Markets
Nia Warfield, Luke Kawa

US stocks stage Herculean comeback to finish positive

US stocks started the session battered by a double whammy of negative economic news and concerns about AI demand.

At their lows of the morning, the S&P 500 and Nasdaq 100 were each down more than 2%. But stocks managed to hurdle those challenges over the course of the day and accelerated into the close, perhaps buoyed by month-end rebalancing activity.

When the dust settled, the S&P 500 and Nasdaq 100 ended in positive territory, while the Russell 2000 had a 0.6% decline.

It’s the biggest intraday loss the benchmark US stock index has erased to finish positive since October 13, 2022. That’s the day the bull market began.

Most S&P 500 sector ETFs rose, with healthcare, consumer staples, and industrials leading the way up. Energy was the massive laggard, tumbling 2.7%.

Some of the big gainers included Seagate, Trane, and Western Digital, all on earnings, which have generally surprised to the upside in a big way so far this reporting period.

But there were also some negative reports of note:

Norwegian Cruise Line shares sank after the cruise operator missed first-quarter estimates, as both ticket sales and onboard spending cooled.

Etsy shares slid nearly 6%, even after the craft-based online marketplace posted solid Q1 revenue, but swung to a loss after taking on charges from the sale of its instrument marketplace, Reverb.

Shares of Oddity Tech surged 30% after the AI-savvy beauty company delivered a standout Q1, easily topping expectations and skirting tariff fears.

Snap shares tumbled — despite beating analyst expectations yesterday — after the social media app warned that de minimis shipping changes may already be hurting its advertising business.

Shares of First Solar, the largest US manufacturer of solar panels and modules, fell about 8% after the company said it expects to pay up to $90 million in tariffs this year.

Starbucks slumped after posting a revenue and earnings miss along with a larger decline in same-store sales than analysts had penciled in.

Super Micro was the biggest sore spot on a sunny day, falling double digits after it released quarterly results that fell far short of expectations.

Shares of Jeep maker Stellantis and luxury giant Mercedes-Benz slipped after both automakers pulled their full-year guidance, citing volatility in trade policy.

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markets
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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