MARKET SNAPSHOT

U.S. stocks slipped. Signs of cooling inflation and growth bolstered odds of another Fed hold in September, weighing on shorter-term yields, while long-term yields rose on fiscal concerns. Oil futures settled higher. Gold and silver rose, while the dollar weakened.

MARKET WRAPS EQUITIES

U.S. stocks fell Friday after weak retail sales data tempered enthusiasm about the artificial-intelligence boom that has driven major indexes to record highs.

The Dow Jones Industrial Average fell 0.2%, closing within 1.1% of its all-time high. The S&P 500 declined 0.2% from Thursday's record. The tech-heavy Nasdaq Composite fell 0.3%, snapping a three-session winning streak.

Retailers' sales fell by 0.6% last month to $763.6 billion, contrary to economists' expectations of a small increase.

The S&P 500 closed at a record high Thursday as investors bet that a combination of moderating inflation and an AI boom would lead to lasting growth in the U.S. economy. But the weak retail data was a reminder that U.S. growth is still largely a function of consumer behavior. An up-tick in oil futures, meanwhile, showed how inflation could persist even if the U.S. economy starts slowing.

Asian equity markets were mixed earlier Friday as investors weighed signs of cooling U.S. inflation against President Trump's unveiling of new tariffs on imports of drones and their components.

South Korea's Kospi rose 2.4% on the strength of its chipmakers.

China's Shanghai Composite Index ended flat, while the Shenzhen Composite and ChiNext Price Index rose 0.3% and 1.1%, respectively.

Japan's Nikkei Stock Average closed 0.6% higher, led by videogame and technology stocks.

Hong Kong's Hang Seng Index fell 1.1%.

In Australia, the S&P/ASX 200 Benchmark Index declined 0.8%. New Zealand's S&P/NZX 50 Index rose 0.2%.

COMMODITIES

Oil futures ended the week higher as the situation in the Strait of Hormuz remained unresolved with the U.S. and Iran both saying they have control over the waterway.

"Diplomacy has so far failed to restore confidence quickly enough to prevent an energy squeeze," Rabobank strategists Joe DeLaura and Florence Schmit said in a note. With no clear diplomatic solution in sight, the market's attention has turned to shortages of diesel and other middle distillates, they added. Even a signed agreement to reopen the strait "would only begin to address the shortage," with Russian and Persian Gulf refineries remaining damaged well into 2027 and Chinese refineries operating at low capacity due to restrictive export quotas.

WTI settled up 1.4%, at $82.40 a barrel, for a 5.4% weekly gain. Brent rose 1.7%, to $88.52, and is up 5.9% on the week.

Gold and silver futures settled slightly higher for the day, closing out a positive week for both precious metals.

Front-month gold futures rose 0.4%, to $4,380.40 a troy ounce, while silver rose 0.2%, to $64.988/oz.

Analysts say that faded expectations around an impending interest-rate increase by the Federal Reserve in September allowed money to flow into precious metals this week. The CME's FedWatch now assesses a 67% chance of interest rates staying unchanged following September's Fed meeting.

TODAY'S TOP HEADLINES

Weak Retail-Sales Number Adds to Softening Economic Data

Sales at U.S. retailers slid in July, the latest in a string of weaker reports prompting a rethink about an economy that had looked to be only accelerating this spring.

Retail sales dropped by 0.6% last month, the Commerce Department reported Friday, falling short of the 0.1% increase that economists had expected. The numbers landed a week after the monthly jobs report showed the economy lost 23,000 jobs in July. Earlier this week, moderate inflation figures also undercut concerns that the economy is overheating.

July's sales setback extended beyond gasoline stations, where lower prices had been forecast to keep sales totals in check. Sales in the "control group" categories of everyday products that economists track closely fell by 0.4%, the first such decline this year.

Consumer Sentiment Has Dropped in August, per Michigan Survey

Consumers' economic mood is weaker this month versus July, according to preliminary results from the University of Michigan's monthly survey.

The survey's sentiment index declined to 51, from 55.2 in July, according to results published Friday. The report reflects a preliminary August reading. A final number, reflecting more survey results, will come at the end of the month. Economists polled by The Wall Street Journal were expecting a reading of 54.5.

The August drop leaves sentiment above the historic lows in the mid-40s touched earlier this year. But persistent price increases and concerns about the economic effects of the Iran conflict are still weighing on shoppers, according to the survey's director, Joanne Hsu.

Week Ahead for FX, Bonds: Fed Minutes, China Data in Focus

Minutes to the recent Federal Reserve meeting, where U.S. interest rates were left on hold, will be closely monitored for any clues on whether rates could rise next month.

In Europe, flash purchasing managers' surveys for August will give a steer on how economies are faring in an environment of high energy prices and heightened geopolitical uncertainty. Inflation figures are due from the U.K. and Canada.

In Asia, a deluge of Chinese data will offer fresh clues on the health of the world's second-largest economy, while Japan's growth figures are also in focus.

More Trump Tariffs Are Coming-and They Could Look Different

The Trump administration's newest tariffs on drones and a report this week outlining efforts to curb China's tariff evasion practices offer a glimpse of the next phase of President Donald Trump's trade agenda: more targeted tariffs, tougher rules governing where products are made, and greater scrutiny of efforts to evade duties.

The U.S. on Friday imposed tariffs ranging from 25% to 100% on drones, using Section 232 of the Trade Expansion Act. Countries that struck trade pacts capping sectoral tariffs-including the European Union, Japan, South Korea, and Switzerland-face 15% levies. The duties are set to take effect Sept. 3.

Companies that commit to manufacturing in the U.S. could qualify for lower tariffs. The tariffs, aimed at addressing China's dominance in drone production, also leave room for further negotiations before they take effect. Shares of U.S. drone makers like Ondas and AeroVironment rose on the news.The details of the drone tariffs also highlight another priority for the administration: rules of origin, which determine where a product was made for tariff purposes. It is the latest push to bring back manufacturing of critical goods to the U.S. For drones from the European Union, Japan, or Korea to get the preferential rate, major components have to come from the U.S. or another trade partner eligible for preferential treatment.

PayPal in Talks to Sell Itself to Stripe, Private-Equity Firm Advent

PayPal Holdings is in talks to sell itself to a group that includes Stripe and the private-equity firm Advent International, according to people familiar with the matter.

Stripe and Advent in July proposed paying $60.50 a share for PayPal, a price PayPal viewed as insufficient, some of the people said. The two sides have since been negotiating a potentially higher price, the people said.

It is possible a deal could come together in the coming weeks, though there are no guarantees the parties will reach an agreement.

JPMorgan Ended Banking Relationship With Polymarket Over Regulatory Concerns

JPMorgan Chase ended its banking relationship with prediction market Polymarket last October over regulatory concerns, according to people familiar with the matter.

The move adds fuel to fights in Washington over debanking and growing nationwide scrutiny of prediction markets' business practices, though the bank still maintains some ties to Polymarket and other prediction-market companies.

A Polymarket spokesman said the company maintains "a close, active relationship with JPMorgan across multiple entities." Polymarket Chief Executive Shayne Coplan has spoken at three of the bank's events in the past year, the spokesman added.

BP, XRG Partner on Venezuelan Offshore Gas Development as Oil Majors Tentatively Return

Britain's BP and the United Arab Emirates' XRG will explore a gas field offshore Venezuela, in an indication that oil majors are tentatively returning to the country under its new regime.

The companies were awarded an exploration and production license for phase 2 of the Loran field, which could give them access to an estimated 4 trillion cubic feet of recoverable gas. They join Shell, which in June was also granted a license to extract 1.7 trillion cubic feet of gas from the field.

Energy majors have been reassessing Venezuela after the ousting of former President Nicolas Maduro by the U.S. The country holds some of the world's largest oil resources but years of underinvestment mean it lacks the infrastructure needed to extract it competitively.

Expected Major Events for Monday 00:30/SIN: Jul Merchandise Trade, incl non-oil domestic exports (NODX)

01:30/CHN: Jul House Price Index

02:00/CHN: Jul Industrial Output

02:00/CHN: Jul Fixed Assets Investment

02:00/CHN: Jul Retail sales

02:30/THA: 2Q GDP

03:00/SKA: KDI Economic Outlook Update

04:00/MAL: Jul CPI

04:30/JPN: Jun Revised Retail Sales

04:30/JPN: Jun Revised Industrial Production

04:30/JPN: Jun Tertiary Industry Index

08:00/HK: Jul Hong Kong port container throughput monthly estimates

09:59/PHI: Jun Overseas Filipino Workers Remittances figures

09:59/CHN: Jul FDI Foreign Direct Investment

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