Amazon's first four-day Prime Day sale last month gave a moderate boost to retail sales in July, which matched Wall Street's forecast even as June retail sales were revised sharply higher. Yet the S&P 500 turned modestly lower in Friday morning stock market action after the University of Michigan consumer sentiment survey showed a jump in inflation expectations.
UnitedHealth Group, Nucor and DR Horton are leading S&P 500 gainers on Friday after Warren Buffett's Berkshire Hathaway disclosed new stakes late Thursday.
10:12 a.m. ET
Consumer Sentiment Down; Inflation Expectations Up
The University of Michigan consumer sentiment index fell to 58.6 from 61.7 in July. Consumers expect 4.9% inflation in the coming year, up from 4.5% last month. The Fed is more concerned about long-term inflation expectations. Those rose also, with consumers expecting 3.9% inflation in five to 10 years, up from 3.4% in July.
Still, the University of Michigan said that both short-run and long-run inflation expectations "remain well below the highs seen briefly in April and May 2025."
9:40 a.m. ET
S&P 500 Opens Flat
The S&P 500 is essentially unchanged just after Friday's open. That follows three straight record closing highs, though Thursday's gain was less than 0.1%. Through Thursday, the S&P 500 had climbed 10% for the year.
The 10-year Treasury yield edged one basis point higher to 4.3%.
9:27 a.m. ET
Wall Street Reaction To Retail Sales
Chris Zaccarelli, chief investment officer for Northlight Asset Management, noted the upward revisions to prior months' retail sales data "makes today's headline numbers better than they appear."
"As long as consumer spending holds up and companies are able to retain workers because of that robust spending," that should continue to push corporate profits and stock prices higher, he said.
High stock market valuations, rising inflation and potentially rising unemployment "aren't the perfect conditions for a robust rally, but right now they are good enough for a slow grind higher."
9:20 a.m. ET
Industrial Production Soft In July
The Federal Reserve reported that industrial production slipped 0.1% in July, worse than forecasts of flat output. Manufacturing output was unchanged, undercutting estimates of 0.1% growth.
However, the data was a pretty much a wash after upward revisions to June data. The Fed said industrial production rose a revised 0.4% in June, up from the initially reported 0.3%. Factory output grew 0.3%, up from the initial estimate of 0.1%.
8:52 a.m. ET
Who Is 'Eating' Trump Tariffs?
Who Is 'Eating' Trump Tariffs? Rising import prices suggest that foreign exporters aren't cutting prices to offset Trump tariffs, which Trump administration officials have said would happen. So who is "eating" the tariffs? It's still not clear. There has been some push through to consumer prices, but July CPI data seemed to show that slowed last month. Meanwhile, producer price data showed that distributors actually saw a jump in margins, meaning that they saw higher profitability, which is the opposite of what you might expect to happen from tariffs, particularly if consumer prices aren't rising that much.
However, the data is subject to revision, and Pantheon Macroeconomics has said its implausible that distributors actually are raking in higher profit margins.
8:50 a.m. ET
Economic Data Not Moving Futures
S&P 500 futures are up 0.1%, where they were before the 8:30 a.m. ET releases. The 10-year Treasury yield is 4.29%, also little changed.
8:46 a.m. ET
Import Prices Rise
Import prices rose 0.4% on the month vs. forecasts of a slim 0.1% increase. Excluding fuel, import prices rose 0.3%. The Bureau of Labor Statistics said that increases in prices for industrial supplies and material, consumer goods and capital goods more than offset lower prices for autos, foods and beverages.
8:44 a.m. ET
Retail Winners, Losers
Nonstore retail sales ran 8% higher than a year ago. Clothing store sales rose 0.7% on the month and 5% from a year ago. Furniture store sales rose 1.4% from June and 5.1% from a year ago. Soft categories included food service and drinking places, which saw sales dip 0.4%, while remaining up 5.6% from a year ago. Electronics and appliance store sales slipped 0.6% on the month and 2.3% on the year. Building materials stores such as Home Depot saw sales fall 1% from June and 2.6% from July 2024.
8:41 a.m. ET
Manufacturing Gauge Picks Up
The New York Federal Reserve's Empire State manufacturing index jumped 11.4 points to 11.9 in August. That was above views for 5.5. The Empire State index is one of the earliest monthly reads on the economy.
8:38 a.m. ET
Retail Sales Headlines
Retail sales rose 5% in July, matching the consensus forecast, according to Econoday. Excluding auto-related sales, which rose 1.6%, retail sales climbed 0.3%, in line with estimates. Sales at nonstore retailers rose 0.8% on the month amid the four-day Amazon Prime Day event.
June retail sales growth was revised up from 0.6% to 0.9%. Sales excluding autos rose a revised 0.8%, vs. the initially reported 0.5%.
Retail Sales Forecasts
Wall Street expects retail sales to rise a solid 0.5% in July, according to the Econoday consensus forecast. But Deutsche Bank economists anticipate a 1.2% jump, fueled partly by surprisingly strong auto sales last month. The firm also expects a 1.4% monthly increase in sales at nonstore retailers, thanks to Amazon extending its Prime Day event to four days from the usual two days. Many other retailers had big sales offerings around the Prime Day event.
Excluding autos, the consensus forecast calls for moderate 0.3% growth.
Amazon said the four-day event achieved a record sales in comparison to other four-day periods that included a Prime Day sale. Adobe said online sales during the week of Prime Day rose 30.3% from a year ago.
Fed Rate-Cut Outlook
Following two big inflation reports this week, markets are pricing in 93% odds of a Federal Reserve rate cut at the Sept. 17 meeting. Over this year's final three Fed meetings, markets see 87% odds of at least 50 basis points in rate cuts and 42% odds of 75 basis points in cuts.
Amazon Flashes Buy Signal
Amazon was Thursday's IBD Stock Of The Day following news that it will offer same-day delivery for U.S. Prime members on perishable orders of at least $35. Deutsche Bank analyst Lee Horowitz reiterated a buy rating and 278 price target.
Amazon stock rose 2.9% to 230.98 on Thursday, flashing an early entry opportunity on a move past 226.22.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
