S&P 500 Extends Losses as Rate-Cut Hopes Fade and Earnings Disappoint

U.S. stocks resumed their downward trajectory on Tuesday, with the S&P 500 posting another day of declines as fading expectations for near-term Fed rate cuts collided with a new round of underwhelming corporate earnings. With the government shutdown still limiting access to official economic data, markets remained heavily reactive to Fed commentary and company guidance — both of which leaned cautious.

The S&P 500 slipped further into negative territory, weighed down by weakness in tech, consumer discretionary, and semiconductors. Several major companies issued earnings results or forward guidance that pointed to cooling demand, rising cost pressures, and slower hiring — reinforcing concerns that the economy may be losing momentum beneath the surface.

Treasury yields drifted higher throughout the session as traders unwound earlier bets on a December rate cut. The move added renewed pressure to growth-oriented equities, where elevated valuations remain sensitive to even modest rate-expectation shifts. Meanwhile, defensive sectors such as utilities and healthcare saw modest inflows as investors rotated toward lower-volatility assets.

Sentiment was also hit by lingering uncertainty around the Fed’s ability to make informed policy decisions without payrolls, CPI, or retail-sales updates. With markets effectively “flying blind,” each corporate update has taken on outsized influence, shaping near-term expectations for both economic strength and earnings stability.

For now, traders are bracing for more choppy price action. The combination of weaker earnings, higher yields, and limited data transparency continues to create an environment where sentiment can shift quickly — and rallies may struggle to sustain momentum until policy clarity returns.