Retail Data Land at 0.5%, Eyes Turn to Trump-Putin

Published as of: August 15, 2025, 9:09 a.m. ET

(Friday market open) Unlike yesterday's inflation reading, today's July retail sales data landed right in the middle of the fairway at 0.5% and the report seems unlikely to ruffle many feathers on Wall Street. That was exactly the growth analysts had expected, and major indexes were flat to higher following the data release.

"Overall, it was a positive report and shows consumers continue to spend," said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research. With little data ahead and earnings relatively quiet, investors could focus on President Trump's meeting in Alaska today with Russian leader Putin. Hopes for an end to the Ukraine conflict helped ease crude oil prices this week. Next week brings a host of housing data and earnings from some of the largest U.S. retailers.

Major indexes initially reacted poorly to Thursday's hot Producer Price Index (PPI) but spent much of yesterday flat and are on track for a winning week. A September Federal Reserve rate cut still appears quite likely despite PPI, futures trading suggests, but hopes for a 50-basis point cut dried up after the inflation data. On another cautionary note, U.S. July import prices rose 0.4%, the government said today, up from 0.1% in June and the highest in 15 months. Treasury yields were little changed after the morning's data parade and the benchmark 10-year yield is flat this week.

1. Retail sales deeper dive: Headline 0.5% July retail sales growth was down from June, but June retail sales were revised higher to 0.9% from the prior 0.6%, which my colleague Cooper Howard called "another positive sign." He also noted that the July report "was fairly strong across the board, which is the story to me," with no single category accounting for the bulk of the increase. The largest jumps were in motor vehicle and parts dealers and furniture and home furnishing stores. The closely watched "control group retail sales" figure—which excludes food services, auto dealers, building materials stores, and gas stations and is used to calculate gross domestic product (GDP)—also climbed 0.5% in July, while June was revised up to 0.8% and July excluding autos was 0.3% . The consumer returns to focus at 10 a.m. ET with preliminary August Consumer Sentiment from the University of Michigan. The Briefing.com consensus is 61.3, down from the prior 61.7 and still relatively low historically.
    
2. PPI and the Fed: The 0.9% July PPI jump makes the Fed's job harder. The central bank's dual mandate is stable prices and maximum employment, but both are heading the wrong way. Rate cuts might address labor weakness but exacerbate inflation. "The PPI print is a dilemma for the Fed—particularly because the components that map over to PCE suggest a firmer print for July (pulling PCE further away from the Fed's target)," said Kevin Gordon, director, senior investment strategist at Schwab. The PCE, or Personal Consumption Expenditures price index, is the Fed's favored inflation meter due August 29. The Fed's target is 2% inflation but even before PPI, inflation was well above that. Still, with jobs growth averaging less than 40,000 over the last three months after recent downward revisions, a rate cut was widely expected next month. "We need to be on watch for how much inflationary pressures are spreading," Gordon said. "The July PPI is just one report, but it takes 50 basis points off the table in September; and even takes some steam out of the rate cut argument."
    
3. "Ghost" inflation as companies pass along costs: With wholesale prices up last month, it's possible some companies will use tariffs as a subterfuge to raise sticker prices even on products not affected by tariffs. "We are hearing of companies that are impacted by tariffs saying they're likely to pass on higher prices even beyond goods that have tariffs associated with them," said my colleague Liz Ann Sonders, Schwab's chief investment strategist, in an interview with CNBC yesterday. "Some have said they could take advantage of an environment allowing them to increase prices." Though Thursday's hot PPI was just one data snapshot and not necessarily a trend, the tariffs didn't all hit at once and this might not be the last hot inflation report. "The tariffs didn’t kick in in a one-time nature, so we're unlikely to see a one-time impact," Sonders said. "It will be an ongoing process as each individual company decides what it can eat in margins and what it can pass on."

• Applied Materials (AMAT) plunged nearly 14% in pre-market trading despite the semiconductor firm reporting better-than-expected earnings per share. However, revenue fell short of Wall Street's expectations and guidance was cautious as the company cited "increased uncertainty." Investors have been harshly punishing companies that disappoint with their outlooks.
   
• Miami International Holdings (MIAX) jumped 38% from their initial public offering price (IPO) Thursday. The launch of MIAX marks the first listing of a major U.S. financial exchange in 15 years, Reuters reported.
   
• Intel (INTC) rose another 1% this morning after a 6% spike late Thursday after Bloomberg reported the Trump administration is in talks with Intel to have the U.S. government potentially take a stake in the chipmaker, which is struggling to expand U.S. production. Both Trump and his predecessor President Biden have focused on getting the U.S. to improve its domestic chipmaking capabilities.
   
• Eli Lilly (LLY) climbed more than 3% Thursday as the company raised the price of its obesity shot in the UK by as much as 170%, Bloomberg reported.
   
• UnitedHealth Group (UNH) jumped 11% in early action Friday after Warren Buffett's Berkshire Hathaway (BRK.B) disclosed a stake in the company. Home builders Lennar (LEN) and DR Horton (DHI) also both rose 3% on Berkshire Hathaway disclosing that it holds shares. Nucor (NUE) rose 6% for the same reason.
   
• Salesforce (CRM) edged up 1% after getting an upgrade to Neutral from Underperform by DA Davidson.
   
• Target (TGT) fell 1.7% after a downgrade from Bank of America to Underperform from Neutral. The analyst said digital trends "look very challenged."
   
• The small-cap Russell 2000^® (RUT) index tumbled 1% Thursday after rising 2% Wednesday. The quick segue to inflation worries and higher yields hurt small caps, which are rate-sensitive since many small firms borrow heavily.
   
• Info tech struggled for the second straight day Thursday, but consumer discretionary and health care strength continued as Amazon (AMZN) and Eli Lilly (LLY) rose.
   
• The CME FedWatch Tool now prices in 93% odds of a rate cut next month, with 7% chances the Fed will keep rates unchanged. The futures market still prices in high odds of at least two rate cuts before year-end despite yesterday's disappointing PPI report.

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With major retailers on deck next week, focus turns to major consumer staples firms. So far this year, the Consumer Staples Select Sector Index ($IXRNTR—candlesticks), which tracks staples stocks in the S&P 500 index, is up just over 5%. That's about half the gains enjoyed year to date by the S&P 500 index (SPX—purple line). But the staples sector recovered more quickly than the broader index from April's tariff-related decline, and has marched steadily along ever since, only recently falling behind the SPX in yearly performance.

August 18: Expected earnings from Palo Alto Networks (PANW).
August 19: July housing starts and building permits and expected earnings from Home Depot (HD) and Medtronic (MDT).
August 20: FOMC minutes and expected earnings from TJX Companies (TJX), Lowe's (LOW), Analog Devices (ADI), Target (TGT), Estee Lauder (EL), and Baidu (BIDU).
August 21: July existing home sales, July leading indicators, and expected earnings from Walmart (WMT), Intuit (INTU), Workday (WDAY), and Ross Stores (ROST).
August 22: Expected earnings from BJ's Wholesale Club (BJ).