The S&P 500 slipped 0.3 per cent, marking its first back-to-back losses in three weeks and further pushing away from its all-time highs. The Dow Jones and the Nasdaq also both fell 0.3 per cent.

Tech giant Oracle sank on uninspiring results. Meantime, Alphabet rallied as analysts applauded the Google parent’s announcement of a major development in quantum computing through the use of its Willow quantum chip. Home builders got hit as Toll Brothers’s profit-margin projection fell short of estimates.

“Animal spirits take a breather ahead of CPI,” said Jose Torres at Interactive Brokers. “US stocks are stalling near all-time highs as investors await this year’s final CPI report, which is expected to reflect another increase in the annualised headline figure.”

Wednesday’s CPI will offer Fed officials a final look at the pricing environment ahead of their meeting next week. Any indication that inflation progress has stalled could well undercut the chances of a rate cut. For now, swap trading projects an 80 per cent chance of a quarter-point rate cut this month.

The market is pricing in the smallest implied reaction to CPI since 2021, according to Bank of America strategists, who argue the readout will matter more this time.

“A softer print can clear the path for a year-end rally, with the second half of December being the second-strongest period of the year,” a team led by Ohsung Kwon said. “On the contrary, a firmer print can revamp volatility,” particularly after the post-election rally.

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Oracle sank 6.7 per cent after reporting growth for the latest quarter that fell just short of analysts’ expectations. It was one of the heaviest weights on the S&P 500, even though CEO Safra Catz said the company saw record demand related to artificial-intelligence technology for its cloud infrastructure business, which trains generative AI models.

AI has been a big source of growth that’s helped many companies’ stock prices skyrocket. Oracle’s stock had already leaped nearly 81 per cent for the year coming into Tuesday, which raised the bar of expectations for its profit report and future growth.

C3.ai recovered from an early loss and rose 6.5 per cent. It reported a smaller loss for the latest quarter than analysts expected. The AI software company increased its forecast for how big a loss it expects to take this fiscal year from its operations.

The Fed has been easing its main interest rate from a two-decade high since September to lift the slowing jobs market, after bringing inflation nearly down to its 2 per cent target. Lower rates would help give support to the slowing job market, but they could also provide more fuel for inflation.

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The yield on the 10-year Treasury rose to 4.24 per cent from 4.20 per cent late on Monday.

Even though the Fed has been cutting its main interest rate, mortgage rates have been more stubborn and have been volatile since the autumn. That has hampered the housing industry, and home builder Toll Brothers’ stock fell 7 per cent even though it beat analysts’ expectations for profit and revenue in the latest quarter.

Indexes were mixed in China after the world’s second-largest economy said its exports rose by less than expected in November. Stocks rose 0.6 per cent in Shanghai but fell 0.5 per cent in Hong Kong.