Weak retail sales drag Nasdaq lower – defense stocks surge on tariff news

Retail sales disappoint – and markets take notice

U.S. retail sales figures for July, released on Friday, August 14, showed a decline of 0.6 percent from the previous month. That came in well below analysts' expectations of a modest increase of 0.1 percent, according to research material reviewed by 24markets.

The drop was partly attributed to lower gasoline prices and falling auto sales, but figures excluding vehicles also failed to hold up: that category fell 0.3 percent. The so-called control group – used as a direct input in GDP calculations – posted its weakest result since January 2025, falling by as much as 0.4 percent.

Nasdaq lags – capital rotates toward AI and semiconductors

The market reaction was clear: Nasdaq trailed the other major indexes throughout the trading session, according to Investors Business Daily, which covered market developments live. Technology stocks are particularly sensitive to macroeconomic uncertainty, and the disappointing consumer data prompted caution.

At the same time, capital flows appear to be favoring more specific themes within the technology sector. Artificial intelligence and semiconductors attracted investor interest at the expense of broader technology exposure – a pattern that has become entrenched throughout 2026.

Defense stocks climb on tariff signals

While technology stocks struggled, the picture was quite different for defense-related companies. Fresh signals from the Trump administration regarding adjustments to tariff and trade policy – which appear to favor the domestic defense industry – triggered buying interest in the sector, Investors Business Daily reports.

This underscores how policy-sensitive the U.S. stock market has become. A single announcement from the White House can rapidly reverse sector performance, regardless of the underlying macroeconomic data.

What does this mean for central bank expectations?

The weak retail sales figures, combined with relatively moderate inflation in recent months, have tempered market expectations for further rate hikes from the Federal Reserve. Softer growth signals typically strengthen the case for holding rates steady – or cutting them.

Nevertheless, it is worth noting that such logic does not automatically lift risk assets. Bitcoin fell below $63,000 on Friday, despite a macroeconomic backdrop that, in isolation, should have reduced pressure from the central bank. Research material from 24markets shows that capital flows in August 2026 instead gravitated toward established equity themes rather than crypto.

Bitcoin and Nasdaq – more tightly linked than many realize

The correlation between Bitcoin and Nasdaq has become increasingly pronounced. At times, the weekly correlation coefficient between Bitcoin and the Nasdaq Composite has reached 0.85, according to market analyses reviewed by 24markets. Crypto expert Hartmut Giesen notes that "bitcoin and tech stocks are more correlated in the short term than in the long term," and that "the more technology-oriented the benchmark index, the stronger the correlation."

JPMorgan, for its part, has observed that crypto continues to trade most closely in line with small-cap technology stocks – particularly the Russell 2000 technology segment – reflecting cryptocurrency's ties to early-stage innovation.

Friday's move in Bitcoin is nonetheless a reminder that the correlation is not mechanical: the macro impulse can point in one direction while capital flows point in another.