Archives May 2025

Shares of Texas Roadhouse (TXRH) rose in premarket trading Friday, a day after the steakhouse chain’s comparable sales results and outlook came in above analysts’ estimates.

Texas Roadhouse reported first-quarter comparable sales at company restaurants rose by 3.5%, while analysts polled by Visible Alpha had expected 3.0% growth. The restaurant operator added they are up 5% for the first five weeks of the current quarter after it increased prices by roughly 1.4% in April, while analysts are looking for 4.1% growth for Q2.

The Louisville, Ky.-based chain reported earnings per share of $1.70 on revenue that rose 10% year-over-year to $1.45 billion. Analysts had expected $1.76 and $1.44 billion, respectively.

The company now sees 2025 “commodity cost inflation of approximately 4%, including the estimated impact of tariffs.” Last quarter, the company said it expected commodity cost inflation of 3% to 4% this year.

“We are pleased to report that our operators successfully navigated us through a number of challenges this quarter and once again delivered traffic growth across all three of our brands,” CEO Jerry Morgan said. “During this period of economic uncertainty, as always, we remain focused on the fundamentals of our business and on what we can control, which is creating an environment where our Roadies want to work and our guests want to dine.”

Shares advanced less than 2% before the opening bell. They entered Friday down about 4% since the start of the year.

U.S. stock futures are pointing higher after indexes rallied Thursday on news of a U.S. trade deal with the U.K.; bitcoin surges back above $100,000; Expedia Group (EXPE) stock plunges in premarket trading after the company warns of weak U.S. travel demand; Pinterest (PINS) shares are jumping after the social media site’s revenue and monthly active user figures top estimates; and shares of Affirm Holdings (AFRM) fall after the Buy Now, Pay Later firm delivers an underwhelming current-quarter revenue outlook. Here’s what investors need to know today.

1. US Stock Futures Point Higher Following Rally on UK Trade Deal

U.S. stock futures are pointing higher after indexes surged in the prior session on President Donald Trump’s announcement of a trade deal with the United Kingdom. Nasdaq futures are 0.3% higher after the tech-heavy index added 1.1% yesterday, while S&P 500 and Dow Jones Industrial Average futures also are slightly higher after those indexes added 0.6% Thursday. Oil and gold futures also are rising. Yields on the 10-year Treasury note are little changed.

2. Bitcoin Surges Back Above $100,000 Threshold

Bitcoin (BTCUSD) is surging more than 2% to trade near $103,000 as the cryptocurrency moved above the $100,000 level for the first time since February. The rise comes after the cryptocurrency fell sharply between February and April amid tariffs uncertainty. With the latest surge, bitcoin is nearly 40% above last month’s low and up 10% since the start of the year. Some cryptocurrency stocks are advancing in premarket trading, with bitcoin buyer Strategy (MSTR) moving up by nearly 2%, while miner Riot Platforms (RIOT) is similarly higher. Coinbase (COIN) shares are more than 1% lower after the cryptocurrency exchange posted underwhelming earnings.

3. Expedia Stock Sinks on Weak US Travel Demand Warning

Expedia Group (EXPE) stock is dropping 10% in premarket trading after the travel booking service’s first-quarter results came in worse than expected and it lowered its full-year outlook amid weak U.S. demand. The company reported revenue of $2.99 billion and $31.45 billion in total bookings, both up from last year but below what analysts surveyed by Visible Alpha had projected. The company trimmed its full-year forecast for both metrics to 2% to 4% growth from 4% to 6%. CEO Ariane Gorin said Expedia managed to grow bookings and revenue “despite weaker than expected demand in the U.S.” as consumer sentiment has worsened amid tariff-fueled uncertainty.

4. Pinterest Stock Surges as Revenue, Active Users Top Estimates

Pinterest (PINS) shares are up by 14% in premarket trading after the social media site reported first-quarter revenue and global active monthly user figures that came in above analysts’ estimates. The company reported earnings per share of $0.01 on revenue that increased 17% year-over-year on a constant currency basis to $855.0 million, both above Visible Alpha consensus. The firm’s monthly active users increased 10% to a record 570 million, also topping estimates. Pinterest shares entered Friday down 4% year-to-date.

5. Affirm Stock Falls on Soft Revenue Outlook

Shares of Affirm Holdings (AFRM) are falling more than 6% in premarket trading after the Buy Now, Pay Later firm delivered a weak current-quarter revenue outlook. The company also projected second-quarter revenue between $815 million and $845 million, with the midpoint coming in below estimates of analysts surveyed by Visible Alpha. Its first-quarter revenue of $783.1 million also came up short. However, Affirm reported profit of a penny per share when a loss of 2 cents per share was expected, and gross merchandise volume of $8.6 billion also topped projections.

Editor’s Note: On Wednesday, the Federal Open Market Committee (FOMC)
chose to keep interest rates steady. Powell and the FOMC are standing still.
They’re not in panic mode, and I believe that’s the correct position.

Furthermore, my colleague, Luke Lango, sees a summer rally
approaching – and he’s built an easy-to-use quant tool that you can use to
profit. Every month, he’ll tell you what stocks to buy and sell based on a
number of factors, including growing revenue, trending upward and gaining analysts’ attention.

The tool is called Auspex, and you can learn more about it by clicking here.

Now, I’ll let Luke explain more about the summer rally that is fast approaching…

Everyone was expecting fireworks on Wednesday afternoon…

Here’s what I said on Wednesday, before the FOMC rate decision announcement and Fed Chair Jerome Powell’s press conference, in the Daily Notes I send my paid-up members…

Powell’s press conference will provide some much-needed clarity as to what the Fed will do in June. He will either sound dovish and open the door for a rate cut – which will send stocks soaring higher. Or he will sound hawkish and sound hesitant on cutting rates – which will send stocks plunging lower.

But instead, Powell and the FOMC were… nothing but damp sparklers.

They kept their benchmark rate unchanged, at a target of 4.25% to 4.5%. That was as expected. The fireworks were supposed to come from the Fed’s statement and Powell’s press conference.

However, Powell said the same thing he’s been saying for months.

“We don’t think we need to be in a hurry,” he said with regard to the potential for cutting rates. He said that there are cases where it would be appropriate to cut… or to stand pat.

The stock market’s response was damp as well. All three major indices ended the day less than a percentage point up from where they started.

No “soaring” or “plunging.”

And while that may be ho-hum news for set-it-and-forget-it index investors, it’s great news for self-directed investors.

So, let’s do a few things today…

Let’s review how we got here… and why I think we’re headed into a summer rally.

Plus, I’ll tell you why this will remain a stock picker’s market despite that rally.

Also, let’s take a peek at the quant tool my team and I built to help us find the best stocks in the market. It works in volatile times like these… and it will work even better once we get past them.

Plus, I’ll reveal one stock my tool and I picked that was a winner for us last month… and that we picked again this month.

This underappreciated “space economy” play is already blasting off and outperforming the market this month as well…

The Building Summer Rally

Stocks just endured one of the fastest and most violent crashes in modern history.

In early April, stocks plummeted 10% in just two days.

As a matter of fact, until last week, stocks were tracking for their third-worst year on record after dropping more than 12% in the first 74 trading days…

But then came the biggest comeback rally in the past 100 years.

Signs that the global trade war is rapidly deescalating blew strong winds into Wall Street’s sails – sparking a historic rally. And, just as fast as they crashed, stocks staged an epic rebound.

And, I believe, momentum is building.

Let’s start with May, when we expect the “trade dam” to break.

The pressure that’s been building since “Liberation Day” is finally forcing a breakthrough on the trade front. 

Over the past week, multiple White House officials have suggested that several trade deals are nearly complete – especially with key allies. We just heard about one with the United Kingdom Thursday morning, in fact (that lit off some fireworks).

We expect more of those deals to be announced in May.

They’ll do more than just ease tariffs. They’ll slam the brakes on inflation fears, cool the geopolitical heat, and give the Fed the economic clarity it’s been waiting for.

Then we’ll move into June, where two catalysts will converge – and ignite a major market rally.

First, we expect a terrible May jobs report. That’s good news. 

Weak jobs data will show the true employment cost of the “Liberation Day” tariff blitz, which began just after the last payrolls survey.

This will give the Fed every reason it needs to pull the trigger on its first rate cut of 2025 at the June FOMC meeting… or at least provide the sort of post-meeting fireworks we were looking for on Wednesday.

But that’s not all.

As trade deals are signed, pressure will mount on the U.S. and China to come to terms. We believe the nations will announce a framework deal, which would serve as the clearest sign yet that the trade war is winding down.

Then in July, we will get the final piece of the puzzle: tax cuts. 

We expect Congress to finalize a massive tax reform bill extending – and potentially expanding –the 2017 tax cuts. By then, lawmakers will have the cover to push this bill through.

These positive catalysts will lead us into the 2Q earnings season, which kicks off in mid-July. Those reports should reflect easing cost pressures, improved demand visibility, and a surge in forward confidence. As such, we expect strong earnings, better guidance, and reaccelerating growth.

But make no mistake…

The Stock Picker’s Stock Picker’s Top May Pick

This isn’t a “buy everything and hope for the best” market.

Volatility is the new norm. We’re living in the Age of Chaos

Traditional buy-and-hold strategies don’t work like they used to.

And so, my team and I have developed what we believe is the ultimate stock-picking engine — a quantitative, machine-driven screener that helps you get in, get out, and get paid month after month in this Age of Chaos.

It scans the market for the rarest type of opportunity – stocks that are simultaneously:

• Growing earnings, revenues, and margins.
• Trending up across short- and long-term technicals.
• Getting attention from both analysts and traders.

These are the strongest stocks in the entire market at any given moment.

Then my team and I make the final call on which of those stocks we recommend to our subscribers.

And we’ve stress-tested it.

Over the past five years, it could have returned 1,054% — outpacing the S&P 500 by more than 10X. Even in rough stretches, it’s been able to sidestep crashes and capitalize on rebounds. In 2024, from July through December, while the S&P barely moved, it could have delivered a 24.3% return.

This model doesn’t require you to perform hours of research or constant monitoring. Just 30 minutes a month is enough to follow its signals.

In April, one of the most volatile months in stock market history, the S&P 500 dipped into bear market territory and then clawed its way back out to a just under 1% loss.

At the same time, one of this tool’s picks was Howmet Aerospace Inc. (HWM). In April, it took off for a 13.4% gain.

Our proprietary stock screener picked this aerospace and defense component specialist again earlier this month… and we agreed. So far in May, HWM shares are up 6.2% (and the top performer in our portfolio). Meanwhile, the S&P is up less than 2%.

We took this tool out of the “lab” and started using it live in June 2024. Since then, we’ve put it to the test in 10 monthly portfolios.

And with results like I just showed you with Howmet, it’s no surprise that this quant screener has, in six of those months, handily beat the market… and tied it once.

To show you what else this tool can do, I’ve participated in an event where I show you a lot more about how this tool works. It’s free to viewers.

Go here to watch it now.

Sincerely, 

Luke Lango

Senior Analyst, InvestorPlace

Bear markets, defined as a 20% or more pullback from recent highs, typically last for an average of between nine and fifteen months. They are an inevitable phase of market cycles that move from expansion to contraction and vice versa. However, these downturns eventually end, and the market climbs higher in the long run. Checking data from Yardeni Research, since and including the market crash that sparked the Great Depression, the S&P 500 index has had 22 bear markets, even as those invested long-term have had positive returns over time.

Still, a bear market can cause significant short-term losses for investors. Understanding how long they typically last and what influences their length can help you keep perspective when there’s market tumult.

Average Duration of Bear Markets

Working with data from Yardeni Research, we get an average duration of about 11.4 months since 1928 for bear markets in the S&P 500 index, with a full recovery (back to the previous peak) typically around 2.5 years.

The data can help you stay calm while others panic, though a lot depends on where you have your investments. For example, the Nasdaq 100, an index of the 100 most valuable stocks on that exchange, which tends to be tech-heavy, took more than 15 years to come back to its previous peak after the dot-com bust.

Factors Influencing Bear Market Duration

There are three main categories of bear markets:

Event-Driven Bear Markets

Economic shocks and unexpected events, such as pandemics and geopolitical conflicts, can cause event-driven bear markets. The early 2020 downturn triggered by the pandemic serves as a prime example. Despite a rapid and steep decline of over 30%, this bear market lasted only about one month because of swift and coordinated policy responses that restored investor confidence.

Cyclical Bear Markets

Cyclical bear markets occur in tandem with broader economic slowdowns or recessions. These often last longer, as can be seen in the table below, because they develop from persistent macroeconomic issues, such as increasing interest rates, unemployment, and falling corporate earnings.

Structural Bear Markets

Bear markets may also develop when fundamental shifts or imbalances occur after speculative bubbles burst or financial crises take place. Also known as “secular” bear markets, these can see drastic drops of more than 50% and require a longer recovery lasting years or even decades (e.g., Japan from the 1990s through the 2000s), as the economy recalibrates to the new reality.

Historical Extremes: Shortest vs. Longest U.S. Bear Markets

While the averages provide a useful guide, it’s also helpful to know how short or long they have lasted:

The Shortest Bear Market

The bear market of March 2020, at the onset of the pandemic, is the shortest on record. The S&P 500 plunged more than 30% in just 33 trading days before rallying to new highs within four months. This rapid recovery was largely due to unprecedented fiscal stimulus and monetary policy support, along with investors’ desire to quickly reenter the market after such a steep decline.

The Longest Bear Market

Determining which is the longest U.S. bear market depends on the method used. Looking at multiple indexes, researchers have identified a 61-month period (about five years) ending March 1942 as the longest. The 60% market decline was sparked by the economic and geopolitical disruptions of World War II.

Other metrics point to the 1929–1932 downturn of the Great Depression, which lasted 33 to 48 months (again, depending on methodology). This period saw the Dow lose up to 89% of its value before returning to steady gains. The S&P index’s longest bear market came after the dot-com bubble burst.

The Bottom Line

Bear markets typically last a little less than a year, but the duration and recovery time depend on the cause of the decline and underlying fundamentals. While downturns can be painful for investors, they do eventually end, and the stock market returns to a long-term growth trend.

Editor’s note: “Stay Profitable in a Wild Stock Market, Even in Bearish Conditions” was previously published in February 2025 with the title, “An Expert Method to Overcome a Turbulent Stock Market“. It has since been updated to include the most relevant information available.

When it comes to the stock market, it can be a bit like a hurricane at sea: powerful, unpredictable, and capable of turning calm waters into chaos in an instant.

We’ve been enduring our fair share of market chaos lately, with the S&P 500 seemingly up one week and down the next. Investors are practically begging for monotony. But wilder price action like this may be our new normal…

You see; historically speaking, the stock market averages about one bear market every five or six years. But in the past six years, we’ve had not one… not two… but three different bear markets. 

There was the flash crash of late 2018, which saw stocks briefly fall into a bear market right before the holidays. There was also the COVID crash of 2020, wherein stocks plunged in the fastest market crash in history. And then there was the inflation crash of 2022, when tech stocks were obliterated by sky-high interest rates. 

Three unforeseen bear markets in the past six years – that is wild. 

But, of course, on the other hand, we’ve also seen some huge stock market successes, too.

What’s Driving These Wild Swings? Algorithmic Trading

On average, the stock market rises about 10% per year. But in 2024, stocks climbed 23%. They rose around 27% in 2021. And in 2019, stocks rallied about 29%.

In other words, over the past six years, the S&P 500 has achieved three different years with nearly 30% returns. As a matter of fact, of the stock market’s 10 best years since 1950, three have occurred since 2018. 

Three different bear markets and three of the best years ever for stocks – all within the past six years.

So, if the stock market has felt wild to you lately, that’s because it has been. 

But this wildness could be the new norm for Wall Street going forward. 

We can thank technology for that – at least, that’s my opinion. 

Why? Because algorithms run the market now. 

These days, algorithmic trading accounts for approximately 60- to 75% of total trading volume in the U.S. stock market. That means most trades are automatic, executed by bots adhering to pre-set parameters. 

And, unlike humans, robots don’t really ask why. They just do what they are programmed to. 

So, when something bad happens, all the algorithmic-driven systems rush toward an exit. And when something good happens, they race to get involved. That’s why, in my view, algorithmic trading creates crowding. 

As a result, we get wild swings in the market – both up and down. The algorithms drive momentum one way or the other, and the market follows. 

We get flash crashes and fast recoveries; big bear markets and massive bull runs; major meltdowns and momentous melt-ups. 

We get stock market volatility.

Cloudflare (NET) shares took off Friday, a day after the provider of cloud services beat revenue estimates as it signed a pair of big contracts.

The company reported first-quarter revenue jumped 27% year-over-year to $479.1 million, beating Visible Alpha estimates by about $10 million. However, adjusted earnings per share of $0.16 came in a penny below forecasts. 

CEO and co-founder Matthew Prince said Cloudflare scored the largest contract in its history, a more than $100 million deal driven by its Workers developer platform. It also signed its longest-term secure access service edge (SASE) contract ever. 

Prince added that Cloudflare has “the scale, the technology, and the team to capture the massive opportunity ahead of us.”

The company sees full-year adjusted EPS of $0.79 to $0.80, and revenue of $2.090 billion to $2.094 billion. Analysts surveyed by Visible Alpha were looking for $0.80 and $2.095 billion, respectively. 

Shares of Cloudflare surged 9% and are up about 25% in 2025.

Tom Yeung here with your Sunday Digest.

Ever wonder why the stock market seems to hibernate during summer?

The most likely explanation comes from 18th-century England. At the time, wealthy British investors often sold their stocks before moving to their country homes for the summer. The seasonal fire sales supposedly caused markets to slump.

Fast forward to today, and much like afternoon tea and handlebar mustaches, this centuries-old habit seems to live on.

According to a study by LPL Financial, the May to October stretch has been a financial dead zone, delivering just 1.8% annual returns since 1950. Trading volumes typically dry up as traders go on vacation, and there’s simply not enough buying demand to power stocks higher.

Meanwhile, the November to April months have rewarded investors with a much stronger 7% return, as shown in the graph below.

The effect is also noticeable across other countries. A 2002 study by LPL found that 36 of the 37 markets they studied showed lower returns in May to October. The one outlier was Australia, which experiences seasons opposite to those in the Northern Hemisphere.

Still, selling your entire investment portfolio in May isn’t just terrible from a tax perspective. It also causes people to miss out on potential recoveries.

For example, the S&P 500 rose 12% in the summer of 2024 after the Federal Reserve cut interest rates. An investor too distracted by the “sell in May” mantra would have missed out on those gains. The 2008 financial crisis and 2020 COVID-19 pandemic also saw incredible resurgences the following summers.

In today’s Digest, we’d like to give nine other reasons (i.e., stocks primed for success) to stay invested in the summer. Well… I’ll give you two here…

And InvestorPlace Senior Analyst Luke Lango will reveal another seven in a special portfolio he built using his new powerful stock algorithm. It’s designed to do one thing… help you beat the markets and volatility, month after month, by helping him find the best stocks at the best time. You can learn more about how that tool works – and that special seven-stock portfolio – in Luke’s new free broadcast here.

Now, let’s get to the two stocks I’m looking at this summer – and take a quick peek at Luke’s special portfolio and how these seven stocks all represent even more reasons to stay invested this summer…

1. Seasonal Effects Can Dominate

Some companies naturally do well during the warmer months.

Outdoor sportswear makers… ice cream parlors… summer camps…

Then there’s my favorite example, Intuit Inc. (INTU). (You can tell I’m popular at parties).

Sunday Digest readers will recognize this tax and accounting firm as one of my top growth picks for 2025. America’s current tax laws expire at the end of this year, and the Trump administration and Congress are lining up a new “big, beautiful bill” that will change everything from the state-and-local tax (SALT) deduction to the way tips are taxed.

Intuit stands to do well because it serves the individuals and small businesses affected by these changes. Do-it-yourself filers are far more likely to use Intuit’s TurboTax software on a major tax overhaul, and INTU’s shares surged 80% during the last major change in 2017.

The software firm also benefits from a significant summer effect. Most of Intuit’s profits happen during the tax filing season that ends on April 15, and markets seem consistently surprised by the 10X jump in operating profits once they’re reported in late May.

“Seasonal” investing software from our corporate partners, TradeSmith, finds that shares of the TurboTax owner typically rise 10% between May 13 and August 11 as these financial figures are announced and digested. The green line in the graph below shows the typical path INTU shares have taken over the past 20 years.

We’re within 48 hours of the best day of the year to buy.

source

In addition, TurboTax has several secular tailwinds in its sails. The company will benefit from the end of the IRS Direct File program, which previously offered free tax filing software. And the firm is also a leader in AI-powered accounting, which is helping sales of its popular QuickBooks product.

Though the average firm typically does poorly during summer months, tax firms like Intuit and H&R Block Inc. (HRB) prove that there are some notable exceptions to this rule.

2. Last November-April Returns Were Poor

Last year’s November to April returns were mediocre at best. The S&P 500 dropped 2.8% over this period, compared to its long-term average gain of 7%.

That means markets are unusually cheap for this time of year. The median S&P 500 company now trades at 17.9X forward earnings – 5% lower than last November, and 7% below the 19.2X level seen in the past five Mays.

That’s made several high-quality firms incredibly attractive long-term buys. And one that stands out is Corning Inc. (GLW).

Corning is an upstate New York firm that’s developed high-end glassware since 1851. It invented Pyrex in 1915, the low-loss fiber optic cable in 1970, and the iPhone’s “Gorilla Glass” in 2007.

Today, the firm is a leader in liquid-crystal display (LCD) panels, smartphone screens, and the fiber optic cable used in broadband connections. It’s an up-market manufacturer that’s survived outsourcing and offshoring thanks to decades of innovation.

Perhaps most excitingly, Corning also manufactures the high-end fiber optics used in data centers to link servers. This essential technology allows AI-focused data centers to send more data across tighter spaces. It’s become one of Corning’s greatest growth drivers.

“Our growth is primarily driven by powerful secular trends and more Corning content in our customers’ offerings,” CEO Wendell Weeks said in prepared first-quarter earnings call remarks. “We continue to see and hear reconfirming evidence that our secular trends are intact and remain relevant. We see it in our results and we see it in our order books, and we hear it in our detailed dialogues with our customers.”

Meanwhile, the firm’s profitability is excellent. Corning has earned positive operating earnings for the past two decades (even through two recessions), and analysts expect return on equity to surge to 17% this year – roughly twice as high as market averages. Shares additionally trade at just 19X forward earnings given the November-April selloff.

Now, you might be thinking there must be something wrong. How can a firm have it all? And you’d be right to worry.

Corning supplies many of the world’s top TV makers, which are now facing enormous tariffs on exports to the United States. Public funding for broadband expansion may also get cut in the upcoming federal budget. Both factors have contributed to a 15% selloff since February.

However, it’s becoming increasingly clear that the market’s “sell first, ask questions later” approach has turned Corning into an irresistible “Buy.” Shares still trade 20% below their February peaks, and we believe this firm is an opportunity too good to pass up this summer.

3. The 7 Short-Term Trades

Finally, Luke Lango has long maintained that there’s always a bull market somewhere. Last year, 60 of the S&P 500 companies saw shares rise more than 30%, and this group included names like Iron Mountain Inc. (IRM) (up 58%) and Nvidia Corp. (NVDA) (up 60%).

At first glance, Iron Mountain and Nvidia seem to have little in common. The former is a blue-chip warehousing firm known for safekeeping corporate documents and Prince’s unpublished music. The latter is a hypergrowth chipmaker at the bleeding edge of artificial intelligence.

Nevertheless, the two do have some commonalities.

On the fundamental side, both firms saw accelerating growth in the fiscal year leading up to 2024. Iron Mountain came from a relatively low base to notch 24% growth in earnings before interest and taxes from the previous year, while Nvidia’s earnings quadrupled to $37 billion.

Meanwhile, the technical factors were also on their side. Iron Mountain’s shares had risen 40% the previous year, while Nvidia’s had surged 240%. History tells us that rising stocks tend to keep going up. The two companies also saw significant analyst upgrades, another sign of gains to come.

Luke and his team have spent over a year assembling these insights into a single system called Auspex. This monthly process now screens over 8,000 stocks on the last day of each month and helps them identify “perfect” stocks with strong growth momentum for shorter holding periods.

In a new presentation, Luke reveals the secrets behind this system and shows how it has now selected seven elite stocks that look set to buck the summer doldrums.

But don’t wait long.

For Luke’s special Project Auspex presentation and insights into his Auspex portfolio picks, simply click here.

The Trouble With Selling in May

Studies have found it’s hard to outperform the stock market by selling in May and rebuying in October. Transaction costs and taxes tend to erase any potential gains even if you put the money into yield-returning T-bills.

In addition, this year has seen some incredible first-quarter results. According to FactSet, the average S&P 500 firm reported a 12.8% increase in earnings per share. We’re seeing firms like The Walt Disney Co. (DIS) surge 16% on strong earnings figures. Selling now would leave people missing out on the typical post-earnings bump.

That’s why we’ve been broadly recommending investors stay in the market. There’s a great deal of opportunity for those who know where to look, and that’s why I urge you to watch Luke’s free Auspex presentation to learn more.

Until next week,

Tom Yeung

Market Analyst, InvestorPlace.com

The market turmoil caused by President Trump’s 2025 tariff announcements has experts reassessing a longstanding maxim: “The stock market is not the economy.”

Brenton Harrison, a certified financial planner, founder of New Money New Problems, and a member of Investopedia’s Advisor Council, pointed to reasons to rethink the dictum. Many investors now trade for themselves via apps like Robinhood Markets Inc. (HOOD) and other platforms, which has “increased Main Street’s interest in Wall Street,” he said. “By having skin in the game, Main Street investors are more attuned to activities on Wall Street that impact their daily lives and portfolios.”

So, is this part of a narrowing of the supposed gap between Wall Street and Main Street? We suggest possible answers below.

Market Signals and Economic Reality

The notion that the stock market isn’t the economy is decades old. Kai Ryssdal of “Marketplace” popularized the phrase just before the 2008 Financial Crisis, emphasizing that one shouldn’t confuse what’s happening in one with the other. The stock market tracks the value and expected future earnings of publicly traded companies, while the economy comprises all U.S. production, consumption, employment, and commerce.

Ryssdal still stresses the point, though in a manner that’s somehow both blunter and more nuanced. For example, in March 2025, he seconded a Bluesky post by noted economist Paul Krugman, who repeated the phrase three times, then wrote, “Nonetheless, holy sh*t,” citing market fears about Trump administration tariffs.

What the Phrase Means

As Krugman put it a few years ago, “The relationship between stock performance—largely driven by the oscillation between greed and fear—and real economic growth has always been somewhere between loose and nonexistent.” This means, as a March 2025 Economic Policy Institute report put it, “More often what is happening to stock prices gives us no insight into the wider economy.”

The market is also not very representative of the U.S. economy:

• The main index, the S&P 500, has just 500 companies out of America’s 33 million businesses.
• Data noting that over 60% of Americans own stock can be misleading, since those in the top 10% by wealth own 87.2% of equities and mutual fund shares.
• S&P 500 companies earn almost a third of their revenue overseas.

Still, some argue for using the market’s ups and downs as an economic barometer. For example, during his first administration, President Donald Trump invoked a rising stock market as evidence of his economic stewardship, suggesting policies doing the opposite should be abandoned.

That would mean a  “stock market veto,” largely by the wealthiest Americans (and not a few foreigners). Policy shifts from the New Deal to the Affordable Care Act (ACA) in 2010 and beyond have caused market drops. Yet, regarding the ACA, the market reaction wasn’t even a good barometer of how healthcare stocks would fare. For example, we calculate that despite an initial price drop, the Health Care SPDR ETF (XLV) rose about 387% between the ACA’s passage and April 2025—higher than the S&P 500 index‘s impressive 354%.

Updating the Relationship Status

There’s a saying among investors and analysts that in a crisis, everything is correlated, which means that everyone is selling everything. In this context, perhaps it’s helpful to add that, while in ordinary times the stock market does not reflect the economy, in times of crisis both are greatly affected.

For example, Wolfers said there’s good reason to take heed of the market’s reaction to Trump’s tariffs. The turmoil in equities and bonds is evidence that Wall Street isn’t buying Trump’s argument that his tariffs, which would fundamentally restructure global trade, will lead to greater profitability and a more robust American economy, he says.

“Ordinarily, I have a lot of sympathy for the statement that the stock market is not the economy,” Wolfers said. “But I think this time it’s more central to understanding what’s going on in the economy.”

Crucially, plunging markets can hit the economy by damaging consumer sentiment. Even though most stocks are held by wealthier families, when markets and the value of 401(k)s are falling, this dominates news broadcasts, Main Street takes notice, with people often quickly cutting their spending, which in turn slows economic growth.

“This month’s market activity shows that companies and governments recognize how fast consumer sentiment can change an economy,” Harrison said. “In past times of turbulence—the Great Recession, the early 2000s tech bubble—some of the market forces that led to a crash were in motion for years before Main Street was aware of them. …Recent market events have shown that the time between a Wall Street activity and Main Street’s reaction to it has whittled down to days.” 

The Bottom Line

“The stock market is not the economy” is a reminder that stock market troubles don’t necessarily lead to slowing economic growth—hence economist Paul Samuelson‘s joke in 1966 that “Wall Street indexes [have] predicted nine out of the last five recessions.”

That said, markets can influence the economy. They help businesses fund growth, offer investments for millions of Americans, and perhaps, as Wolfers suggests, provide important insights about certain policies. The relationship is thus more nuanced than screaming headlines about stock market crashes might lead one to believe.

Inflation data, scheduled for Tuesday, may claim the spotlight early this week. But investors will also be evaluating the outcome of the weekend meetings between U.S. and Chinese trade officials after a quiet Friday session that left stocks down for the week.

Traders will also follow Thursday’s remarks from Fed Chair Jerome Powell as he comes under pressure from President Donald Trump over the Fed’s interest rate policy. And retail sales data will be closely watched on Thursday, the same day as retailer Walmart (WMT) reports earnings. 

Earnings releases from Cisco Systems (CSCO), Alibaba Group (BABA), Deere & Co. (DE), Applied Materials (AMAT), and video game maker Take-Two Interactive (TTWO) are among the week’s other top scheduled results.

Consumer and small business sentiment surveys, along with homebuilder and manufacturing sector data, could also attract attention.  

Monday, May 12

• Monthly federal budget (April)
• Federal Reserve Gov. Adriana Kugler is scheduled to deliver remarks
• Simon Property Group (SPG), NRG Energy (NRG), Fox Corp. (FOX), and Monday.com (MNDY)

Tuesday, May 13

• NFIB Small Business Optimism Index (April)
• Consumer Price Index (April)
• JD.com (JD), On Holding (ONON), Tencent Music Entertainment (TME), and Oklo (OKLO)

Wednesday, May 14

• Federal Reserve Vice Chair Philip Jefferson, Federal Reserve Gov. Christopher Waller and San Francisco Fed President Mary Daly are scheduled to speak
• Sony Group (SONY), Cisco Systems, CoreWeave (CRWV), Dynatrace (DT), and Alcon (ALC)

Thursday, May 15

• Initial jobless claims (Week ending May 10)
• U.S. retail sales (April)
• Producer Price Index (April)
• Industrial production (April)
• Capacity utilization (April)
• Business inventories (March)
• Homebuilder confidence (May)
• Federal Reserve Chair Jerome Powell and Gov. Michael Barr are scheduled to speak
• Walmart, Alibaba, Deere & Co., Applied Materials, Mizuho Financial Group (MFG), Take-Two Interactive, and Cava Group (CAVA)

Friday, May 16

• Import/export price index (April)
• Housing starts (April)
• Building permits (April)
• Consumer sentiment – preliminary (May)
• Richmond Fed President Tom Barkin is scheduled to speak

Inflation, Retail Sales Reports Come As Investors Watch Data Amid Tariff Developments

The weekend meetings on trade between U.S. and Chinese officials are likely to capture market watchers’ attention to start the week, with investors hopeful that trade tensions between the two nations could be easing.

Inflation will be in focus as investors get their first look at April prices with the Tuesday release of the Consumer Price Index (CPI). At last week’s Federal Reserve meeting, officials said they were looking for more improvement on inflation before moving to lower interest rates from their current levels.

Federal Reserve Chair Jerome Powell is scheduled to speak on Thursday; last week, President Trump was critical of the Fed for failing to act on interest rates. Federal Reserve Vice Chair Philip Jefferson, Federal Reserve Gov. Christopher Waller, and San Francisco Fed President Mary Daly are among the other officials expected to deliver remarks this week.

March’s CPI report indicated that inflation dropped unexpectedly to a rise of 2.4%, while other recent indicators have shown that price increases are slowing. Investors are also expecting updates on import and export prices, as well as April’s Producer Price Index, which shows inflation at the wholesale level. 

Retail sales data, scheduled for Thursday, comes as consumer spending has been strong while shoppers rush to buy items before tariffs take hold. Economists are looking for signs of change in spending levels, with recent consumer sentiment surveys showing that feelings about the economy are worsening. 

On Friday, the latest sentiment report is expected to offer May’s first look at how consumers feel about current and future economic conditions. The survey offers insights into spending patterns that can help support the economy. It follows several months of surveys showing declining consumer sentiment amid worries over the administration’s tariffs’ impact on prices. Tuesday’s expected small business sentiment report could further signal the economy’s direction.

The homebuilders’ confidence survey, scheduled for Thursday, and Friday’s expected housing starts data, will highlight inventory supply trends during a period in which housing scarcity is helping drive affordability problems.

Investors will also be looking at Thursday’s scheduled industrial productivity report for data on the manufacturing sector. Monday’s planned release of the monthly federal budget for April will provide an update on government debt levels.

Walmart Earnings Come as Investors Watch for Consumer Spending Trends

Walmart’s scheduled quarterly report on Thursday leads the weekly earnings calendar, as market watchers seek information on consumer spending and economic conditions amid uncertain U.S. trade policy.

The retail giant reported prior-quarter earnings per share and revenue that came in ahead of analyst expectations, but its outlook was weaker than expected as the company said it was evaluating the impact of tariffs on its business.

Cisco is expected to report on Wednesday after the network infrastructure provider posted higher revenue in the prior quarter on increased AI orders and approved a $15 billion increase to the company’s stock repurchase program. Semiconductor maker Applied Materials’ report scheduled for Thursday comes after it said in its previous quarterly earnings report in February that sales could be negatively affected by recent limitations on chip exports.

Take-Two Interactive’s Thursday earnings report will drop as the video game maker builds excitement for its latest release in the Grand Theft Auto game franchise. Deere’s report on the same day will provide a look at the agricultural sector. 

Nuclear power startup Oklo’s report on Tuesday comes after it recently reported that its losses widened in 2024. Investors in the power provider include OpenAI’s Sam Altman, which has raised investor optimism that the company’s services could be used to meet energy demand for AI infrastructure projects.

Investors will also be following scheduled earnings reports from Chinese e-commerce companies Alibaba, JD.com, and Tencent Music Entertainment.

This weekend could be a turning point for the trade dispute between the world’s two largest economies.

U.S. and Chinese officials met in Switzerland starting on Saturday, and investors are optimistic about what could result. A thawing of the relationship between the two trading partners could provide some relief for businesses and consumers who have been bracing for higher prices and empty shelves.

“A very good meeting today with China, in Switzerland,” President Donald Trump posted on Truth Social after the first day of negotiations ended. “Many things discussed, much agreed to. A total reset negotiated in a friendly, but constructive, manner.”

While no details of the negotiations have been released as they resume for a second day, here’s what we know about the discussions.

What’s the Status of the Trade Relationship?

The U.S. and China have been in a tit-for-tat trade dispute in recent weeks, resulting in high tariffs levied on both countries.

President Donald Trump has pushed tariffs on Chinese goods coming into the U.S. to 145%. In response, China’s government ratcheted up import taxes on U.S. goods coming to their country to 125%. Economists have said that duties that more than double the price of goods essentially amount to a trade embargo.

China is the U.S.’s third-largest trading partner, according to the most recent data available from the Census Bureau. America has brought in more than three times the amount of goods from China than it exported there so far this year.

Who Is Involved in the Trade Talks?

Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will negotiate on the U.S.’s behalf.

Bessent has been vocal about the trade spat between the two countries, saying that the current tariff levels are “unsustainable” and that de-escalation was likely in the cards. In a press release announcing his trip to Switzerland, Greer said he would be “negotiating with countries to rebalance our trade relations to achieve reciprocity.”

For China, Vice Premier He Lifeng will spearhead the discussions. He is reportedly close to Chinese President Xi Jinping and is expected to toe the government’s official line. China’s Ministry of Commerce has said, “whether through confrontation or negotiation, China’s determination to safeguard its development interests will not change.”

Will a US-China Trade Agreement Be Reached?

While Trump said Thursday that he expects talks to be “substantive”, it’s unlikely the delegations will be able to hammer out a complete trade agreement over the weekend.

U.S. trade agreements take an average of 18 months to negotiate and often even more time to implement, so de-escalation of the tariffs would be more likely. On Friday morning, Trump suggested that tariffs on Chinese goods could be lowered to 80% but said he would leave the final number up to Bessent.

The two countries could also discuss other trade barriers, such as the de minimis exemption that Trump excluded China from last week, affecting Chinese bargain shopping sites like Temu and Shein.