Wall Street drifts a touch below its record heights

NEW YORK (AP) — U.S. stocks drifted a bit below their record heights. The S&P 500 slipped 0.1% Tuesday, coming off its latest all-time high. The Dow Jones Industrial Average lost 0.3%, and the Nasdaq composite fell 0.1%. Stocks have run to records on expectations that the Federal Reserve will announce on Wednesday its first cut to interest rates of the year. The job market could use such a boost after slowing sharply. Treasury yields eased a bit after a report showing stronger sales at U.S. retailers did little to change expectations for the Fed to cut interest rates several times through this year and into 2026.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are hanging around their record heights on Tuesday as the countdown ticks toward what Wall Street expects will be the first cut of the year to interest rates by the Federal Reserve.

The S&P 500 fell 0.1%, coming off its latest all-time high. The Dow Jones Industrial Average was down 120 points, or 0.3%, as of 1:51 p.m. Eastern time, and the Nasdaq composite was 0.1% lower.

Stocks have run to records on expectations that the Fed will announce the first of a series of cuts to rates on Wednesday afternoon in hopes of giving the economy a boost. The job market has slowed so much that traders believe Fed officials now see it as the bigger danger for the economy than the threat of higher inflation because of President Donald Trump’s tariffs.

The Fed has been holding off on cuts to rates because inflation has remained above its 2% target, and easier interest rates could give it more fuel.

A report on Tuesday said shoppers increased their spending at U.S. retailers by more last month than economists expected. A chunk of that could simply be due to shoppers having to pay higher prices for the same amount of stuff. But it could also indicate solid spending by U.S. households could continue to keep the economy out of a recession.

The data did little to change traders’ expectations for a cut to interest rates on Wednesday, followed by more through the end of the year and into 2026.

Such high expectations have sent stocks to records, but they can also create disappointment if unfulfilled. That’s why more attention will be on what Fed Chair Jerome Powell says in his press conference following Wednesday's decision than on the decision itself. Fed officials will also release their latest projections for where they see interest rates and the economy heading in upcoming years, which could provide another potential flashpoint.

For now, global fund managers are tilting their portfolios toward stocks at the highest level in seven months, according to the latest survey by Bank of America. That's even though a record 58% of them are also saying that stocks look too expensive at the moment.

On Wall Street, Dave & Buster’s fell 16.2% after the entertainment chain reported a weaker profit for the latest quarter than analysts expected.

Ralph Lauren slipped 0.5% and got a tepid reception to the unveiling of its long-term financial plan, which it titled “Next Great Chapter: Drive.” As part of it, the company said it expects compounded annual growth over the next three years to be in the mid-single digit percentages for revenue.

New York Times Co. fell 1.8% after Trump filed a $15 billion defamation lawsuit against the newspaper and four of its journalists on Monday. The lawsuit points to several articles and a book written by Times journalists and published in the lead up to the 2024 election as “part of a decades-long pattern by the New York Times of intentional and malicious defamation against President Trump.”

On the winning end of Wall Street was Steel Dynamics, which climbed 6.9% after it said it’s seeing improved earnings across its three business units. It credited strong demand for steel from the non-residential construction and auto industries, among other things.

Oracle rose 0.9% on speculation that it could be part of a deal that would keep TikTok operating in the United States.

Chipotle Mexican Grill added 1.7% after its board said the company could buy back an additional $500 million of its stock. Such a move can send cash directly to investors and boost per-share results.

In stock markets abroad, indexes fell in Europe following a mixed showing in Asia.