Stock rally is losing steam, but 'stay put' & don't buy the dip
US stock futures (ES=F, NQ=F, YM=F) are sliding Thursday morning as the market rally stalls, with weakening data and caution from the Federal Reserve dragging on investor sentiment.
Alex Morris, CEO and CIO of F/m Investments, joins Brad Smith and Madison Mills on Morning Brief to explain why he's not buying the dip and why staying in cash might be the smarter move for now.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
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Ford recently issued two recalls that are not necessarily concerning. The company's higher warranty costs have hurt earnings in the past. Quality improvements will take time to filter through Ford's U.S. fleet. 10 stocks we like better than Ford Motor Company › Let's take a moment to rewind back almost a year ago, when Ford Motor Company (NYSE: F) reported second-quarter earnings for 2024. "It's a code-red situation at Ford after a disaster quarter," Daniel Ives, an analyst at Wedbush Securities, said in comparison to healthy results at crosstown rival General Motors, according to The Detroit News. Part of Ford's "disaster" quarter was due to rising warranty costs, which cover vehicles leaving the factory with defects that later require repairing. In recent years, Ford has continuously found itself near the top in the volume of U.S. vehicles recalled, and it has weighed on the Detroit icon's bottom line. After a couple of recent recalls, is this problem rearing its ugly head again? Not so fast -- let's dig in. In late May, Ford issued a recall for 1,075,299 vehicles in the U.S. over an issue that could prevent the rearview camera from displaying images, which increases the risk of a crash, according to the National Highway Traffic Safety Administration (NHTSA). At first glance, this number is alarming, considering Ford's annual recall volume is generally around 4 million to 6 million total. But not all recalls are created equal, and that's the case here as well. Within months of being contacted by the NHTSA, Ford was able to reproduce the camera failure and fix the software through an over-the-air update, free of charge. That's the clear difference between hardware, which requires a consumer to bring the vehicle to a dealership for repairs, and software that can be fixed over the air. This isn't a recall that's going to cost Ford much, and it certainly won't noticeably weigh on earnings. The next example is a different story. Ford also recently announced that it will recall nearly 30,000 F-150 Lightning electric pickup trucks sold in the U.S.. The reason is a suspension nut loosening or missing entirely. The majority of affected vehicles, or 20,528, are from the 2024 model year, with the remaining from the 2025 model. This is where the hardware vs. software aspect comes into play. To fix the issue for affected vehicles, Ford and Lincoln dealers have to inspect the torque of the nut on the ball joint of the left and right upper control arms. If it passes inspection, the nut is replaced; if it fails inspection, the knuckle and nut will be replaced. This is not only a physical process, but far more expensive than a simple over-the-air blast to fix a million vehicles, essentially all at once. While this recall for hardware will cost Ford, the small volume of vehicles won't move the needle at all for the automaker's financials. For investors, what's important to realize is that while headlines about recalls can be very loud, not all of them are created equal, and these two in particular don't raise any red flags in terms of earnings being affected. Ford has made a focused effort on improving quality over the past few years, and most of the issues are on vehicles produced prior to 2021. Despite the company's focus on improving quality and reducing warranty expenses, management warned that it will take at least 18 months to see the benefits of new processes and lower warranty costs – my guess is perhaps even longer. Before you buy stock in Ford Motor Company, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Ford Motor Company wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Daniel Miller has positions in Ford Motor Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is Ford's Big Problem Rearing Its Ugly Head Again? was originally published by The Motley Fool Sign in to access your portfolio
