U.S. equity markets opened in the red Thursday as investors digested weaker-than-expected retail sales data for April and considered the implications of recent comments by Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average fell 127.91 points, or 0.30%, to 41,923.10. The tech-heavy Nasdaq shed 139.19 points, or 0.73%, to close at 19,007.6, while the broader S&P 500 declined by 21.09 points, or 0.37%, ending the session at 5,870.59.

The market reaction came on the heels of a mixed retail sales report from the U.S. Census Bureau. April retail and food services sales rose just 0.1% to a seasonally adjusted $724.1 billion—below the 0.3% growth economists had anticipated. Core retail sales, excluding autos and gas, ticked up a marginally better 0.2%, while the retail control group, which feeds directly into GDP calculations, was flat for the month.

“While the headline miss disappointed, a robust revision to March and solid year-over-year growth muted the downside,” the report noted, citing a revised March growth figure of 1.7%, up from 1.5%. Year-over-year, retail sales rose 5.2%, suggesting that consumer demand, while slowing, remains resilient.

The Nasdaq’s steeper decline reflected investor concerns about slowing growth in consumer-related sectors. Discretionary categories, including apparel and department stores, were particularly weak, with department store sales down 1.4% and sporting goods tumbling 2.5%. The pullback in discretionary spending reinforces signs of growing consumer selectivity amid lingering inflationary pressures.

Meanwhile, Federal Reserve Chair Jay Powell added a layer of macro uncertainty, noting that the U.S. economy may be entering a period of “more frequent supply shocks”. Powell also reiterated that the "lower bound" remains a structural risk and suggested it may be time to reconsider the Fed’s average inflation targeting framework.

Investors viewed the combination of weak retail control data and Powell’s comments as a signal that the Fed might maintain a cautious approach to rate cuts. Treasury yields edged lower in response, as markets interpreted the soft consumer data and tame producer prices as bolstering the case for easing in the second half of the year.

While some sectors held up—building materials and food services were among the few categories to post gains—others, like clothing and electronics, suggested that the retail recovery is becoming increasingly uneven. Building material and garden equipment stores rose 0.8%, and electronics and appliance stores were up 0.3%. E-commerce, tracked via nonstore retailers, grew a modest 0.2%, underscoring the slow but steady consumer shift toward digital platforms.

Some market participants found solace in the broader trend data. Retail sales from February through April were up 4.8% compared to the same period a year ago, with particular strength in autos, health and personal care, and online retail. Food services and drinking places, a key indicator of service-sector strength, climbed 1.2% in April alone and are up 5.9% year-to-date.

The mixed market reaction reflects a larger narrative: the U.S. consumer, long a pillar of economic growth, is still spending—but more cautiously. With the labor market steady and inflation easing, real spending power remains intact. Yet, the momentum appears to be slowing, raising questions about the durability of the consumer-led expansion heading into the second half of 2025.

The day's equity declines also coincide with a bearish tilt in market sentiment. Market internals show declining stocks outpaced advancers, with 47.2% of names falling compared to 41% advancing. Moreover, only 33.6% of stocks remained above their 50-day moving averages, and a mere 45% above their 200-day averages, according to relative volume indicators from market dashboards.

As Powell's remarks and the soft retail data reverberate through trading desks, all eyes will now turn to upcoming inflation prints and corporate earnings guidance for clarity on the Fed’s next steps. Until then, investors may continue to navigate a choppy path, caught between slowing economic data and a central bank in wait-and-see mode.