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

Feb 10 (Reuters) – The S&P 500 and the Nasdaq closed lower on Tuesday as investors digested disappointing retail sales figures and waited for a key labor market report.

The S&P 500 communication services sector was weighed down by Alphabet shares after Google’s parent said it sold bonds worth $20 billion.

The announcement came as investors have been worrying 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% 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.

According to preliminary data, the S&P 500 lost 23.49 points, or 0.34%, to end at 6,941.33 points, while the Nasdaq Composite lost 139.49 points, or 0.60%, to 23,099.18. The Dow Jones Industrial Average rose 43.15 points, or 0.08%, to 50,179.02.

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 in stocks such as Walt Disney and Home Depot helped push the blue-chip Dow up modestly to a fresh peak, against a drag from Coca-Cola, which lost ground after missing Wall Street estimates for fourth-quarter revenue.

In other individual stocks, Datadog jumped after the cloud-based monitoring and analytics platform beat quarterly estimates.

In the consumer discretionary sector, Marriott rallied after 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 dipped after forecasting 2026 profit below analysts’ estimates. Peers Moody’s and MSCI also fell during the session.

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

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