Wall Street holds near its record following the latest weak update on the US economy

NEW YORK (AP) — U.S. stocks are drifting around their record heights Friday following the latest report on the economy to come in surprisingly weak, this time about how much shoppers are spending at retailers. Such data could keep interest rates low, which is something Wall Street loves, but it also raises the risk of a worst-case economic scenario of slow growth and high inflation.

The S&P 500 was virtually unchanged, coming off its all-time high set the day before. The Dow Jones Industrial Average was down 24 points, or less than 0.1%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.

Treasury yields were also mixed in the bond market after a report showed shoppers spent less at U.S. retailers last month than the month before. That surprised economists, who were forecasting another month of growth.

On the bright side for financial markets, such a pullback in spending could take pressure off inflation. Inflation remains much higher than anyone would like, but reports earlier this week suggested the pace of increases in prices is decelerating.

If inflation keeps trending that way, it could encourage the Federal Reserve to hold off on hikes to interest rates. Higher rates would help keep a lid on inflation, but they do so by intentionally slowing the economy and making it more expensive for everyone to borrow money.

But the downside of such data, including last week’s surprisingly weak report on the U.S. job market, is that they also raise the risk of a slowing economy. The Fed has no good tool to fix both a stagnating economy and high inflation at the same time, which is why what’s called “stagflation” is seen as a worst-case scenario.

Some on Wall Street cautioned against overreacting to the weak data on U.S. retail sales, even if it was broad based. It could simply be a snap back after retail sales in earlier months were boosted by unusual factors such as big tax refunds, the World Cup and even an earlier Prime Day event at Amazon, according to Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute.

U.S. consumers nevertheless appear to be getting more discouraged about the economy. A preliminary survey by the University of Michigan suggested sentiment among them is weakening by more than economists expected.

The survey said drops occurred across the political spectrum and showed up particularly among older, lower-income and other groups who can be hurt most by inflation.

On Wall Street, Reddit jumped 13% after learning its stock will join the S&P 500 index on Tuesday. Many professional investors and funds closely track the index, either mimicking it or at least measuring their performance against it. That can push many investors to buy a stock automatically when it enters the index.

Applied Materials fell 4.9% even though the company, whose technology helps make semiconductors, reported stronger profit and revenue for the latest quarter than analysts expected. CEO Gary Dickerson said global hunger for artificial-intelligence technology helped it deliver another record quarter.

But its stock had already more than doubled this year and built expectations very high, which helped pressure the stock on Friday.

AI stocks in general have been swinging sharply on worries that their prices shot too high because of AI euphoria and that their strong growth in revenue may not be sustainable.

In the oil market, prices were relatively steady following big recent swings as hopes rose and fell about when the war with Iran will allow tankers to carry crude again from the Middle East again to customers worldwide. The price for a barrel of Brent crude rose 0.4% to $87.46 after drifting earlier between gains and losses.

In the bond market, shorter-term Treasury yields eased following the retail sales report, suggesting traders see the Fed as less likely to hike interest rates at its next meeting in September.

But the yield on the 10-year Treasury, which moves more on expectations for inflation and economic growth in upcoming years, rose to 4.66% from 4.63% late Thursday.

In stock markets abroad, indexes were mixed in Europe and Asia.

London’s FTSE 100 slipped 0.1% after Nigel Farage regained the seat in Parliament he quit a month ago, beating trash-can wearing comic candidate Count Binface in a special election.

South Korea’s Kospi again had one of the world’s sharpest moves and jumped 2.4% for its third straight gain of at least that much. Seoul has been at the center of the world’s swings for artificial-intelligence stocks because its market is dominated by two tech giants, Samsung Electronics and SK Hynix.

AP Business Writers Michelle Chapman and Elaine Kurtenbach contributed to this report.

A general view shows the New York Stock Exchange, Friday, Aug. 7, 2026, in New York. (AP Photo/Yuki Iwamura)

Specialist Michael Pistillo works on the floor of the New York Stock Exchange, Wednesday, Aug.. 5, 2026, in New York. (AP Photo/Yuki Iwamura)

Trader Fred Demarco, right, and Specialist Michael Pistillo, left, work on the floor of the New York Stock Exchange, Friday, Aug. 7, 2026, in New York. (AP Photo/Yuki Iwamura)

Traders Daniel Kryger, right, and Aman Patel, left, work on the floor of the New York Stock Exchange, Friday, Aug. 7, 2026, in New York. (AP Photo/Yuki Iwamura)

A general view shows the New York Stock Exchange, Friday, Aug. 7, 2026, in New York. (AP Photo/Yuki Iwamura)

A person walks in front of an electronic stock chart board showing Japan's Nikkei index at a securities firm Thursday, Aug. 13, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A person walk in front of an electronic stock chart board showing Japan's Nikkei index at a securities firm Thursday, Aug. 13, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A currency trader watches monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 14, 2026. (AP Photo/Ahn Young-joon)

Currency traders work at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 14, 2026. (AP Photo/Ahn Young-joon)

A screen shows the Korea Composite Stock Price Index (KOSPI), SK Hynix and Samsung Electronics Co. stock price at the foreign exchange dealing room of the Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 14, 2026. (AP Photo/Ahn Young-joon)

Manchester City manager Enzo Maresca offered no assurances Friday about the future of Rodri at the club and said fellow midfielder Tijjani Reijnders was set to leave after just one season.

Rodri was welcomed with what Maresca said was a “big hug” when he returned to City on Friday following an extended break after helping Spain win the World Cup last month and then undergoing minor back surgery.

Asked whether he expected the former Ballon d’Or winner to stay at City amid reported interest from Barcelona, Maresca said “the transfer window is open — we can buy players, we can sell players. Anything can happen.”

One thing is for sure: Rodri will not be playing in Sunday’s Community Shield — the curtain-raiser to the English soccer season between the winners of last season’s Premier League and FA Cup — against Arsenal as he follows a rehabilitation program after surgery.

How Maresca, who has replaced longtime City manager Pep Guardiola, overhauls the team's midfield after the departure of stalwart Bernardo Silva to Real Madrid and a possible move for Rodri has been the subject of much speculation.

On whether he would be interested in signing Enzo Fernandez from Chelsea — where Maresca used to be coach — the Italian said “it’s a player from another club. I don’t think it’s correct to speak about other players.”

Maresca was more open about Reijnders, who failed to establish himself as a regular for City after joining from AC Milan in last year’s offseason.

Widespread reports in the British media say the Netherlands midfielder is on his way to Saudi Arabian club Al-Qadsiah and Maresca said “(The transfer of) Tijjani is not done officially, we’ll see in the next hours.”

Maresca added Reijnders was “already convinced” about leaving City, comparing the situation to goalkeeper James Trafford, who joined Leeds this summer to get more playing opportunities.

“They all work every day, they all do sessions every day, and then at the end of the week, they want to all play a game — when they don’t play, they struggle to understand,” Maresca said.

“I can understand that. After one season, some of them, they want to play a little bit more. So it’s a normal situation.”

It will be Maresca's first competitive game in charge of City and he has been backed by Arsenal manager Mikel Arteta to do an “unbelievable job” as Guardiola’s replacement.

Arteta even went as far as saying Maresca was “as good as” Guardiola, who won 17 major trophies in his 10 years at City.

“I know him well and he will provide something different to the club,” said Arteta, who himself was an assistant to Guardiola at City.

“What I know is that Enzo has the personality, the character, and especially the knowledge to have an unbelievable job there. That’s why he’s been selected, because they could probably pick anybody and they’ve gone for Enzo for the right reasons.”

Arteta said England players Declan Rice and Bukayo Saka could be involved against City after returning to training, but Jurrien Timber and William Saliba (back) remain sidelined. Saliba has a long-term injury, Arteta said.

Erling Haaland has also only just returned to training and Maresca played down any injury concerns for the striker at a training session this week.

“He had just small things behind the heels,” Maresca said, “but he was OK.”

See AP’s full soccer coverage here

Manchester City's Tijjani Reijnders, second left, celebrates with teammate Mateo Kovacic after scoring the goal against Team K-league during a friendly soccer match in Seoul, South Korea, Wednesday, Aug. 5, 2026. (AP Photo/Ahn Young-joon)

Manchester City's coach Enzo Maresca reacts after a pre-season friendly match between Manchester City and Inter Milan for the Hong Kong Football Festival in Hong Kong on Saturday, Aug. 1, 2026. (AP Photo/Chan Long Hei)