The S&P 500 Index closed down 0.19% on Tuesday. The Dow Jones Industrials Index fell 0.80%, and the Nasdaq 100 Index declined 0.18%. March E-mini S&P futures dropped 0.22%, and March E-mini Nasdaq futures fell 0.18%.
Stock indexes retreated after early gains. Software stocks sold off following AI startup Anthropic's preview of a new tool designed for work-related tasks beyond coding. Credit card companies fell for a second day after President Trump said lenders would be "in violation of the law" if they don't cap interest rates at 10% for one year.
Stocks moved higher briefly as inflation concerns eased. US December core consumer prices rose less than expected. Energy-producing stocks gained after WTI crude oil rose more than 2% to a 2.25-month high. Geopolitical risks pushed crude higher as the US increased pressure on Iran after Trump announced a 25% tariff on goods from countries "doing business" with Iran. Drone attacks near the Caspian Pipeline Consortium terminal on Russia's Black Sea Coast reduced crude loadings by almost half to around 900,000 barrels per day.
Stocks faced negative carryover from Monday on concerns about Federal Reserve independence. Fed Chair Powell said the Justice Department was threatening a criminal indictment tied to his June testimony on Fed headquarters renovations. This was in retaliation for the Fed's refusal to go along with President Trump's calls for lower interest rates.
US December CPI was unchanged from November at 2.7% year-over-year, matching expectations. December core CPI was also unchanged at 2.6% year-over-year, a smaller increase than the expected 2.7%.
US October new home sales fell 0.1% month-over-month to 737,000, beating expectations of 715,000.
St. Louis Fed President Alberto Musalem said the US economy is pretty robust. He expects above-potential growth and stated it is unnecessary and unadvisable for the Fed to take an accommodative stance.
March 10-year T-notes closed up by 4 ticks on Tuesday. The 10-year T-note yield fell 0.8 basis points to 4.167%. T-notes recovered from overnight losses and moved higher after the US December core CPI rose less than expected. T-notes added to gains Tuesday afternoon after strong demand was seen for the Treasury's $22 billion 20-year T-bond auction. The bid-to-cover ratio was 2.42, above the 10-auction average of 2.36.
T-notes initially moved lower on carryover pressure from Monday. Concerns over Fed independence arose when Fed Chair Powell said the Justice Department was threatening a criminal indictment. Hawkish comments from St. Louis Fed President Alberto Musalem were bearish for T-notes.
European government bond yields moved higher. The 10-year German bund yield rose 0.7 basis points to 2.847%. The 10-year UK gilt yield rose 2.5 basis points to 4.398%.
Software stocks retreated on Tuesday. Salesforce closed down more than 7%, leading losers in the S&P 500 and Dow Jones Industrials. Adobe closed down by more than 5%, and Intuit closed down by more than 4%. Workday and ServiceNow closed down more than 3%. Autodesk closed down by more than 2%, and Microsoft closed down by more than 1%.
Credit card companies fell for a second day. Visa closed down more than 4%. Mastercard and JPMorgan Chase closed down more than 3%.
Travere Therapeutics closed down more than 14% after the company said it received an FDA request to clarify the clinical benefit of its therapy for a rare kidney disease. Analysts said this could delay approval.
Super Micro Computer closed down more than 4% after Goldman Sachs initiated coverage with a sell recommendation and a $26 price target.
CRH Plc is down more than 3% after Wells Fargo Securities downgraded the stock to equal weight from overweight.
Synopsys closed down more than 3% after Piper Sandler downgraded the stock to neutral from overweight with a price target of $520.
Chipotle Mexican Grill closed down more than 2% after announcing that Chris Brandt has stepped down as chief brand officer.
Delta Air Lines closed down more than 2% after it forecast full-year adjusted EPS of $6.50 to $7.50. The midpoint is below the consensus of $7.20.
Moderna closed up more than 17%, leading vaccine makers higher and gainers in the S&P 500. Several medical organizations, including the American Academy of Pediatrics, plan to ask the courts to throw out revisions to the childhood vaccination schedule announced last week by Health Secretary Kennedy. They said the vaccine schedule is not based on scientific evidence and will harm the public.
Option Care Health closed up more than 8% after TD Cowen said the company's forecast for 2026 EBITDA growth of 2% to 7% is better than expected.
Intel closed up more than 7%, leading gainers in the Nasdaq 100. KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $60.
Advanced Micro Devices closed up more than 6% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $270.
Revvity closed up more than 6% after reporting preliminary Q4 revenue of $772 million, stronger than the consensus of $756.9 million.
Albemarle Corp closed up more than 4% after Deutsche Bank upgraded the stock to buy from hold with a price target of $185.
Cardinal Health closed up 3% after raising its full-year adjusted EPS forecast to at least $10.00 from a previous forecast of $9.65-$9.85. This is stronger than the consensus of $9.83.
Huntington Ingalls Industries closed up more than 3% after Bernstein raised its price target on the stock to $412 from $362.
Alphabet closed up more than 1% after Google entered into a multiyear deal with Apple to power Apple's AI technology.
Overseas stock markets settled mixed on Tuesday. The Euro Stoxx 50 rallied to a new record high and closed up 0.22%. China's Shanghai Composite fell from a 10.5-year high and closed down 0.64%. Japan's Nikkei Stock 225 rallied to a new all-time high and closed up sharply by 3.10%.