US stocks slip following the latest discouraging signal on the economy

NEW YORK (AP) - U.S. stock indexes slipped following the latest discouraging signal on the U.S. economy. The S&P 500 fell 0.5% Tuesday, coming off a whipsaw stretch where it followed its worst day since May with its best since May. The Dow Jones Industrial Average fell 0.1%, and the Nasdaq composite fell 0.7%.

A weaker-than-expected report on activity for U.S. services businesses added to worries that President Donald Trump's tariffs may be hurting the economy. But hopes for coming cuts to interest rates by the Federal Reserve, along with a stream of stronger-than-expected profit reports from U.S. companies, helped keep the losses in check.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

NEW YORK (AP) - U.S. stock indexes are slipping in mixed trading on Tuesday following the latest discouraging signal on the U.S. economy.

The S&P 500 was down 0.4% in late trading, coming off a whipsaw stretch where it followed its worst day since May with its best since May. The Dow Jones Industrial Average was down 36 points, or 0.1%, with an hour remaining in trading, and the Nasdaq composite was 0.5% lower.

A weaker-than-expected report on activity for U.S. businesses in the transportation, retail and other services industries added to worries that President Donald Trump's tariffs may be hurting the economy. But increased hopes for coming cuts to interest rates by the Federal Reserve, along with a stream of stronger-than-expected profit reports from U.S. companies, helped to keep the losses in check.

Edgewell Personal Care, the company behind the Schick, Playtex and Banana Boat brands, fell 19% after reporting lower profit and revenue for the latest quarter than analysts expected. CEO Rod Little said it was a very weak season for sun care in North America, while tariffs are acting as a drag on profits.

All kinds of companies have been telling investors how much they expect tariffs to shave off their earnings this year, and trade policy was one of the most common topics U.S. services businesses talked about in the latest monthly survey compiled by the Institute for Supply Management about their activity.

"Tariffs are causing additional costs as we continue to purchase equipment and supplies," one company in the health care and social assistance business said, for example. "Though we need to continue with these purchases, the cost is significant enough that we are postponing other projects to accommodate these cost changes."

Another business in the real estate, rental and leasing industry told the institute that economic "uncertainty remains the dominant theme. However, the tariff talk has turned out to be much more bluster than actual policy, and businesses have seemed to tune out the noise."

Even the threat of tariffs isn’t seeming to slow the juggernaut of investment flowing into artificial-intelligence technology.

Palantir Technologies jumped 7% after the provider of AI platforms reported a stronger profit for the latest quarter than analysts expected. The AI darling also raised its forecast for revenue over the full year, and its stock climbed further after it had already doubled for the year so far coming into the day.

"We continue to see the astonishing impact of AI leverage," CEO Alex Karp said.

Axon Enterprise leaped 15.2% after the company, which sells Tasers, body cameras and software to public safety departments, reported a much stronger profit than analysts expected. It also cited growth in its AI offerings, which can save time for transcriptions and other tasks, and raised its forecast for revenue this year.

On the losing side of Wall Street was American Eagle Outfitters, which dropped 7.8% to give back some of its 23.6% jump from the day before. That's when Trump weighed in on the debate surrounding the retailer's advertisements, which highlight actor Sydney Sweeney's great jeans.

Some critics thought the ad's reference to the blonde-haired and blue-eyed actor's "great genes" may be extolling a narrow set of beauty standards, while Trump said that being "WOKE is for losers."

Yum Brands fell 5% after the company behind KFC, Taco Bell and Pizza Hut reported results for the latest quarter that came up just short of analysts' expectations.

The pressure is on companies to report bigger profits after the U.S. stock market surged to record after record from a low point in April. The big rally fueled criticism that the broad market had become too expensive.

For stock prices to look like better bargains, either companies could produce bigger profits, or interest rates could fall. The latter may happen in September, when the Federal Reserve has its next meeting.

Expectations have built sharply for a rate cut at that meeting since a report on the U.S. job market Friday came in much weaker than economists expected. Lower interest rates would make stocks look less expensive, while also giving the overall economy a boost. The potential downside is that they could push inflation higher.

Treasury yields sank sharply after Friday's release of the jobs report, and they haven't recovered. The yield on the 10-year Treasury eased to 4.20% from 4.22% late Monday and from 4.39% just before the release of the jobs report. That's a significant move for the bond market.

In stock markets abroad, indexes rose across much of Europe and Asia.

India's Sensex was an outlier and dipped 0.4% on concerns about trade tensions with the United States as the Trump administration pushes for cutbacks in the country's oil purchases from Russia.