July Retail Sales Fall 0.6% — Steepest Drop in Over a Year — as Michigan Sentiment Craters to 51.0; Stocks Slip From Record High

The Census Bureau reported July retail and food-services sales fell 0.6% MoM to $763.6 billion, missing the +0.1% forecast and marking the sharpest monthly decline in more than a year (sales remained up 5.0% YoY). The drop was led by motor vehicle and parts dealers (-1.8%), nonstore/online retailers (-2.2%), and gasoline stations (-0.9%), partly offset by gains in clothing (+1.9%) and health/personal care (+0.7%). Separately, the University of Michigan's preliminary August Consumer Sentiment Index tumbled to 51.0 — a 7.6% MoM decline and 12.4% YoY drop, badly missing the 54.5 consensus and down sharply from July's final 55.2 — with year-ahead inflation expectations rising to 4.3% and short-term expectations falling 11%. The weak-demand, weak-sentiment combination pulled US equities off Thursday's record close: the S&P 500 slipped just below flat, the Dow fell about 0.2%, and the Nasdaq-100 dropped about 0.2%, even after Wednesday's flat PPI and Thursday's cooler CPI had briefly driven stocks to fresh highs.