US close: Dow Jones and S&P 500 retreat from fresh record highs

Wall Street stocks closed mostly lower on Tuesday, with the Dow Jones and S&P 500 retreating from the fresh record highs reached in the previous session.

At the close, the Dow Jones Industrial Average was 0.39%% lower at 32,825.95 and the S&P 500 was 0.16% weaker at 3,627.71, while the Nasdaq Composite saw out the session 0.09% higher at 13,471.57.

The Dow closed 127.51 points lower on Tuesday, cutting into gains recorded on Monday after the yield on the US 10-year Treasury note slid off recent highs and the Internal Revenue Service began processing $1,400 direct payments to Americans.

The Federal Reserve kicked off its two-day policy meeting on Tuesday, with market participants patiently awaiting comments on inflation and interest rates from chairman Jerome Powell tomorrow.

Also in focus, the benchmark 10-year Treasury yield, which sparked a rotation out of growth stocks as a result of its recent highs, was sitting at roughly 1.61% at the end of the session, down from last week's peaks and session highs of more than 1.62%.

The Cboe volatility index also fell below 20 and hit its lowest level since February 2020.

On the macro front, Americans tightened their belts in February as extreme weather conditions weighed on retails sales. Retail sales dropped 3% last month, according to the Commerce Department, more than had been expected on the Street, partly due to wild weather conditions across much of the US, with Americans spending less on automotive, furniture, electronics, home improvement, healthcare and clothing purchases, while sales at food and beverage stores were unchanged and sales at gas stations were up 3.6%.

Elsewhere, US industrial production fell unexpectedly in February, with marked declines in manufacturing and mining output easily offsetting a sharp increase in utilities output. According to the Federal Reserve, industrial production slumped 2.2% last month after increasing an upwardly revised 1.1% in January, surprising economists, who had anticipated a 0.6% gain for February.

Still on data, monthly business inventories rose moderately in January thanks to a sharp rebound in consumer spending at the beginning of 2021, with it now taking US businesses less time to offload their products than it has in almost nine years. Business inventories increased 0.3% in January after rising 0.8% in December, according to the Commerce Department, but were still down 1.8% on a year-on-year basis.

Lastly, March's NAHB housing market index fell two points in March to a reading of 82 as homebuilders were forced to deal with rising interest rates and heightened costs for materials - most notably, lumber.