S&P 500 Eases Off Its Record as the Consumer Finally Blinks

Retail sales fell 0.6% in July and consumer sentiment dropped to 51.0 in August, well below the 54.5 economists expected.

The Nasdaq Composite slid 0.44%, the Dow lost 0.21%, and the S&P 500 fell 0.19% at midday.

Both the S&P 500 and the Nasdaq are still on track for a third straight weekly gain.

The American consumer has been carrying this economy for months. Friday morning brought two reports suggesting the load is getting heavy. Stocks responded with a slow, unglamorous slide.

The Nasdaq Composite (NASDAQINDEX: ^IXIC) is down 0.44% as of 12:00 p.m. ET, the Dow Jones Industrial Average (DJINDICES: ^DJI) has slipped 0.21%, and the S&P 500 (SNPINDEX: ^GSPC) is off 0.19%. All three hovered around the flatline for the first half hour, turned negative shortly after 10 a.m. ET, and ground steadily lower until about 11:30. The Nasdaq broke away from the other two mid-morning and fell roughly twice as far.

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Retail sales dropped 0.6% in July, showing the first decline in nine months and the biggest in 14. Economists had forecast a 0.1% gain. Core retail sales, which most closely correspond to the consumer spending component of GDP , dropped 0.4% versus expectations of a 0.3% increase.

Some of that is a technicality. Amazon (NASDAQ: AMZN) moved Prime Day to June this year, which pulled sales out of July and knocked nonstore retailers down 2.2%. Many e-tailers followed Amazon's shift, keeping their own discount events close to the e-commerce titan's calendar. The less comfortable explanation is that this spring's generous tax refunds were already spent.