U.S. Stocks End Mixed as Investors Parse Late-Session Risk Signals

U.S. stocks finished Tuesday’s session mixed at the closing bell, with modest losses in blue chips and small caps offset by gains in large-cap technology. The Dow Jones Industrial Average fell 302 points, or 0.63%, to 48,114 The S&P 500 slipped 16 points, or 0.24%, to 6,800. By contrast, the Nasdaq Composite rose 54 points, or 0.22%, to 23,111, supported by strength in growth-oriented names. Small-cap stocks underperformed, with the Russell 2000 down 2.01 points, or 0.80%, at 249.92, reflecting a more cautious tone toward economically sensitive companies late in the session.

What history tells us about bull markets after the 3-year mark 👇

Labor Market Signals Point to Cooling, Not Collapse

Attention remained on the latest U.S. jobs data, which underscored a labor market that is losing momentum rather than rolling over outright. According to the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 64,000 in November, modestly above expectations, while prior months were revised lower. The unemployment rate rose to 4.6%, the highest level since mid-2021, reflecting a growing labor force alongside slower hiring rather than a surge in layoffs. Federal Reserve officials have repeatedly emphasized the distinction, framing the current environment as one of cooling demand rather than acute labor stress, a dynamic that supports patience on policy while keeping recession risks in view.

Global Central Banks Diverge as Liquidity Concerns Linger

Overseas, investors are closely tracking meetings this week from the Bank of England, the European Central Bank, and the Bank of Japan, each confronting distinct economic trade-offs. The Bank of England is widely expected to cut rates by 25 basis points, citing weak growth and easing wage pressures, while signaling caution to avoid reigniting inflation, according to guidance from U.K. policymakers. The European Central Bank, by contrast, is expected to hold rates steady, with President Christine Lagarde having said policy is “in a good place,” even as internal debate continues over the longer-term inflation path and growth resilience in the euro zone.

The Bank of Japan remains the most consequential for global markets. Japanese policymakers are expected to raise rates modestly, lifting borrowing costs to their highest levels in decades. While some investors fear higher Japanese yields could trigger a rapid unwind of yen-funded carry trades, recent market behavior has challenged that assumption. Japanese government bond yields have risen alongside a weaker yen, suggesting concerns about fiscal sustainability rather than a classic tightening shock. Japanese Ministry of Finance data show overseas investment flows into U.S. assets remain firm, tempering fears of an abrupt global liquidity drain.

Bull Market Optimism Tempered by Policy and Political Risk

Looking beyond the near term, investors are increasingly debating how long the current bull market can persist. Kevin Mahn, president and chief investment officer of Hennion & Walsh Asset Management, said in an interview with AInvest’s Capital & Power that he expects markets to continue moving higher into 2026, though with greater volatility than in recent years. “I do feel conviction in that the market should continue to move higher in 2026, albeit with much more volatility than we experienced in 2025,” Mahn said.

Mahn pointed to a dense policy calendar as a key risk, including U.S. midterm elections, recurring debt-ceiling debates, and leadership changes at the Federal Reserve expected in 2026. Historically, he noted, bull markets that extend beyond three years have lasted an average of eight years, suggesting the current cycle may have room to run. Still, he cautioned that leadership within the market is likely to rotate, urging investors to diversify rather than rely on the sectors that dominated earlier gains.

Artificial intelligence remains a long-term growth theme, but one that could contribute to sharper swings. Mahn described the current phase of AI adoption as early-stage, driven largely by infrastructure investment in data centers and power systems, while warning that skepticism around valuations is likely to persist. At the same time, he cautioned that inflation may not ease as quickly as some forecasts suggest, potentially complicating expectations for rate cuts later in 2026.