The S&P 500 edged closer to a record high on Monday as investors weighed a slump in U.S. retail sales against escalating geopolitical risks in the Middle East. The benchmark index has gained 0.4% in early trading, extending a rebound from last week’s pullback.
Retail sales in the U.S. fell 1.1% in August, the largest decline since March 2023, signaling weaker-than-expected consumer demand amid persistent inflation pressures. The data, released by the Commerce Department, underscored concerns over the resilience of the U.S. economy despite a resilient labor market.
Geopolitical tensions in the region added to market uncertainty, with reports of heightened activity in Iran raising the risk of supply disruptions in global oil markets. Brent crude futures rose 1.3% to $92.45 per barrel, while WTI crude climbed 1.5% to $88.70, reflecting broader commodity market volatility.
Analysts at Goldman Sachs noted that while the retail slump may temper near-term growth expectations, the S&P 500’s technical outlook remains constructive. The index is now less than 1% below its January 2022 record of 4,818.62, with support seen around the 50-day moving average at 4,720.
A pivotal week for markets lies ahead, with the Federal Reserve’s policy decision on Wednesday and the release of key inflation data on Thursday. Traders will scrutinize the Fed’s stance on interest rates, particularly in light of the mixed economic signals. The central bank is widely expected to hold rates steady, but any hawkish tilt could dampen risk appetite.
Investors are also monitoring developments in the Middle East, where geopolitical risks could further complicate the Fed’s policy calculus. The potential for supply chain disruptions in oil markets remains a wildcard, with implications for both inflation and economic growth.
For now, the S&P 500’s trajectory toward a record high hinges on a delicate balance between economic data and geopolitical stability.
