Markets
Nia Warfield, Luke Kawa

S&P 500 dips as traders ditch high-flying stocks and go bargain hunting

The start of the third quarter was marked by a vibe shift: an intense rotation from the market’s winners into value stocks. Alas, since value stocks often get that title from underperformance, making them smaller members of a benchmark, this shift in allocations saw the S&P 500 end 0.1% lower despite advancers outnumbering decliners by 255. Until today, the S&P 500 hadn’t declined during a session in which this many of its constituents rose in all of 2025.

The Nasdaq 100 fell 0.9% while the Russell 2000 rose 0.9%.

Top performers in the S&P 500 included casino stocks Las Vegas Sands, Wynn Resorts, and MGM, which were all up over 7% on the back of strong June Macao gaming numbers. On the flip side, GE Vernova and Axon Enterprise fell 4.3% and 6.3%, respectively, leading the day’s declines.

Target shares rose 5% as bullish call option activity surged, part of the broader factor rotation where traders are pivoting from high-flyers to beaten-down names.

Ford and GM jumped 4.7% and 5.7%, respectively, after both posted solid Q2 vehicle sales. Ford’s sales rose over 14%, while GM’s climbed more than 7%.

Tesla slipped 5% after President Trump threatened to have “DOGE take a good, hard look” at EV-friendly government subsidies — a critical part of Elon Musk’s business.

AI trade names like Meta, Palantir, and Cloudflare, along with chipmakers Nvidia, AMD, and Broadcom, all declined in this factor rotation, also weighed down by Senate Republicans scrapping a bill provision that would have banned state-level AI regulation.

AMC sank 9% after the movie theater chain and meme stock favorite struck a debt-for-equity swap and settled litigation with creditors.

Rivian shares dipped 1.9% while Lucid’s fell 3.7% as the Senate worked to advance a version of Trump’s “big, beautiful bill,” which would slash a number of EV benefits and charger network budgets.

Warner Bros. Discovery dropped over 4% after the Newhouse family — longtime media moguls and Condé Nast owners — sold $1.1 billion worth of shares.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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