(Updates with index/price moves, macroeconomic data, and geopolitical news from the first paragraph.)

US equity indexes fell after retail sales unexpectedly slumped in July, registering the largest monthly drop since May 2025.

The Nasdaq Composite fell 0.4% to 26,702.5, the S&P 500 slipped 0.2% to 7,787.5 and the Dow Jones Industrial Average declined 0.2% to 53,730.7 after midday Friday.

Retail sales slid 0.6% amid declines in spending on motor vehicles and at gas stations, following a 0.2% increase in June, the Census Bureau reported Friday. The consensus was 0.1% growth, according to a survey compiled by Bloomberg.

"American consumers took a breather last month, despite the tailwind from rising equity markets," BMO Capital Markets Senior Economist Sal Guatieri said in a separate note. "This, together with a weaker jobs report and subdued core (consumer price index) inflation, raise the odds of the (Federal Open Market Committee) staying patient again in September."

The University of Michigan's preliminary consumer sentiment index fell to 51.0 in August from 55.2 in July, below expectations for a much smaller decrease to 55.0 in a Bloomberg-compiled survey.

Respondents saw one-year inflation expectations at 4.3%, up from 4.2% in July, while five-year inflation expectations remained at 3.3% for the third straight month.

Treasury Secretary Scott Bessent said the US plans to announce measures on Iran next week that have "never been seen," CNN reported. US Secretary of Defense Pete Hegseth said the US can sustain its blockade against Iran "indefinitely," Al Jazeera, a Middle Eastern broadcaster, reported.

The front-month US West Texas Intermediate crude oil contract edged up 0.4% to $81.57 per barrel and the global benchmark North Sea Brent climbed 0.7% to $87.69 per barrel.