• Stocks: The S&P 500 ended Friday in the red after hitting an intraday record high on Thursday, though it was still the benchmark’s third consecutive weekly gain.
• Commodities: Oil rose after the US indicated it would continue its naval blockade of Iranian ports.
• Bonds: The 10-year Treasury yield rose after the latest retail sales data missed expectations (more on that below) and on the news of continuing geopolitical hostility.

Economy

Illustration: Morning Brew Inc., Photo: Adobe Stock

US retail sales, a key gauge of consumer spending, slipped 0.6% in July for the biggest drop in 14 months. Economists expected a 0.1% increase.

The decline was driven partly by temporary factors:

• Online sales fell 2.2%, the biggest drag on the report, after Amazon moved Prime Day from July to June and pulled some spending forward.
• Auto and parts sales fell 1.8%; another major drag on the headline number.
• Gas station sales fell 0.9%, as cheaper gasoline reduced the dollar value of sales even if drivers weren’t necessarily filling up less.

The headline number can be distorted by volatile categories like auto and gasoline. But there were signs of weakness underneath: Core retail sales, which strip out several volatile categories and are used to help calculate consumer spending in GDP, fell 0.4%, versus expectations for a 0.3% increase.

A softer shopper

Retail sales offer a timely read on one part of consumer spending, which accounts for more than two-thirds of the US economy. So a pullback here is a major signal for the broader growth outlook.

And so far, it’s not looking too great. Alongside the weak retail sales report, the University of Michigan’s preliminary consumer sentiment index hit below economists’ expectations, falling to 51 in August from 55.2 in July. That was its first decline in three months, and the drop was especially pronounced among older, lower-income consumers and those without a college degree, Bloomberg reported.

Economists say consumers are also becoming more price-sensitive as fiscal support fades. PNC’s research team notes that the bigger tax refunds that helped households absorb higher gas prices earlier this year are running out, leaving gas prices and income growth as the key swing factors for spending in the second half.

One silver lining for Warsh: A grumpier consumer could make the Fed’s job a little easier. First, softer consumer demand means businesses have less room to keep raising prices, which can ease inflation pressure. Second, the weak retail report comes alongside July job losses and mild core inflation, giving the Fed more evidence that growth is slowing. That lowers the likelihood of a September rate hike.

Next up: PCE lands Aug. 26, followed by August jobs numbers and CPI—the last big tests before the Fed meets in September. —SY

      

Sponsored By Nasdaq

From the internet boom to cloud computing to AI, the Nasdaq-100 Index® (NDX®) has tracked the companies at the center of each major technological innovation over the last four decades.

Today, it’s a globally recognized index of 100 of the most innovative large-cap companies listed on the Nasdaq Stock Market—spanning technology, healthcare, consumer, and industrials.

With roughly $1.4 trillion in global exposure flowing through ETFs and derivatives, NDX has become the go-to vehicle for retail investors who want direct access to the companies defining the future.

More than just a list of companies, the Nasdaq-100 is a representation of how large caps have developed in the modern era.

Stocks

🟢 What’s up

• Nintendo jumped 6.08% after revealing that Pokémon Pokopia sold more than 5 million copies on the Switch 2.
• Unusual Machines surged 25.04% on new US tariffs targeting imported drones and drone parts.
• Intuitive Machines climbed 8.26% as its backlog grew to roughly $1.8 billion and Stifel upgraded the stock to Buy.
• Fox Corporation gained 5.47% following upgrades from JPMorgan Chase and Wells Fargo that pointed to the company’s planned Roku acquisition.
• Wayfair advanced 0.57% after Bernstein upgraded the stock, citing continued market share gains in a sluggish furniture market.
• Sandisk rose 7.39% on a JPMorgan upgrade that highlighted the company’s improving margin profile and long-term revenue visibility.

🔴 What’s down

• York Space Systems tumbled 4.79% after missing earnings estimates and cutting its full-year outlook.
• Applied Materials fell 5.12% despite solid quarterly results, as lofty expectations left little room for upside.
• Cisco Systems slipped 1.58% following an HSBC downgrade that cited a lack of near-term catalysts.
• Software development company Globant dropped 8.93% after missing earnings estimates and warning that revenue growth will remain under pressure.
• Broadcom declined 5.94% after an analyst estimated that its AI infrastructure financing vehicle could accumulate as much as $370 billion in debt by 2029.

Stock of the day

For once, Reddit has nothing to complain about

Illustration: Morning Brew Inc., Photo: Timothy A. Clary/Getty Images

Talk about a big upvote: Reddit—home to heated debates over the right way to load a dishwasher—will join the S&P 500 on August 18. Shares soared 12.56% today on the news.

Reddit landed this enviable invite after fellow S&P member AvalonBay merged with Equity Residential, forming a new company called Vivmark Residential. That deal opened up a seat on the index, which Reddit was all too happy to fill.

So why was a company built off crotchety commentators ushered into one of Wall Street’s most exclusive clubs? S&P Global’s selection criteria set a high bar, including large-cap status, ample liquidity, and a sufficient “float” of shares available for public trades. Sector representation matters, too, and this is where Reddit had an edge: It’s only the second pure-play social media company to join the index after Meta.

Reddit has been on a roll lately, notching eight straight quarters of 60%+ sales growth. The stock has been less consistent, tanking 12% after its Q2 earnings call, when CEO Steve Huffman admitted that “search referrals were choppy,” raising concerns over the company’s reliance on Google for fresh users.

Now, some S&P sparkle is giving the stock a boost, since every index fund tracking the S&P 500 has to buy Reddit whether fund managers want to or not.

But can Reddit go mainstream on Wall Street without losing its r/AITA soul? After a corporate admin posted the news about this “big milestone,” the reactions were uncharacteristically positive, from, “They say invest in what you know,” to, “Let’’s goooo. Been steadily building on my position over the last year+.”—JD

Investing

Illustration: Morning Brew Inc., Photo: Adobe Stock

If you’ve ever felt the urge to don a fleece vest in mid-summer and start treating X like your unfiltered personal diary: Congratulations, you might be ready to become a venture capitalist.

And now, you don’t have to be a multimillionaire to invest in startups that could become unicorns.

Yesterday, Robinhood’s second fund designed to give regular investors access to startups launched on the New York Stock Exchange. Robinhood Ventures Fund II, trading under the ticker RVII, raised $225.5 million to invest in early-stage private companies, specifically, startups participating in the Y Combinator accelerator program, which has helped launch companies like OpenAI, Reddit, and Coinbase. The fund opened at $22.50 yesterday after its IPO of 8 million shares was priced at $25 a share. Today, the fund closed at $24.5—a 8.9% gain since launching yesterday.

It’s the second time Robinhood has tried this. Back in March, Robinhood launched Robinhood Ventures I, which gives retail traders access to late-stage private companies like OpenAI and Databricks. Since launching, the fund has been on a volatile journey: The stock opened at $21, soared to a high of almost $74 in May, and later fell back closer to its IPO price.

Should you go unicorn chasing?

To Robinhood and other proponents of opening private markets to regular investors, the argument is simple: It’s unfair that retail traders don’t get access to the explosive growth of pre-IPO startups while everyone else has to wait.

But there’s a flip side: Private markets are inherently volatile, and for every OpenAI or Reddit, there are far more startups in the graveyard of failed ventures. RVII’s own filings warn that investors could lose money.

Then there’s the issue of fees. RVII charges traders a 2% annual management fee, in addition to a 20% incentive fee on realized capital gains. While that fee structure mimics how funds work in the VC world, the expense ratios on “set it and forget it” ETFs like VOO or IVV both sit at 0.03%.

Robinhood isn’t the only company trying to make private markets more accessible. Goldman Sachs recently created a platform for high-net-worth investors to make bets on potential unicorns. Meanwhile, private equity and private credit are pushing to be included in 401(k)s as Wall Street increasingly wants everyday investors’ money in private markets.

Whether everyday investors should want to put their money there is another question entirely. —LB

      

Sponsored By Nasdaq

From the internet to the cloud to AI. The Nasdaq-100 Index® (NDX®) has tracked the companies driving some of the world's most transformative innovations for 40 years. Today, it’s 100 innovative large caps across a diverse range of industries. Roughly $1.4 trillion in global exposure flows through ETFs and derivatives. More than just a list of companies.

News

• The Financial Times reported today that JPMorgan Chase debanked Polymarket last year.
• Sources say OpenAI’s annualized revenue will reportedly climb past $40 billion, roughly doubling last year’s. Meanwhile, the company’s CRO has been replaced.
• Wealth managers are trimming their fees for this one specific type of client.
• A new tax rule can save you thousands on charitable giving…if you know the trick.
• North Korean operatives are posing as remote US employees—and leaked data obtained by the Wall Street Journal shows how they’re sneaking into the US workforce.

Calendar

A big week for retail stocks picks up steam on Tuesday. Here’s what we’re watching.

Tuesday: Earnings reports from Home Depot, BHP, Baidu, and others get released.

Wednesday: If you’re looking for a juicy beach read, look no further than the Fed’s meeting minutes, which will get published mid-week. It’s also a retail bonanza, with earnings reports from Target, Lowe’s, and TJX Companies.

Thursday: We’ll get weekly initial jobless claims, as always, along with earnings from Walmart and Deere & Co.

recs

💼 Good news for your coworker who still doesn’t know how to use Excel. “Personality hires” are likely marked safe from the AI job-pocalypse.

🚢 Shipping prices are heading even higher. Here are the winners (hello FedEx) and losers about to get soaked by some rough seas.

🍬 Goldman Sachs wants to hook more investors with…“boomer candy.”

↗️ The S&P 500 hit an all-time high yesterday, and it can thank these 20 stocks for being the wind beneath its wings.

🗣️ Silicon Valley’s new favorite phrase, “hill-climbing,” is creeping its way into corporate America. But do you even know what it means?

^{*A message from our sponsor.}