Wall Street drifts lower following mixed data on the economy

NEW YORK (AP) — The U.S. stock market is drifting lower on Tuesday following mixed data on the economy’s strength, which did little to clear uncertainty about where interest rates may be heading.

The S&P 500 fell 0.4% in afternoon trading and remains a bit below its all-time high set last week. The Dow Jones Industrial Average was down 271 points, or 0.6%, as of 1:53 p.m. Eastern time, and the Nasdaq composite was mostly unchanged.

Treasury yields eased a bit, following a larger initial drop, after one report said the U.S. unemployment rate was at its worst level last month since 2021, but employers also added more jobs than economists expected. A separate report, meanwhile, said an underlying measure of strength for revenue at U.S. retailers grew more in October than economists expected.

The mixed data initially sent Treasury yields lower in the bond market. The knee-jerk reaction seemed to be that the reports could encourage the Federal Reserve to see the slowing job market as the biggest threat to the economy, rather than high inflation, and cut interest rates further in 2026. But yields quickly recovered and then drifted up and down.

What the Fed does with interest rates is a top driver for Wall Street because lower rates can give a boost to the economy and to prices for investments, even if they also may worsen inflation. A report coming on Thursday will show how bad inflation was last month, and economists expect it to show prices for U.S. consumers continue to rise faster than anyone would like.

A report released on Tuesday after U.S. stocks began trading suggested price pressures are rising sharply, with average selling prices for businesses climbing at one of the fastest rates since the middle of 2022. The preliminary data from S&P Global also said growth for overall business activity slowed to its weakest level since June.

“Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem,” according to Chris Williamson, chief business economist at S&P Global Market Intelligence.

In the bond market, the yield on the 10-year Treasury fell to 4.16% from 4.18% late Monday. The two-year Treasury yield, which more closely tracks expectations for the Fed, eased to 3.48% from 3.51%.

Helping to keep the overall market in check were continued swings for stocks that have been caught up in the frenzy around artificial-intelligence technology.

Oracle rose 2.4%, and Broadcom rose 0.1%. They both had dropped to sharp losses last week, even though both reported stronger profits for the latest quarter than analysts expected.

But CoreWeave, which rents out access to top-of-the-line AI chips, fell 4.9%.

Questions remain about whether all the spending underway on AI technology will produce the kind of profits and productivity that will make it worth the expense.

Elsewhere on Wall Street, Pfizer fell 5.2% after giving a forecast for profit in 2026 that was below what some analysts expected. Its forecast for revenue next year, of between $59.5 billion and $62.5 billion, was close to analysts’ expectations.

Kraft Heinz fell 0.1% after saying Steve Cahillane, who was most recently CEO of Kellanova, will join as CEO on Jan. 1. After Kraft Heinz splits into two companies, which is expected to happen in the second half of 2026, Cahillane will lead the one that will hold onto the Heinz, Philadelphia and Kraft Mac & Cheese brands.

In stock markets abroad, indexes fell across much of Europe and Asia.

Japan’s Nikkei 225 dropped 1.6% ahead of an expected hike to interest rates by the Bank of Japan later this week.

Other markets in Asia also had some of the world's sharper swings. South Korea’s Kospi dropped 2.2%, while indexes fell 1.5% in Hong Kong and 1.1% in Shanghai.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.