S&P 500, Nasdaq dip with economic data, earnings in focus

By Sinéad Carew and Twesha Dikshit

Feb 10 (Reuters) – The S&P 500 and the Nasdaq closed lower on Tuesday while the Dow edged up to its third record close in a row, as investors digested disappointing retail sales figures and waited for a key labor market report. 

The S&P 500 communication services sector was the market’s weakest sector, weighed down by Alphabet shares, which fell 1.8% after Google’s parent said it sold bonds worth $20 billion.

The announcement played in to investor worries about the amount of money technology companies say they must spend to support the artificial-intelligence boom, with Amazon, Alphabet, Meta and Microsoft collectively set to spend hundreds of billions in 2026 as they race for AI dominance.

Meanwhile, U.S. retail sales unexpectedly stalled in December as households scaled back spending on vehicles and other big-ticket items, suggesting a slower growth path for consumer spending and the economy heading into the new year. The flat reading compared with economists’ estimates for 0.4% growth.

Trader hopes edged up for a more dovish Federal Reserve with the probability of a one-notch April rate cut up to 36.9% from 32.2% on Monday, according to CME Group’s FedWatch tool. Markets still expect, however, that the central bank will keep rates on hold until June, when President Donald Trump’s Fed chair nominee, Kevin Warsh,  would take charge if approved by the U.S. Senate.

Mark Luschini, chief investment strategist at Janney Montgomery Scott, described the disappointing retail data as “bad news is good news,” particularly for rate-sensitive industry indexes such as utilities and real estate, which were leading the benchmark’s sector gainers.

But the strategist pointed to caution ahead of the delayed but closely watched nonfarm payrolls report, due on Wednesday. 

“In anticipation of the jobs report, nobody wants to get too far above their risk budget in the event the number does cause some consternation,” said Luschini.

Potentially adding some angst was White House economic adviser Kevin Hassett’s comment on Monday  that U.S. job gains could be lower in the coming months because of slower labor force growth and higher productivity due to AI gains. 

The Dow Jones Industrial Average rose 52.27 points, or 0.10%, to 50,188.14, after hitting an intraday record high earlier in the day. The S&P 500 lost 23.01 points, or 0.33%, to 6,941.81 and the Nasdaq Composite lost 136.20 points, or 0.59%, to 23,102.47. 

With the S&P 500 narrowly missing a return to its late January record close on Monday, Janney’s Luschini said: “When a security or an index reapproaches a high level again there’s often some hesitation, some contention that has to take place before it can break through that peak again.”

Gains of more than 2% in stocks such as Walt Disney and Home Depot helped push up the blue-chip Dow, countering declines in shares including Coca-Cola, which finished down 1.5% after missing Wall Street estimates for fourth-quarter revenue.

In other individual stocks, Datadog jumped 13.7% and led S&P 500 percentage gainers on the day after the cloud-based monitoring and analytics platform beat quarterly estimates.

In the consumer discretionary sector,  Marriott closed up 8.5% for its biggest daily gain since April after also hitting a record high. The hotel chain projected a 35% jump in fees from co-branded credit cards, as affluent travelers splurge on luxury vacations.

Shares of S&P Global slumped 9.7%, making it the biggest loser in the S&P 500 after forecasting 2026 profit below analysts’ estimates. Peers Moody’s and MSCI also fell.

Spotify shares soared 14.7% after the audio-streaming platform forecast first-quarter earnings above expectations, benefiting from strong user growth and price hikes.

Advancing issues outnumbered decliners by a 1.47-to-1 ratio on the NYSE where there were 795 new highs and 65 new lows. On the Nasdaq, 2,276 stocks rose and 2,447 fell as declining issues outnumbered advancers by a 1.08-to-1 ratio. 

The S&P 500 posted 72 new 52-week highs and 11 new lows while the Nasdaq Composite recorded 105 new highs and 107 new lows.

On U.S. exchanges, 17.89 billion shares changed hands compared with the 20.68 billion-share moving average for the last 20 sessions. 

(Reporting by Sinéad Carew in New York, and Twesha Dikshit and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and Matthew Lewis)