By Twesha Dikshit and Purvi Agarwal Feb 10 (Reuters) – The S&P 500 and the Nasdaq edged lower on Tuesday, bogged down by declines in the communication services and technology sectors, while investors digested retail sales figures that kick off a series of economic datasets through the week. The S&P 500 communication services sector weighed the most and was down 1.3%, dragged by a 2.8% decline in Alphabet's shares after it sold bonds worth $20 billion in a seven-part offering. Tech stocks slipped 0.1%. Consumer discretionary stocks on the benchmark index gained 0.3%, lifted by Tesla and Marriott, capping declines. The latter jumped 8.7% after fourth-quarter results. Meanwhile, retail sales were unexpectedly unchanged in December, putting consumer spending and the overall economy on a slower growth path heading into the new year. Economists polled by Reuters had expected a 0.4% increase. "It's really the retail sales data that's come out below expectations (and) that's driving some of the weakness, indicating that maybe the economy wasn't as strong as people expected going through the fourth quarter," said Charlie Ripley, vice president of portfolio management at Allianz Investment Management. At 09:47 a.m. ET, the Dow Jones Industrial Average rose 207.51 points, or 0.40%, to 50,338.83, the S&P 500 lost 3.13 points, or 0.04%, to 6,961.93, and the Nasdaq Composite lost 75.64 points, or 0.30%, to 23,169.04. Gains in Goldman Sachs and Home Depot lifted the Dow to a record high despite a 1% decline in Coca-Cola, after the company missed Wall Street expectations for fourth-quarter revenue. A rebound in tech stocks on Monday helped the Dow close at a record high for the second session and brought the S&P 500 and the Nasdaq closer to all-time highs. The AI trade has come under renewed scrutiny, with ballooning capital expenditure projections and concerns about measurable returns weighing on investor sentiment. The next test will be chip giant Nvidia's results later this month. UBS downgraded the S&P 500 information technology sector to "neutral" from "attractive". This week, focus will be on the delayed nonfarm payrolls data, followed by crucial inflation numbers that could influence expectations for the U.S. Federal Reserve's monetary policy trajectory. White House economic adviser Kevin Hassett said on Monday that U.S. job gains could be lower in the coming months due to slower labor force growth and higher productivity. Markets currently expect the central bank to keep rates on hold until June, when President Donald Trump's Fed chair nominee, Kevin Warsh, could take charge, pending confirmation from the U.S. Senate. Federal Reserve policymakers Beth Hammack and Lorie Logan are slated to speak later in the day. In stocks, Datadog topped the S&P 500 with a 13% jump after the cloud security products provider beat estimates for fourth-quarter results. Shares of S&P Global plunged 6% after forecasting 2026 profit below analysts' estimates. Peers Moody's, FactSet and MSCI fell between 2.2% and 6%. Spotify's shares soared 15% after the audio-streaming platform forecast first-quarter earnings above expectations, benefiting from strong user growth and price hikes. Advancing issues outnumbered decliners by a 1.57-to-1 ratio on the NYSE, and by a 1.14-to-1 ratio on the Nasdaq. The S&P 500 posted 35 new 52-week highs and six new lows, while the Nasdaq Composite recorded 49 new highs and 55 new lows. (Reporting by Twesha Dikshit and Purvi Agarwal in Bengaluru; Editing by Saumyadeb Chakrabarty and Pooja Desai)
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