Stock market dealing with yield signs

Briefing.com Summary:

*The July Retail Sales report was much weaker than expected.

*Longer-term Treasury yields have not responded in kind this week to the seemingly market-friendly inflation news.

*Applied Materials is down after a good earnings report, hitting a wall of high expectations.

The stock market had the inflation data break its way this week, which in turn helped the S&P 500, Russell 2000, and S&P 400 breakaway to new record highs. Strikingly, longer-term bond yields, which are more sensitive to inflation, didn’t breakdown to new lows.

Coming into today, the 10-yr note yield was unchanged for the week at 4.64%, and the 30-yr bond yield was up four basis points to 5.23%. Why that is the case is open for debate, but supply concerns, deficit concerns, oil price concerns, and, yes, even inflation concerns, are all in the mix as possible reasons.

Long-term rates, however, came down a bit in the wake of the Retail Sales report for July, which was weaker than expected.

Total retail sales declined 0.6% month-over-month in July (Briefing.com consensus: 0.2%) following a 0.2% increase in June. Excluding autos, retail sales declined 0.3% month-over-month (Briefing.com consensus: 0.2%) following a 0.2% decline in June.

The key takeaway from the report is that control retail sales dropped 0.4% month-over-month. This figure will feed into GDP forecasts, so there are apt to be some downward revisions to Q3 GDP forecasts.

The headlines from the retail sales report were a bit of a shock, but it would be remiss not to point out that nonstore retailer sales were down 2.2% month-over-month, which can be attributed in large part to Amazon’s Prime Day sales event taking place in June. That doesn’t account fully for the weakness in July retail sales, but it did contribute to things looking worse than expected.

Notably, the Treasury market hasn’t overreacted to this weak report. There was some knee-jerk buying in its wake, but as of this writing, yields across the curve are basically back at where they were trading just before the release.

The equity futures market, in turn, didn’t get too worked up about it either. Current indications are not far off at all from where things stood just before the release.

The S&P 500 futures are up eight points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 81 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are down 63 points and are trading 0.1% below fair value.

That is a recipe for a mixed and somewhat flattish start on this summer Friday, which might feel like a vacation day for the market, meaning some chop in narrow trading ranges as buyers and sellers alike lack conviction.

The caveat is that larger swings in Treasury yields and/or oil prices could alter that dynamic. WTI crude futures are currently up 0.2% to $81.45/bbl, paying some heed to Treasury Secretary Bessent’s pronouncement that the U.S. will be implementing “unprecedented” economic isolation measures against Iran next week, according to Bloomberg.

That news had been a focal point before the retail sales report, along with the downside action in Applied Materials (AMAT) after its good earnings report—a move most have attributed to facing a wall of exceedingly high expectations after a big run for the stock, which is up 22% from its July 29 close—and upside action in Reddit (RDDT), which will be added to the S&P 500 prior to the open on August 18.

—

Originally Posted August 14, 2026 – Stock market dealing with yield signs