US stocks retreated for a third consecutive week as sentiment appeared to take a blow from a sharp increase in longer-term bond yields and fears of a sharp slowdown in China. The S&P 500 index ended the week down 5.2% from its July 26 intraday peak. Small-cap stocks performed the worst. On the macro side, July US retail sales jumped 0.7% over the month, roughly double consensus estimates. Sales in specific categories indicated a sharp rise in discretionary spending (e,g +11.9% yoy for restaurants and bars). Industrial production grew by 1.0% in July, roughly triple consensus estimates and its biggest gain since January. The Wednesday release of the (July) FOMC minutes seemed to raise worries about how policymakers would respond to continued growth signals and was taken as rather hawkish by investors. The positive economic surprises pushed the US 10-year yield to its highest level since at least October 2022, although heavy issuance may have also played a role. The pan-European STOXX Europe 600 Index fell 2.34% on the prospect of a prolonged period of higher European interest rates and intensifying concerns about the outlook for China’s economy. Indeed, official data for July revealed that China’s economic activity continued to weaken. Industrial output and retail sales grew at a slower-than-expected pace in July from a year earlier. Meanwhile, New home prices in 70 of China’s largest cities fell 0.23% in July from June. Over the week, Oil retreated, the dollar rose while cryptos tumbled.