US stocks flirt with records as yields fall after a discouraging report on US shoppers

The action was stronger in the bond market, where Treasury yields fell after a report showed U.S. retailers made less money at the end of last year than economists expected. Shoppers spent roughly the same amount in December as they did in November, less than the modest growth that economists expected.

That could signal a loss of momentum for overall spending by U.S. households, which is the main engine of the economy. It also comes ahead of two more anticipated reports coming later in the week. On Wednesday, the U.S. government will give the latest monthly update on the unemployment rate, while a Friday report will show how bad inflation is for U.S. consumers.

Altogether, the data should help the Federal Reserve decide what to do with interest rates. The Fed has put its cuts to interest rates on hold, and too-hot inflation could keep it on pause for a long time. But a weakening of the job market, on the other hand, could push it to resume cuts more quickly.

One of the reasons the U.S. stock market has remained close to records is the expectation that the Fed will continue cutting interest rates later this year. Lower rates can give the economy a boost, though they can also worsen inflation.

Following Tuesday’s disappointing report on sales at U.S. retailers, traders upped bets that the Fed could cut interest rates three times or more this year, according to data from CME Group. Most still see two cuts as more likely.

The yield on the 10-year Treasury fell to 4.13% from 4.22% late Monday.

On Wall Street, mixed reactions to the latest profit reports from big U.S. companies helped to keep the market relatively in check.

Coca-Cola fell 1.9% after its growth in revenue for the latest quarter fell short of analysts’ expectations. It also gave a forecasted range for growth this upcoming year for an important underlying measure of growth whose midpoint was less than analysts’ expectations.

S&P Global dropped 6.2% after giving a forecast for profit in the upcoming year that fell short of analysts’ expectations. The company famous for its stock indexes has been struggling recently with worries that competitors powered by artificial-intelligence technology may steal customers for its data services. Its stock came into the day with a loss of 15% for the year so far.

But Hasbro climbed 6.6% after topping analysts’ expectations for profit and revenue in the latest quarter. The toymaker credited strength for its “Magic: The Gathering” game in particular, and it announced a program to send up to $1 billion of cash to investors by buying back its own stock.

DuPont rose 4% after the chemical giant reported better results for the latest quarter than analysts expected. It also gave a forecast for profit in 2026 that topped analysts’ expectations.

Outside of earnings reports, Warner Bros. Discovery climbed 1.8% after Paramount said it upped its offer to buy the entertainment company.

Paramount is increasing its offer of $30 per share by 25 cents per share for each quarter that its buyout has not closed past the end of this year. It’s to show how confident Paramount is that its deal would get an OK from regulators at the government. Paramount also said it would pay $2.8 billion to help Warner Bros. Discovery get out of its buyout deal with Netflix.

Paramount Skydance’s stock added 1.3%, while Netflix rose 2.3%.

In stock markets abroad, Japan’s Nikkei 225 rallied for a second day on expectations that a newly elected parliament will help the country’s prime minister push through tax cuts and other moves to boost the economy and markets. The Nikkei 225 rose 2.3% to another record.

Gains for other Asian markets were more modest, while indexes were mixed in Europe.

AP Business Writers Yuri Kageyama and Matt Ott contributed.