S&P500 Forecast: US Indices Slip on Tariffs, Weak Inflation Data, and Retail Sales

S&P 500 Pulls Back After Three-Day Rally as Tariff Concerns Resurface

U.S. stocks slipped Thursday, halting a three-day winning streak for the S&P 500 as traders reacted to weaker wholesale inflation data, modest retail gains, and renewed tariff pressures impacting key consumer stocks. The S&P 500 fell 0.4%, the Dow dropped 163 points, and the Nasdaq declined 0.6%, marking a pause in what had been a strong week for equities.

Investor sentiment had improved earlier in the week following de-escalation in U.S.-China trade tensions. However, Walmart’s warning about potential price hikes due to ongoing tariffs reignited concerns about consumer cost pressures, dragging retail and broader market sentiment lower.

Did Tariffs Hit Walmart’s Stock Despite Solid Earnings?

Walmart reported stronger-than-expected earnings of $0.61 per share, slightly beating estimates, with revenue roughly in line at $165.61 billion. However, shares fell 4% after the retailer indicated prices may rise if current tariffs remain. The market’s reaction reflected broader concerns that even resilient earnings may not offset macroeconomic policy headwinds.

Meanwhile, Dick’s Sporting Goods sank nearly 11% after agreeing to acquire Foot Locker for $2.4 billion. Foot Locker shares surged over 80% on the deal, which values its stock at a steep premium.

How Are Economic Indicators Shaping the Fed Outlook?

April’s producer price index (PPI) unexpectedly declined 0.5%, the sharpest monthly drop in services prices in the report’s history, raising questions about inflation strength. Core PPI, excluding food and energy, also dropped 0.4%, counter to expectations for a 0.3% rise.

Retail sales edged up just 0.1% last month, in line with forecasts but well below March’s 1.7% gain. Excluding autos, sales also rose 0.1%, below the 0.3% estimate. Jobless claims remained steady at 229,000, while regional manufacturing indicators showed mixed signals—Empire State data weakened, but the Philly Fed index improved slightly.

Which Stocks Outperformed Despite the Market Pullback?

Tech names continued to lead the week’s gains. Nvidia and Tesla are both up more than 16%, Meta added 11.3%, and Amazon and Alphabet rose over 8%. Cisco gained 2% after posting better-than-expected earnings and issuing positive guidance. Boot Barn jumped 13% despite missing earnings estimates, buoyed by a $200 million share buyback plan.

On the downside, UnitedHealth dropped 6% following reports of a Justice Department probe into possible Medicare fraud, although the company stated it has not been notified of an investigation.

What’s the Outlook Heading Into the Next Session?

Traders are recalibrating expectations as economic data and geopolitical developments create a mixed picture. Weak inflation prints and tepid retail growth may bolster the case for a Federal Reserve rate cut later this year, but tariff tensions and sector-specific pressures remain key risks. Attention will turn next to upcoming speeches from Fed officials and deeper earnings insight from major retailers.

More Information in our Economic Calendar.