. The remarks renewed focus on regulatory and policy risks facing financial services companies.

Markets also carried over some negative sentiment from Monday amid concerns related to Federal Reserve independence. Fed Chair Jerome Powell said the Justice Department was threatening a criminal indictment tied to his June testimony regarding Federal Reserve headquarters renovations, which he linked to the Fed’s refusal to align with President Trump’s calls for lower interest rates.

Energy Shares Supported by Rising Crude

Energy-producing stocks moved higher during the session as crude oil prices advanced. West Texas Intermediate crude rose more than 2% to a 2.25-month high. Geopolitical developments contributed to the move, including increased U.S. pressure on Iran after President Trump announced a 25% tariff on goods from countries “doing business” with Iran.

In addition, drone attacks on oil tankers near the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast reduced crude loadings at the terminal by nearly half, to around 900,000 barrels per day, tightening near-term supply conditions.

Economic Data and Fed Commentary

In housing data, U.S. new home sales edged down 0.1% month over month to an annualized rate of 737,000, above expectations of 715,000. Separately, St. Louis Fed President Alberto Musalem said the U.S. economy remains “pretty robust,” adding that he expects above-potential growth and sees it as unnecessary and inadvisable for the Federal Reserve to adopt an accommodative policy stance at this stage.

The combination of mixed economic signals, sector-specific moves, and policy-related developments contributed to Tuesday’s cautious market close.