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US stocks faced a downturn on Tuesday despite positive retail sales data. Investors are now awaiting the commencement of a highly anticipated Federal Reserve policy meeting, which is widely expected to bring about an interest-rate cut. The Dow Jones Industrial Average (^DJI) dipped approximately 0.5%, following an eighth consecutive day of losses for the blue-chip index. The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) also shed around 0.5%. Interestingly, the Nasdaq closed at a record high on Monday.

Yield on 10-Year Treasury and Fed's Future Stance

The yield on the 10-year Treasury (^TNX) witnessed a significant climb, reaching as much as 4.42%, which is its highest level in over three weeks. This upward movement is attributed to the growing expectations of the Fed adopting a more cautious approach in the coming year. Amidst these market dynamics, investors are closely observing clues regarding the path of interest rates next year, with a particular focus on January.

Impact of Fed Policy Meeting on Stocks

The upcoming Federal Reserve policy meeting holds significant importance for the stock market. With all bets pointing to a 25 basis point interest-rate cut, investors are closely monitoring the developments. The Dow Jones Industrial Average's (^DJI) 0.5% slide and the similar losses in the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) highlight the market's sensitivity to the Fed's decisions. The Nasdaq's record high on Monday added an interesting dimension to the market's behavior.

Insight from November Retail Sales Data

November retail sales provided valuable insights into the health of the consumer and the economy. Sales rose by 0.7%, surpassing the expected 0.6% month-on-month gain. This strong holiday spending indicates a promising start to the US holiday shopping season. Retail sales in October were revised upwards to a 0.5% increase from the previous reading of 0.4%. The significant month-over-month increase of 2.4% in motor vehicle and auto parts sales, along with a 1.8% rise in online sales, were the key drivers behind the gains. However, when excluding auto and gas, November sales rose only 0.2%, falling short of the consensus estimate of a 0.4% increase. The control group in Tuesday's release, which excludes several volatile categories and is a factor in the Gross Domestic Product reading for the quarter, increased by 0.4%, in line with estimates.

Performance of Crypto-Linked Stocks

Elsewhere in the market, crypto-linked stocks showed a slight upward trend. Bitcoin (BTC-USD) broke above $107,000 per token, continuing its record-setting rally. Shares of Coinbase (COIN), Mara Holdings (MARA), and MicroStrategy (MSTR) all gained. This indicates the growing influence of the cryptocurrency market on traditional stocks.