The S&P 500 and the Nasdaq closed lower on Tuesday while the Dow edged up to its third record close in a row, as investors digested disappointing retail sales figures and waited for a ⁠key labour market report.

The S&P 500 communication services sector was the market's weakest sector, weighed down by Alphabet shares, which fell 1.8 percent after Google's parent said it sold bonds worth US$20 billion.

The announcement played in to investor worries 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, US 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 percent growth.

Trader hopes edged up for a more dovish US Federal Reserve with the probability of a one-notch April rate cut up to 36.9 percent from 32.2 percent 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 US President Donald Trump's ⁠Fed chair nominee, Kevin Warsh, would take charge, if ⁠approved by the US 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 non-farm payrolls report, due on Wednesday.

The S&P 500 fell 0.3 percent, to 6,941, the Dow rose 0.1 percent, to 50,188, while the Nasdaq fell 0.6 percent, to 23,102. (Reuters)