Surprise rise in retail sales precedes key Fed decision

STORY: An unexpected rise in U.S. retail sales for August suggested the economy remained resilient, ahead of a crucial Fed policy decision due on Wednesday.

Data from the Commerce Department released on Tuesday showed retail sales ticked up last month when economists polled by Reuters had forecast a decline.

Lower prices at the pump may have helped retail sales, as cheaper gasoline can free up money for other purchases.

The report showed that online sales rebounded from the prior month, and sales at sporting goods, building material and garden equipment stores all increased.

The news eased fears of an economic slowdown a day before an expected interest rate cut by the Federal Reserve.

That along with a drop in last month's unemployment rate could dispel market expectations of a larger 50-basis point interest rate cut at the conclusion of the Fed's two-day policy meeting on Wednesday.

Traders on Tuesday lowered their bets of 50-basis-point rate cut, but just slightly.

CME's FedWatch Tool showed the odds still stood at nearly 60%, with the probability of a smaller 25-basis-point cut at roughly 40%.