Indiana drought
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Disappointing retail sales forced economists to slash their outlook for U.S. GDP.
First the scoreboard:
Dow: 12,727, -49.8, -0.3%

S&P 500: 1,353, -3.1, -0.2%

NASDAQ: 2,896, -11.5, -0.4%

And now the top stories:
  • The latest read on the U.S. consumer was ugly.  In June, retail sales unexpectedly fell 0.5 percent.  Economists were looking for a gain of 0.2 percent.  Even worse, this represents an acceleration from the 0.2 percent decline we saw in May.  Excluding autos, the decline was 0.4 percent.

  • Right away, Wall Street's economics departments – including Goldman Sachs, Deutsche Bank, Nomura, and HSBC – came out and slashed their GDP growth expectations.  

  • The other big story was corn prices, which continue to soar as historic droughts plague over half of the U.S.  

  • In earnings news, banking giant Citigroup announced better-than-expected earnings thanks to strength in its North American operations.  "Our core businesses performed well in a difficult environment and are generating solid returns,"  said CEO Vikram Pandit.  "We had strong growth in both loans and deposits, showed resilience in our markets-facing businesses, and saw record revenues in Transaction Services."  

  • But, what is it to beat earnings estimates?  Rich Bernstein told Business Insider that investor relations departments do what they can to manage expectations so that the company is more likely to beat. Because of this, earnings surprises don't tell us much.  Bank of America's Savita Subramanian contributed to the discussion, arguing that all analysts are increasingly saying the same thing.  "Today, estimates may be lower quality than normal, given evidence of herding around consensus," she wrote.