July’s 0.3% drop in US retail sales, alongside weaker inflation data, curbs expectations for a September Fed rate hike.
US retail sales declined 0.3% in July, marking the first drop in nine months, as lower gasoline prices and an earlier Amazon Prime Day distorted figures. The miss aligns with a dip in consumer confidence and softer inflation, easing pressure on the Federal Reserve to raise rates next month.
Excluding volatile categories, sales still underperformed expectations, reinforcing concerns about consumer resilience. The University of Michigan’s consumer sentiment index also slipped, adding to signs of cooling demand. Markets had already priced in a more dovish Fed stance after last week’s subdued inflation reports.
Wall Street indexes extended record highs as rate hike fears receded, though rising oil prices amid Middle East tensions could shift the calculus before the Fed’s September meeting.