Stocks Stall as Markets Eye US Retail Sales Data for a Growth Check

Will consumers give the stock market something new to celebrate?

• Wall Street is in wait-and-see mode amid a lull high-stakes news flow.
• As trade war recedes into the background, growth trends are in view.
• US retail sales figures are now in focus for a check on recession risk.

A pause in headline-grabbing news flow left stock markets rudderless after two days of convincing gains. The bellwether S&P 500 is trading flat heading into the closing bell. The tech-tilted Nasdaq 100 has fared a little better, posting a modest gain, while the small-cap Russell 2000 is underperforming with a modest intraday loss.

Equities stormed higher at the start of the week after rosy pronouncements from US officials following blitz trade negotiations with a Chinese delegation in Geneva, Switzerland over the weekend. The talks produced a sharp climb down on tariff rates from both sides for a 90-day window to carve out a lasting deal.

Are stock markets ready to start thinking about the economy again?

Refreshingly “normal” US inflation data helped keep the markets disposition cheerful. The figures pointed to a gradual cooling of service-sector price pressure – a welcome sign for Federal Reserve officials – alongside the glaring absence of a surge in goods inflation amid the Trump administration’s rapid-fire trade war.

Wall Street has now erased all of the losses sustained amid the panic in April when markets recoiled in horror at the sight of President Trump’s “Liberation Day” tariff plan. It seemed to imply that the U.S. was intent on cataclysmic self-harm with a policy that tried to break the foundational role of US Treasury bonds and the dollar in global finance.

This may bring a conversation about the business cycle back to the forefront. Worries about slowing economic growth amid sharp drops in business and consumer confidence drove the start of the stock market selloff in mid-February. With the trade war seemingly shifted to the background, a status check on recession risk seems due.

US retail sales in focus: will consumers keep front-running tariffs?

With that in mind the spotlight turns to US retail sales data. It is expected to show that receipts growth stalled last month after a 1.5% jump in March, marking the largest increase since January 2023. A surge in purchases of motor vehicles and auto parts drove the upswell, which probably reflected a rush to front-run tariffs due to hit that sector.

US gross domestic product (GDP) data revealed a dramatic jump in imports and inventories as businesses anticipating tariff hikes rushed to stock up at lower prices. Meanwhile, S&P Global purchasing manager index (PMI) data revealed a brisk pickup in economic activity growth in the consumer goods sector last month.

If this boils down to another month of anticipatory buying, April’s retail sales print is likely to overshoot forecasts. Stocks are likely to cheer in this scenario, reasoning that tariff policy cliffhangers in July and August at the expiration of 90-day pauses for reciprocal and China-facing tariffs will keep uptake healthy in the interim.

Alternatively, a soft result may signal that consumers have exhausted their desire to pre-buy ahead of tariffs. A preview of such a scenario appeared in the same first-quarter GDP report, revealing the slowest growth in household consumption in almost two years. Stocks may lurch lower if such an outcome revives recession fears.

Ilya Spivak, tastylive head of global macro, has 15 years of experience in trading strategy, and he specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak

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