U.S. retail sales fell 0.6% in July, the biggest monthly drop since May 2025 and well below expectations for a modest increase, while consumer sentiment weakened and labor-market indicators pointed to a softer household backdrop. Commerce Department data showed sales excluding gasoline also fell 0.6%, suggesting the pullback was not only an energy-price effect, and core retail sales, a gauge of underlying consumer demand, dropped 0.4%. Online sales fell 2.2% and sales at auto and parts dealers declined, while spending at restaurants and bars rose 0.5%. Because retail sales are reported in nominal terms, July's 0.1% rise in the consumer price index implies real goods purchases may have fallen by about 0.7%. The University of Michigan's preliminary August consumer sentiment index dropped to 51 from 55.2 in July, ending a two-month improvement streak, while July payrolls fell by 23,000, labor-force participation slipped to 61.4%, unemployment held at 4.1% as some people left the workforce, and wage growth slowed to 3.2%. The weaker consumer data helped push U.S. stocks lower on Aug. 14, with the Dow Jones Industrial Average down 107.58 points to 53,732.41, the S&P 500 falling 13.23 points to 7,785.76 and the Nasdaq Composite losing 73.86 points to 26,729.16. Oil prices rose after a tanker attack in the Strait of Hormuz and renewed U.S.-Iran tensions, with Brent settling at $88.52 and WTI at $82.40, while the 10-year Treasury yield climbed to 4.69%. Analysts say the energy shock linked to the Iran conflict is complicating the outlook by lifting inflation even as consumer spending cools, making the Federal Reserve's policy path harder to judge.