U.S. stock markets were largely flat during Tuesday's early session as traders digested gains from the previous two trading days. A recently released retail sales report, which came in weaker than anticipated, has strengthened the argument for the Federal Reserve to implement interest rate cuts this year, leading to an extension of gains in U.S. Treasuries. Bitcoin's price experienced a significant decline.

At 9:30 AM New York time, the S&P 500 was up 0.1%, hovering near its record high. The Nasdaq 100 Index advanced 0.2%, while the Dow Jones Industrial Average rose 0.4%. Market volatility remained relatively contained. The benchmark 10-year Treasury yield traded near its lowest level in a month. Money markets—which have already fully priced in two rate cuts—are now attributing a higher probability to the Fed cutting rates three times within the year.

Alphabet announced plans to issue bonds denominated in British pounds and Swiss francs totaling more than $11 billion, including a notably rare 100-year maturity. The company's shares extended their decline in New York's early trading, falling 2.7% to hit the session's low.

U.S. retail sales unexpectedly stalled in December, suggesting that the momentum consumers provided to economic growth at the year's end has weakened. On a monthly basis, retail sales, unadjusted for inflation, were flat, following a 0.6% increase in November.

Vail Hartman of BMO Capital Markets noted, "Consumer momentum in the final months of 2025 appears weaker than previously expected—this provides a relatively pessimistic starting point for 2026 growth forecasts."

Bret Kenwell from eToro stated that the report "is not a disaster," but it is not a positive signal either, especially against a backdrop of lingering concerns about the labor market and ongoing volatility across multiple asset classes.

Kenwell emphasized, "Tomorrow's jobs report is critical. If the data is weak and growth concerns intensify, market sentiment could shift further towards risk-off mode; however, strong data might alleviate some worries. It would be refreshing if markets could return to a normal state where good news is seen as good and bad news as bad."

Economists forecast that the nonfarm payroll data for January, due Wednesday, will show an increase of 68,000 jobs, which would be the best performance in four months. The unemployment rate is expected to hold steady at 4.4%. In addition to the regular data, the employment figures will undergo annual revisions, with significant downward adjustments anticipated for the data covering the 12 months up to March 2025.