U.S. Indexes Stocks closed modestly lower on Friday in quiet trade, with the NASDAQ 100 underperforming, while the RUSSELL 2000 bucked the trend to close higher and the equal-weight S&P 500 was flat. Sectors were mixed, with Energy outperforming alongside firmer crude prices, while Technology and Health Care lagged. US data was soft but had little lasting market impact. Retail Sales disappointed, while the University of Michigan Consumer Sentiment fell notably alongside declines in both Current Conditions and Expectations. However, 1-year inflation expectations ticked up to 4.3% from 4.2%, while the 5-year remained at 3.3%. Treasury yields rose in a bear steepening despite the softer data, with no obvious catalyst in quiet trade. Firmer oil and higher near-term UoM inflation expectations may have provided some pressure, while Fed pricing was little changed with a September hold still around 67%. Crude prices settled higher amid continued geopolitical uncertainty. Treasury Secretary Bessent said the US will implement unprecedented measures against Iran, while the UKMTO reported a tanker was struck by a drone while transiting outbound through the Strait of Hormuz. In FX, the Dollar underperformed while NZD led the gains. The Japanese Yen briefly strengthened on reports the Bank of Japan could hike as soon as September and accelerate subsequent tightening, before paring the move. Gold also advanced despite higher Treasury yields, supported by the weaker Dollar and continued geopolitical uncertainty. US Retail Sales fell 0.6% M/M in July (exp. +0.1%, prev. +0.2%), significantly below expectations, while sales excluding autos declined 0.3% (exp. +0.2%, prev. -0.2%). The details were also soft, with sales excluding autos and gasoline falling 0.2% M/M (prev. +0.4%), while the closely watched Control Group declined 0.4% (exp. +0.3%, prev. +0.4%), pointing to weakness in the component most closely linked to consumer spending in GDP. Looking at the sector breakdown, weakness was led by nonstore retailers (-2.2%), motor vehicle & parts dealers (-1.8%), gasoline stations (-0.9%), and electronics & appliance stores (-0.5%). Conversely, clothing & clothing accessories stores (+1.9%) saw the strongest increase, followed by health & personal care stores (+0.7%), miscellaneous retailers (+0.5%), and food services & drinking places (+0.5%). On an annual basis, retail sales growth slowed to 5.0% Y/Y from 6.7%. Overall, the report points to a notable loss of momentum in consumer spending at the start of Q3, particularly given the downside surprise in the Control Group. Some of the July weakness may reflect a reversal of World Cup-related spending and consumption brought forward into June, although the broad-based softness, including the decline in Control Group sales, suggests this was unlikely to be the sole driver. The University of Michigan’s preliminary Consumer Sentiment Index fell sharply to 51.0 in August (exp. 54.5, prev. 55.2), ending two consecutive months of improvement, with weakness seen in both Current Conditions at 51.8 (exp. 55.0, prev. 54.8) and Consumer Expectations at 50.6 (exp. 55.2, prev. 55.4). Surveys of Consumers Director Hsu said sentiment fell around 8% on the month, with expected business conditions particularly weak, declining 11% for the short-run and 17% for the long-run, while views of personal finances saw only modest deterioration. Hsu noted the decline was broad-based across demographic and political groups, with particularly large falls among older, lower-income and non-college-educated consumers, who are more vulnerable to an erosion in purchasing power from inflation. Notably, just 8% of consumers expect income growth to exceed inflation over the coming year. On inflation, one-year expectations edged up to 4.3% from 4.2%, remaining well above the 3.4% seen in February before the Iran conflict, while five-year expectations were unchanged at 3.3% for a third consecutive month. Overall, the survey points to a notable deterioration in consumer confidence and the growth outlook alongside still-elevated near-term inflation concerns, although longer-term inflation expectations remained stable. Fed Member Goolsbee said the US economy and labor market remain broadly stable and that he supported the decision to hold rates steady in July. He cautioned against reading too much into one month of weak Retail Sales, though continued spending weakness would become a concern. On inflation, Goolsbee said he has been encouraged by recent CPI reports but needs to see more data. He also highlighted two consecutive weak productivity readings, warning that a persistent deterioration in productivity would challenge the narrative that AI is delivering significant productivity gains. Elsewhere, Oil closed higher by 1.35% and Gold by 0.75%.
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For anyone following my Platinum Service it made 440 points on Friday and is now ahead by 1710 points for August after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a previous record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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