Retail Sales Take a Dip, Stocks Eye Weekly Gain

Published as of: August 13, 2026, 9:10 a.m. ET

(Friday market open) Retail sales, the last rung on this week's data ladder, fell a surprising 0.6% monthly in July, though the weakness partly reflected lower gas prices and falling car sales. Analysts had expected a 0.2% rise following June's 0.2% increase. Stocks wavered after the data, little changed from yesterday's record high, and Treasury yields initially dipped.

"The retail sales report came in much softer than expected," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Combined with the relatively soft jobs report, it may make people worry about a softening economy, but one month doesn't make a trend. A look under the hood in the second quarter GDP report showed strong underlying growth."

On Thursday, the S&P 500 Index scrambled to new all-time highs, carried by tech and Magnificent Seven names as oil and yields fell. Crude rose today after the U.S. threatened more economic measures isolating Iran. Preliminary August University of Michigan Consumer Sentiment looms at 10 a.m. ET. Consensus is 54.5%, down from 55.2% in July and near historic lows. After that, summer trading trends could return, keeping volume light as the market tracks for another positive week.

1. Retail sales deeper dive: Zooming in, retail sales fell 0.3%, excluding autos, when analysts had expected a 0.2% increase. Control group retail sales fell 0.4%, the worst showing since January 2025. The control group, which excludes auto dealers, building materials stores, and gas stations, is a measure closely watched by investors because it's the part of the report that's used to help calculate gross domestic product (GDP). "This makes a September rake hike less likely, but not completely off the table," my colleague Martin said. "Any upside surprises with August's inflation reports could make more Fed voters nervous." There were whispers heading into the report that the numbers might be light given the end of the World Cup in mid-July and an earlier-than-usual Prime Day event from Amazon (AMZN). With retail sales now in the book, retail giants begin reporting next week, perhaps offering more detail on consumer trends. Home Depot (HD) kicks things off Tuesday.
    
2. Overseas Treasury buys in focus: Monday's key data is the Treasury Department's monthly Treasury International Capital (TIC) report that tracks flows into and out of U.S. assets. Lower inflows could ultimately lead to a weaker U.S. dollar and higher Treasury yields if demand falls enough. This report follows a rare joint effort early this month by Japan and the U.S. to prop up the yen. The motive likely was to limit Japan's sales of U.S. Treasuries, as Japan is the largest foreign holder. Such sales to fund yen purchases might pressure an already sagging Treasury market, sending yields and inflation higher here. The TIC report collected data before that move was announced but still deserves a look after Japan's Treasury holdings fell more than 11% in 2025. Despite the coordinated yen buying, fundamentals in terms of yield differentials and fiscal policy suggest continued yen weakness. "Currency intervention typically doesn't have a great record of sustainably changing trends without a change in policy," said Michelle Gibley, director of international equity research and strategy at SCFR.
    
3. 2026 rate hike odds remain high despite inflation data: After a busy week of data including a benign Consumer Price Index and a somewhat mixed Producer Price Index, chances of a Fed rate hike next month eased. However, odds of at least one hike by the end of the year remain near 63%, according to the CME FedWatch Tool. Recent remarks from Fed policymakers reinforced already evident divisions after last month's 9-3 vote in favor of a rate pause. The next major highlight is likely an expected speech from Fed Chairman Kevin Warsh at the Fed's annual Jackson Hole symposium the week after next. However, it's unclear how much Warsh will reveal then or any time he speaks, as he's made it clear he's not a fan of forward guidance. "We still don't have any insight into Warsh's thinking around how he wants to respond to economic developments (apart from AI); and as long as that's the case, influence will continue to shift towards the rest of the FOMC," said Kevin Gordon, head of macro research and strategy at SCFR. "Fed watchers will have to be more manual in tallying the hawks versus doves."

• Applied Materials (AMAT) slid almost 6% despite results topping estimates and the semiconductor equipment company guiding above Wall Street's expectations. Disappointment could reflect the company taking a $220 million unrealized investment loss in its third quarter, Barron's noted.
   
• Reddit (RDDT) rose 11% early on news that the company's shares would be traded on the S&P 500 starting next week. Reddit replaces AvalonBay Communities (AVB), which is being acquired by Equity Residential (EQR), Barron's reported.
   
• Sandisk (SNDK) surged 7% after JPMorgan Chase initiated coverage with an overweight rating, saying the company is "uniquely positioned" to benefit from the "structural inflection" in NAND demand driven by "rapid growth" in AI inference. Other memory stocks, including Western Digital (WDC) and Micron (MU), climbed along with Sandisk.
   
• Wayfair (W) climbed 4% after Bernstein upgraded shares to outperform from market perform, citing the company's cost discipline and revenue beats.
   
• Workday (WDAY) climbed nearly 18% Thursday after Reuters reported the company is in talks to be acquired by private firm Silver Lake.
   
• Seven of 11 S&P 500 sectors climbed Thursday, led by communication services as Alphabet (GOOGL) and Meta Platforms (META) both rose amid general positive sentiment around AI and cloud names. Energy fell as oil lost ground. Materials also lagged, hurt by a 1.4% drop in gold (/GC) and 1.7% losses for silver (/SI).
   
• Treasury yields slid Thursday and the 10-year note yield posted its lowest close in more than a week at 4.64%. Relatively benign inflation data this week followed last week's soft jobs report, reducing chances of a September rate hike, according to the CME FedWatch Tool. Chances were just above 30% as of this morning.
   
• The Schwab Center for Financial Research upped its expected 10-year Treasury note yield range to 4.25% to 4.75%, as short-term rates are higher than previously expected and sticky inflation and fiscal concerns haven't gone away.
   
• The Cboe Volatility Index (VIX) fell to new 2026 lows below 14.4 this week and remains near those today at 14.52. A weak VIX implies little downside hedging, but with the Fed's Jackson Hole conference taking place August 27-29, it wouldn't be surprising to see that change.
   
• There's no Friday FactSet earnings update this week or next. Through late Thursday, 455 of 500 S&P firms have reported. Of those, 87% beat analysts' EPS estimates and 68% exceeded revenue estimates, according to Bloomberg. S&P 500 firms are expected to report around 50% year-over-year second quarter earnings growth, FactSet said last week.

Short interest: Check out which stocks saw rising levels of short interest in the latest edition of the Short Interest Monitor. They include The Campbell's Company (CPB) and IMAX (IMAX).

The PHLX Semiconductor Index (SOX—candlesticks), which descended into bear market territory down 20% from highs late last month, has forged a vigorous comeback but couldn't quite get over the hump Thursday. Earlier in the session, it spent time above the 50-day moving average of 12,637 (blue line) but closed below it and has been below that for a month. It did post its highest close since July 14, however. A close above 12,536.99 would put the SOX into a new bull market, defined by a 20% rise from recent lows. The tech-focused Nasdaq-100^® (NDX) has risen above its 50-day moving average, which it dropped below in July.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

August 17: No major earnings or data expected.
August 18: July housing starts and building permits, July industrial production, and expected earnings from Home Depot (HD), Baidu (BIDU), and Toll Brothers (TOL).
August 19: FOMC minutes and expected earnings from Analog Devices (ADI), TJX Companies (TJX), Lowe's (LOW), Target (TGT), and Estee Lauder (EL).
August 20: Conference Board Leading Indicators for July and expected earnings from Walmart (WMT), Alibaba (BABA), Deere (DE), NetEase (NTES), and Ross Stores (ROST). 
August 21: No major earnings or data expected.