U.S. equities moved higher on Tuesday as newly released government data strengthened expectations that the Federal Reserve is positioned to deliver another interest rate cut at its December policy meeting. The latest reports on retail spending, producer prices and consumer sentiment — delayed for weeks due to the extended federal shutdown — collectively pointed toward easing inflation pressures and moderated demand.
The Dow Jones Industrial Average led the session with a solid advance of more than 1.2%, supported by broad-based buying across industrials and financials. The S&P 500 also gained, rising 0.72%, while the Nasdaq Composite climbed 0.40%, held back by weakness in semiconductor shares.
Technology stocks were under pressure after chipmaker Nvidia slid nearly 4%, weighing on the broader Philadelphia Semiconductor Index, which declined 0.8%. The pullback in the sector contrasted with strength elsewhere in the market, where investors reacted positively to data suggesting that inflation continues to move in the right direction.
Reports released Tuesday by the Commerce and Labor departments showed that September retail sales softened, while producer price growth slowed, reinforcing the view that price pressures remain contained. Analysts noted that while the data is several weeks old, the trend is consistent with other indicators showing that the pace of inflation has not reaccelerated.
Market strategists said the batch of data helped solidify expectations that the Federal Open Market Committee is likely to approve a 25-basis-point rate cut at next month’s meeting — what many expect to be the central bank’s third and final reduction this year.
“Even though the figures reflect September, the direction remains meaningful,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “Inflation is not worsening, and with spending showing signs of easing, the Fed has room to act on rates in December.”
The day’s moves also followed renewed optimism surrounding corporate developments in the technology sector. Shares of Alphabet traded higher after reports indicated the company had engaged in discussions with Meta about supplying AI chip technology, a development investors viewed as a potential indicator of expanding demand in the artificial intelligence hardware ecosystem.
Consumer confidence data released alongside the economic reports also pointed to a measured improvement, adding to the positive tone in financial markets. Analysts say the combination of easing inflation and steady sentiment could support further recovery in consumer activity toward the end of the year.
Even with Tuesday’s gains, traders noted that market volatility is likely to persist in the weeks ahead as investors assess incoming corporate guidance and await updated policy signals from Federal Reserve officials. Still, many view the latest data as an encouraging sign that the economy remains on a path consistent with a soft landing.
Market participants will now turn their attention to upcoming releases covering personal consumption expenditures — the Fed’s preferred inflation gauge — due later this month. Any continued moderation in price pressures could further cement expectations for a December policy adjustment.
The major indices closed near session highs, underscoring a constructive trading day for U.S. equities. While uncertainty remains around the trajectory of rate cuts into 2026, Tuesday’s moves reflected increased confidence that the Fed is nearing the end of its tightening-to-easing transition.
