✎ Contributed by Ty Griffin
U.S. retail sales fell 0.9% in May, marking the sharpest drop in four months as consumers cut back on spending across categories including autos, gasoline, and dining. The Commerce Department’s report highlighted broad weakness, particularly in vehicle purchases, which declined 3.5% from April. Economists cited rising tariffs and waning consumer confidence as key factors behind the pullback.
While core retail sales—which exclude autos, gas, and building supplies—rose 0.4%, the gain was not enough to offset growing market concerns. Analysts warn the slowdown may reflect a shift in consumer behavior as inflationary pressures persist and fiscal headwinds mount, especially for middle- and lower-income households.
Market Reaction
- Walmart Inc. (NYSE: WMT): $94.60, up $0.31 (0.33%)
- Target Corp. (NYSE: TGT): $96.39, down $0.98 (1.01%)
- Costco Wholesale Corp. (NASDAQ: COST): $984.03, down $0.33 (0.03%)
- Dollar General Corp. (NYSE: DG): $113.52, down $0.17 (0.15%)
- The Home Depot Inc. (NYSE: HD): $350.34, down $3.25 (0.92%)
Analyst Commentary
Analysts noted that big-box retailers with strong value propositions, such as Walmart and Costco, are better positioned to withstand shifts in consumer spending, while companies more reliant on discretionary purchases could face continued volatility. Dollar stores and home improvement chains are particularly exposed as shoppers prioritize essentials over large-scale purchases.
With tariff policies weighing on import costs and macroeconomic uncertainty lingering, retail investors will be watching upcoming earnings calls for updated guidance on inventory strategies, margin protection, and promotional activity heading into the back half of the year.
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