U.S. equity futures are modestly positive as softer consumer data reduces expectations for another near-term Fed hike. Early Monday, S&P 500 futures were up about 0.2% and Nasdaq 100 futures were up 0.5%, while Dow futures were down roughly 0.1%. The Russell 2000 proxy IWM was up about 0.5% premarket, suggesting the lower-rate backdrop is also supporting small caps. Markets now price only about a 30% probability of a September Fed increase, down from roughly 50% a week ago.
U.S. equities edged lower Friday after weak retail-sales and consumer-sentiment reports raised questions about household spending. The S&P 500 fell 0.17%, the Dow declined 0.20% and the Nasdaq lost 0.28%, while the Russell 2000 gained 0.5% and reached another record. The S&P 500 and Nasdaq nevertheless posted their third consecutive weekly gains. Trading was unusually light, with just 9.6 billion shares changing hands across U.S. exchanges versus a recent 20-session average of 17.4 billion.
Treasury yields moved higher Friday despite the weak consumer data, with the 2-year yield rising 2 basis points to 4.16%, the 10-year gaining 4 basis points to 4.68% and the 30-year increasing 4 basis points to 5.25%. Those moves are partially reversing this morning: the 2-year is near 4.15% and the 10-year around 4.69% as markets pare tightening expectations.
The DXY fell to 99.66 Friday, while the euro strengthened to $1.1568, sterling rose to $1.3534 and the dollar eased to ¥159.34. The dollar is extending lower Monday, with the euro reaching a two-month high near $1.1595 as U.S. rate expectations diverge from a more hawkish outlook in Europe and Japan.
September WTI crude rose 1.50% Friday to $82.47, while December gold gained 0.18% to $4,428.50. Oil is mixed this morning, with WTI near $83 and Brent around $88.8, as stalled U.S.-Iran diplomacy maintains a geopolitical premium but actual supply disruptions remain limited. Gold is firmer around $4,394 spot, supported by a weaker dollar and lower expectations for Fed tightening.
Friday’s macro data were notably softer. July retail sales fell 0.6%, the first decline in nine months, while the core control group used in GDP calculations fell 0.4%. Preliminary August consumer sentiment dropped to 51.0 from 55.2, well below the 54.5 consensus, while one-year inflation expectations edged up to 4.3%. The combination reinforces a picture of cooling consumption despite still-elevated living costs.
Monday’s calendar includes the Empire State Manufacturing Survey at 8:30 a.m. ET and the NAHB Housing Market Index at 10:00 a.m. ET. July’s Empire State index was 15.6, while the housing index remains constrained by high mortgage rates and affordability pressure. The broader week brings the FOMC minutes Wednesday, housing starts and industrial production Tuesday, jobless claims Thursday and August S&P Global PMIs Friday.
Sector Highlights
Sector performance showed an inflation-sensitive rotation rather than broad risk-off selling. Energy led with a 1.36% gain, followed by Utilities +0.55%, Materials +0.48%, Real Estate +0.37% and Industrials +0.35%. Consumer Staples gained 0.10%, while Communication Services and Financials slipped modestly. The largest declines came from Health Care -0.60%, Technology -0.42% and Consumer Discretionary -0.37%. Breadth was mixed beneath the indexes, with NYSE breadth positive at 1.13:1 but Nasdaq breadth negative at 1.07:1.
Information Technology
- Micron (MU), Marvell Technology (MRVL), Intel (INTC) and AMD (AMD) were higher premarket as semiconductor shares attempted to rebound from Friday’s weakness.
- Applied Materials (AMAT -5.1%) fell Friday despite an upbeat forecast, while Broadcom (AVGO -5.9%) and Intel (INTC -2.0%) also declined as elevated AI expectations continued to make positive earnings surprises harder to clear.
- Workday (WDAY -3.8%) gave back part of Thursday’s 18% surge following reports that Silver Lake is in discussions to acquire the cloud-software company.
Communication Services
- Reddit (RDDT +12.6%) surged Friday after being selected for inclusion in the S&P 500 effective before Tuesday’s open, replacing AvalonBay Communities. The addition is expected to generate significant index-related buying.
- Alphabet (GOOGL) has hired banks for its first Australian-dollar bond offering, the latest effort to broaden financing sources as the company funds its rapidly expanding AI infrastructure program. Alphabet raised $25 billion in U.S. dollar bonds earlier this month.
Industrials
- Red Cat Holdings (RCAT +8.8%) and Unusual Machines (UMAC +25%) rallied Friday after President Trump said the U.S. plans tariffs on imported drones and drone components, boosting domestic manufacturers.
- Diana Shipping (DSX +7% premarket) rose after withdrawing its offer for Genco Shipping & Trading, ending a nearly year-long takeover contest.
Consumer Discretionary / Consumer Staples
- Consumer stocks will move into the earnings spotlight this week following Friday’s weak retail-sales report. Home Depot (HD) reports Tuesday, with Target (TGT) and Walmart (WMT) also due this week, giving investors direct reads on discretionary spending, pricing and lower-income consumer pressure.
