Financial advisors are turning to this asset class for diversification and stability as uncertainty rocks markets
Alternative investments are gaining traction among financial advisors who are seeking diversification just as rising geopolitical tensions and shaky tariff policy rattle stocks. A survey of nearly 200 financial planners by the Financial Planning Association and the Journal of Financial Planning from March 23 to May 4 found that while these investments aren't in widespread use among advisors, they've seen significant growth compared to last year. More than 17% of the advisors are incorporating such options into their practice, nearly double from last year, the poll found. Some 23% are using individually traded real estate investment trusts, up from 14.9% in 2024. More advisors also embraced private debt, with about 19% of participants saying they're turning to this asset class, compared to 12.5% last year. The results arrive as investors grapple with an S & P 500 that's up just 2% this year, and volatile movements in Treasury yields, as well as escalating conflict between Israel and Iran. "This use of alternatives as an asset class is a natural evolution in the process of bringing greater diversification and greater consistency of portfolio performance as a whole," said Paul Brahim, certified financial planner and managing director at Wealth Enhancement Group in Pittsburgh. He is also the 2025 president of the Financial Planning Association. An evolution of the 60/40 allocation How advisors implement alternatives in their practices will vary, but they tend to see it as a complement to investors' asset allocation – rather than a complete overhaul of the split between stocks and bonds. Brahim said that the 60/40 model that's typically split between stocks and bonds has evolved to include exposure to domestic and foreign assets, a range of market capitalizations, different flavors of fixed income and now alternative investments. Jon Ulin, CFP and managing principal at Ulin & Co. Wealth Management in Boca Raton, Fla., said that his practice has transitioned from a 60/40 allocation to a 50/30/20. The 20% portion is split among structured notes to offer downside protection and income, as well as private credit, private equity, real estate and commodity ETFs. "We aren't reinventing the wheel, but instead we're trying to smooth out people's results," he said. Key considerations for investors hoping to dip a toe into alternatives include correlations in price performance versus other asset classes and strategies, the use of leverage — which can magnify gains and losses — access to liquidity and fees, Brahim said. "The objective of alternatives is to reduce overall portfolio volatility to create more consistency in returns so that we get better compounding," he said. Access through ETFs Esoteric products like structured notes and private credit may not be easy for individual investors to access, but retail investors can tap into alternatives through exchange traded funds. "If you've never done alts before, the best way is to use the ETFs that are within the scope," said Shana Sissel, founder of Banrion Capital Management. Her firm, based in Glenview, Ill., provides financial advisors with a platform for incorporating alternative investments into their practices. Sissel said that in a hypothetical situation, an individual with a $1 million portfolio might earmark $800,000 to a 60/40 strategy and direct the remaining $200,000 into alternatives. She likes ETFs that are "hedge fund like," calling out AGF U.S. Market Neutral Anti-Beta Fund (BTAL) and the Clough Hedged Equity ETF (CBLS) . When strategies incorporate options, she prefers that they be focused on hedging market risk, rather than providing income. .SPX BTAL 1Y mountain The S & P 500 versus the AGF U.S. Market Neutral Anti-Beta Fund (BTAL) in the past 12 months BTAL aims to provide negative beta exposure to U.S. stocks – meaning, it strives to move in the opposite direction of the market. In 2022, BTAL did just that, rising around 20% while the S & P 500 tumbled more than 19%. This year, with the broad market up a mere 2%, BTAL is off about 1%. CBLS holds a portfolio of long and short positions and seeks to minimize volatility. The fund lost more than 11% in 2022's tumult, but it's up more than 8% this year. Pricing will vary for these strategies: CBLS's total annual fund operating expenses add up to 1.90%, while BTAL's fees weigh in at 0.45%. "I want to look at the strategy and how it correlates to fixed income and equities," Sissel added. "These strategies could be doing different things, but the role they play is as a diversifier."
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an hour ago
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Stock market today: Dow, S&P 500, Nasdaq stall as Fed holds rates steady, forecasts 2 cuts in 2025
US stocks were mixed on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as the Federal Reserve held interest rates steady while officials diverged over the ultimate path of interest rates this year. The Dow Jones Industrial Average (^DJI) fell 0.1% while the S&P 500 (^GSPC) slipped just below the flat line. Meanwhile, the Nasdaq Composite (^IXIC) rose about 0.1%. All three major averages had been up around 0.6% on the day earlier in the trading session. The central bank held rates steady for the fourth meeting in a row. It also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, which would likely represent two 25-basis-point cuts this year. However, officials were more divided on that path, with a handful forecasting no change to rates. Fed Chair Jerome Powell said the right move for the central bank at this juncture was to hold steady to study the near-term path of inflation. "What we are waiting for to reduce rates is to understand what will happen with the tariff inflation. There is a lot of uncertainty about that," Powell said, adding, 'Ultimately, the cost of the tariffs has to be paid." Read more: The latest on Trump's tariffs Markets are also on alert for any sign that the US has joined the Middle East conflict, which has swung stocks around since it broke out last week. President Trump demurred Wednesday when asked if he's moving closer to bombing Iran. "I may do it. I may not do it. I mean, nobody knows what I'm going to do," he said. Iran has warned it will respond firmly if the US crosses a red line into involvement and has reportedly readied missiles for strikes on US bases in the region if it does. Oil prices nudged higher. Brent futures (BZ=F), the international benchmark, were roughly flat above $76 a barrel while West Texas Intermediate (CL=F) crude traded just below $75. US stock and bond markets will be closed on Thursday, June 19, for Juneteenth National Independence Day. The stock market will reopen Friday at 9:30 a.m. ET. Following Juneteenth, the remaining holidays in 2025 observed by the New York Stock Exchange and Nasdaq are: Read more here about the 10 stock market holidays in 2025. US stocks were mixed on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as the Federal Reserve held interest rates steady while officials diverged over the ultimate path of interest rates this year. The Dow Jones Industrial Average (^DJI) fell 0.1% while the S&P 500 (^GSPC) slipped just below the flat line. Meanwhile, the Nasdaq Composite (^IXIC) rose about 0.1%. All three major averages had been up around 0.6% on the day earlier in the trading session. The central bank held rates steady for the fourth meeting in a row. It also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, unchanged from March. On June 4, The Wall Street Journal reported that a hiring freeze at the Bureau of Labor Statistics would force the federal agency to survey fewer businesses for its reports, such as the Consumer Price Index (CPI). When asked about these cutbacks on Wednesday, Powell said the cutback on survey size will "lead to more volatility in the surveys." To be clear, Powell said, "the data we get right now, we can do our jobs. I'm not concerned that we can't do our jobs." But the Fed chair did spend some time stressing the importance of accurate data. "Having really good data on the state of the economy at any given time is a huge public good," Powell said. "It helps. It doesn't just help the fed, it helps the government. It helps Congress. It helps the executive branch. More importantly, really, it helps businesses. They need to know what's going on in the economy." There was a clear divide in the June 2025 summary of economic projections. Seven officials see the Fed's benchmark interest rate not changing at all this year while eight officials see the central bank lowering the rate by a total of 50 basis points. When asked about the divergence, Fed Chair Jerome Powell said, "If you have a higher inflation forecast, you're going to be less likely to be writing down more cuts." "People can look at the same data and they can evaluate the risks differently, as you know," Powell said. "And that includes the risk of higher inflation, the risk that will be more persistent, the risk that the labor market will weaken. People are going to have different assessments of that risk." But Powell continued, adding that with elevated uncertainty about the economic outlook, "no one holds these rate paths [in the Fed's projections] with a lot of conviction." "As the data come in, you should see those differences diminish," Powell said. Federal Reserve Chair Jerome Powell acknowledged Wednesday that the housing market remains a weak spot in the broader economy — one the Fed is watching closely, but can do little to directly fix. "The housing market is a longer-run problem," Powell said, pointing to a mix of persistent supply shortages and still-elevated mortgage rates. It's both a short-term strain and a longer-term structural issue, he noted, and not something that can be resolved through monetary policy alone. "I think the best thing we can do for the housing market is to restore price stability in a sustainable way and create a strong labor market," Powell added. His comments come just hours after fresh data showed a sharp pullback in home construction. Housing starts and building permits for May both came in below expectations, with just 1.26 million new homes started, the lowest monthly total since the height of the pandemic. During his press conference on Wednesday, Federal Reserve Chair Jerome Powell highlighted a theme playing out in markets over the past two months: The economic outlook looks better than it did in early April, but not necessarily better than it was prior to the tariff whipsaw. "Estimates of where the tariffs will be have actually moved back down, although still at an elevated level," Powell said. As Powell pointed out, the peak estimated effective tariff rate, as estimated by JPMorgan below, has been falling since early April. But the 14.4% estimated effective tariff rate remains well above the 2.5% seen entering this year and above the 10.3% seen before President Trump's "Liberation Day" tariff announcements in April. The Federal Reserve's latest "dot plot" outlining future interest rate moves suggests the central bank will still cut rates twice this year, unchanged from its March outlook, though June's forecasts shows a more divided Fed weighing its next move on interest rates. The Fed announced Wednesday that it held its benchmark interest rate in a range of 4.25%-4.5%, as expected. This marked the fourth straight meeting the Fed kept rates unchanged since cutting rates by 0.25% back in December. Along with its policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The central bank raised its projections for inflation and unemployment at the end of this year while lowering its forecast for economic growth. Fed officials see the fed funds rate falling to 3.9% this year, on par with its previous March projection. Coming into the decision, markets had priced in one to two additional rate cuts this year, according to Bloomberg data. The central bank slashed interest rates by a total of 100 basis points in 2024. It is yet to deliver rate cuts so far this year. In 2026, officials see one additional cut; in March, the Fed expected to cut rates twice next year. Twelve officials predict a rate cut this year, with two officials seeing a decrease of more than 0.5%. Most notable in Wednesday's dot plot were forecasts that showed seven FOMC members see no change in rates this year, signaling a more hawkish stance compared to March when four officials saw no change. Two FOMC members expect only one interest rate cut this year. Read more here. The Federal Reserve held interest rates steady in a range of 4.25% to 4.5%. The central bank also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, which would likely represent two 25 basis points cuts this year. As part of the Fed's SEP, officials marked up their projections for core inflation and lowered their forecast for economic growth in 2025. The Fed now also sees the "core" PCE inflation hitting 3.1% in 2025 up from a prior forecast of 2.8%. Less than 30 minutes before the Federal Reserve is set to release its next policy update, the Dow Jones Industrial Average (^DJI) rose 0.1% and S&P 500 (^GSPC) added less than 0.1%. Meanwhile, the Nasdaq Composite (^IXIC) added about 0.2%. All three major averages had been up about 0.6% at one point in the trading day. The 10-year Treasury yield (^TNX) was down about three basis points to hover near 4.36%. As we often note, most of the stock swings on Fed days typically comes after Federal Reserve chair Jerome Powell's press conference starts at 2:30 p.m. ET. But specifically the last hour of trading has been where the market action is as of late. Research from Bespoke Investment Group shows that since all Fed meetings since 1994 the S&P 500 (^GSPC) has dropped an average of six basis points in the final hour of trading. But across the past 10 meetings, those losses have worsened with the S&P 500 falling more than 41 basis points on average. This included eight straight meetings that saw the S&P 500 fall in the final hour trading leading into the March meeting when the S&P 500 rose 10 basis points in the final hour of trading. Yahoo Finance's Claire Boston reports: Mortgage rates drifted slightly lower but remained above 6.8% for another week as the Treasury yields they closely track oscillated. The average 30-year mortgage rate was 6.81% for the week through Tuesday, down from 6.84% a week earlier, according to Freddie Mac data. The average 15-year mortgage rate was essentially unchanged at 5.96%, from 5.97%. This week's data collection period was a day shorter than normal to account for Thursday's Juneteenth holiday. This week's rate is the lowest in four weeks, but mortgage rates haven't been able to break out of a narrow range between 6.8% and 7% since April. This week, the 10-year Treasury yield, which closely tracks mortgage rates, whipsawed and, ultimately, dropped slightly in response to the Israel-Iran conflict and a contraction in retail sales in May as consumers remain jittery about tariffs and their financial positions. Read more here. Yahoo Finance's Jennifer Schonberger reports: The Federal Reserve is widely expected to hold rates steady at the conclusion of its policy meeting Wednesday, but the big question is whether Chairman Jerome Powell and his colleagues will stay committed to two rate cuts in 2025. The answer will come in the form of the "dot plot," a chart updated quarterly that shows each Fed official's prediction about the direction of the central bank's benchmark interest rate. The last dot plot, released in March, revealed a consensus among Fed officials for two cuts this year as some were already factoring the uncertainties of President Trump's economic policies into their projections. They made the same prediction last December. Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran. "I think they'll end up keeping two cuts, but will stick with narrative that they need more time to see effects of tariffs on inflation," Wilmington Trust senior bond fund manager Wilmer Stith said. Read more here. Circle (CRCL) stock rose 15% on Wednesday as the US Senate passed a bill to regulate the sector. The stablecoin issuer has now seen its shares soar more than 460% since its IPO in early June. Marvell Technology (MRVL) stock rose roughly 8% on Wednesday as investors digested the company's AI event. "We continue to like MRVL as the rising tide of AI capex can help drive potential upside for one of the few franchises with a singular data-center focus, and with breadth of leading IP across compute, XPU, networking, electro-optics, security, and memory/storage," Bank of America analyst Vivek Arya analyst wrote in a note to clients on Wednesday while boosting his price target to $90 from $80. Housing activity remains in the doldrums. Privately owned housing starts declined 9.8% in May to hit 1.256 million, the lowest level in five years, according to data from the Census Bureau on Thursday. "Housing starts are running below the level of housing completions," Renaissance Macro head of economics Neil Dutta wrote in a note to clients on Wednesday. "This means that units under construction will continue to decline." Citi economist Veronica Clark pointed out in a note to clients that the weak housing starts data could also be a bad sign for future employment in the sector. "As construction declines, we continue to see downside risks to employment in this sector," Clark wrote. US stocks wavered on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as they braced for the Federal Reserve's interest rate decision later in the day. The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) were all within less than 0.1% of the flat line at the open. Weekly claims for unemployment benefits remained near their highest level in eight months during the second full week of June, while the number of Americans filing for unemployment insurance on an ongoing basis also remained near the highest level since November 2021. Data from the Department of Labor released Thursday morning showed 245,000 initial jobless claims were filed in the week ending June 14, down from 250,000 seen the week prior and in line with economists' expectations. Meanwhile, 1.945 million continuing claims were filed. This marked a slight move down from 1.951 million the week prior, which had been the highest level since November 2021. Economists see an increase in continuing claims as a sign that those out of work are taking longer to find new jobs. Shares of the largest US stablecoin issuer, Circle (CRCL), popped 3% after the Senate passed new legislation that would establish a framework for dollar-backed cryptocurrencies known as stablecoins. The GENIUS Act still needs to move through the House and President Trump before it's signed into law, but the bill's passage in the Senate was heralded as a win for the crypto industry, which has been pushing for clearer and more positive regulation. 'I feel really good about [this bill],' Dante Disparte, chief strategy officer and head of global policy and operations at Circle, told Yahoo Finance's David Hollerith and Jennifer Schonberger. Circle stock debuted on the public markets on June 5 in an explosive IPO. Since its debut, Circle stock is up more than 380%. Read more here. Toymaker Hasbro (HAS) announced Tuesday it cut 3% of its global workforce, or about 150 employees, as part of a larger cost-cutting effort. The stock fell 3% in premarket trade on Wednesday. The Monopoly maker has been navigating President Trump's tariffs and trade war, especially with China, where it sources about half of its toys and games. The company is working to diversify its supply chain. and reduce its exposure to China. "Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs, and reduced profits for our shareholders," Hasbro's CEO Chris Cocks said during an earnings call in April, per Reuters. Read more here. Here are some top stocks trending on Yahoo Finance in premarket trading: AMD (AMD) stock rose over 1% in premarket trading on Wednesday, following the news it plans to partner with Microsoft to develop custom chips to power the next range of Xbox systems. Tesla (TSLA) stock was up before the bell today. A Bloomberg report on Wednesday said that Elon Musk's artificial intelligence startup xAI was burning through $1B a month as costs of building its AI models increased. Micron (MU) shares rose 1% today in premarket trading, following Wells Fargo analysts maintaining a Buy rating for the tech stock and a price target of $130.00. US stock and bond markets will be closed on Thursday, June 19, for Juneteenth National Independence Day. The stock market will reopen Friday at 9:30 a.m. ET. Following Juneteenth, the remaining holidays in 2025 observed by the New York Stock Exchange and Nasdaq are: Read more here about the 10 stock market holidays in 2025. US stocks were mixed on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as the Federal Reserve held interest rates steady while officials diverged over the ultimate path of interest rates this year. The Dow Jones Industrial Average (^DJI) fell 0.1% while the S&P 500 (^GSPC) slipped just below the flat line. Meanwhile, the Nasdaq Composite (^IXIC) rose about 0.1%. All three major averages had been up around 0.6% on the day earlier in the trading session. The central bank held rates steady for the fourth meeting in a row. It also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, unchanged from March. On June 4, The Wall Street Journal reported that a hiring freeze at the Bureau of Labor Statistics would force the federal agency to survey fewer businesses for its reports, such as the Consumer Price Index (CPI). When asked about these cutbacks on Wednesday, Powell said the cutback on survey size will "lead to more volatility in the surveys." To be clear, Powell said, "the data we get right now, we can do our jobs. I'm not concerned that we can't do our jobs." But the Fed chair did spend some time stressing the importance of accurate data. "Having really good data on the state of the economy at any given time is a huge public good," Powell said. "It helps. It doesn't just help the fed, it helps the government. It helps Congress. It helps the executive branch. More importantly, really, it helps businesses. They need to know what's going on in the economy." There was a clear divide in the June 2025 summary of economic projections. Seven officials see the Fed's benchmark interest rate not changing at all this year while eight officials see the central bank lowering the rate by a total of 50 basis points. When asked about the divergence, Fed Chair Jerome Powell said, "If you have a higher inflation forecast, you're going to be less likely to be writing down more cuts." "People can look at the same data and they can evaluate the risks differently, as you know," Powell said. "And that includes the risk of higher inflation, the risk that will be more persistent, the risk that the labor market will weaken. People are going to have different assessments of that risk." But Powell continued, adding that with elevated uncertainty about the economic outlook, "no one holds these rate paths [in the Fed's projections] with a lot of conviction." "As the data come in, you should see those differences diminish," Powell said. Federal Reserve Chair Jerome Powell acknowledged Wednesday that the housing market remains a weak spot in the broader economy — one the Fed is watching closely, but can do little to directly fix. "The housing market is a longer-run problem," Powell said, pointing to a mix of persistent supply shortages and still-elevated mortgage rates. It's both a short-term strain and a longer-term structural issue, he noted, and not something that can be resolved through monetary policy alone. "I think the best thing we can do for the housing market is to restore price stability in a sustainable way and create a strong labor market," Powell added. His comments come just hours after fresh data showed a sharp pullback in home construction. Housing starts and building permits for May both came in below expectations, with just 1.26 million new homes started, the lowest monthly total since the height of the pandemic. During his press conference on Wednesday, Federal Reserve Chair Jerome Powell highlighted a theme playing out in markets over the past two months: The economic outlook looks better than it did in early April, but not necessarily better than it was prior to the tariff whipsaw. "Estimates of where the tariffs will be have actually moved back down, although still at an elevated level," Powell said. As Powell pointed out, the peak estimated effective tariff rate, as estimated by JPMorgan below, has been falling since early April. But the 14.4% estimated effective tariff rate remains well above the 2.5% seen entering this year and above the 10.3% seen before President Trump's "Liberation Day" tariff announcements in April. The Federal Reserve's latest "dot plot" outlining future interest rate moves suggests the central bank will still cut rates twice this year, unchanged from its March outlook, though June's forecasts shows a more divided Fed weighing its next move on interest rates. The Fed announced Wednesday that it held its benchmark interest rate in a range of 4.25%-4.5%, as expected. This marked the fourth straight meeting the Fed kept rates unchanged since cutting rates by 0.25% back in December. Along with its policy announcement, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The central bank raised its projections for inflation and unemployment at the end of this year while lowering its forecast for economic growth. Fed officials see the fed funds rate falling to 3.9% this year, on par with its previous March projection. Coming into the decision, markets had priced in one to two additional rate cuts this year, according to Bloomberg data. The central bank slashed interest rates by a total of 100 basis points in 2024. It is yet to deliver rate cuts so far this year. In 2026, officials see one additional cut; in March, the Fed expected to cut rates twice next year. Twelve officials predict a rate cut this year, with two officials seeing a decrease of more than 0.5%. Most notable in Wednesday's dot plot were forecasts that showed seven FOMC members see no change in rates this year, signaling a more hawkish stance compared to March when four officials saw no change. Two FOMC members expect only one interest rate cut this year. Read more here. The Federal Reserve held interest rates steady in a range of 4.25% to 4.5%. The central bank also released its latest Summary of Economic Projections (SEP), including its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future. The median official's forecast for the federal funds rate at the end of 2025 was 3.9%, which would likely represent two 25 basis points cuts this year. As part of the Fed's SEP, officials marked up their projections for core inflation and lowered their forecast for economic growth in 2025. The Fed now also sees the "core" PCE inflation hitting 3.1% in 2025 up from a prior forecast of 2.8%. Less than 30 minutes before the Federal Reserve is set to release its next policy update, the Dow Jones Industrial Average (^DJI) rose 0.1% and S&P 500 (^GSPC) added less than 0.1%. Meanwhile, the Nasdaq Composite (^IXIC) added about 0.2%. All three major averages had been up about 0.6% at one point in the trading day. The 10-year Treasury yield (^TNX) was down about three basis points to hover near 4.36%. As we often note, most of the stock swings on Fed days typically comes after Federal Reserve chair Jerome Powell's press conference starts at 2:30 p.m. ET. But specifically the last hour of trading has been where the market action is as of late. Research from Bespoke Investment Group shows that since all Fed meetings since 1994 the S&P 500 (^GSPC) has dropped an average of six basis points in the final hour of trading. But across the past 10 meetings, those losses have worsened with the S&P 500 falling more than 41 basis points on average. This included eight straight meetings that saw the S&P 500 fall in the final hour trading leading into the March meeting when the S&P 500 rose 10 basis points in the final hour of trading. Yahoo Finance's Claire Boston reports: Mortgage rates drifted slightly lower but remained above 6.8% for another week as the Treasury yields they closely track oscillated. The average 30-year mortgage rate was 6.81% for the week through Tuesday, down from 6.84% a week earlier, according to Freddie Mac data. The average 15-year mortgage rate was essentially unchanged at 5.96%, from 5.97%. This week's data collection period was a day shorter than normal to account for Thursday's Juneteenth holiday. This week's rate is the lowest in four weeks, but mortgage rates haven't been able to break out of a narrow range between 6.8% and 7% since April. This week, the 10-year Treasury yield, which closely tracks mortgage rates, whipsawed and, ultimately, dropped slightly in response to the Israel-Iran conflict and a contraction in retail sales in May as consumers remain jittery about tariffs and their financial positions. Read more here. Yahoo Finance's Jennifer Schonberger reports: The Federal Reserve is widely expected to hold rates steady at the conclusion of its policy meeting Wednesday, but the big question is whether Chairman Jerome Powell and his colleagues will stay committed to two rate cuts in 2025. The answer will come in the form of the "dot plot," a chart updated quarterly that shows each Fed official's prediction about the direction of the central bank's benchmark interest rate. The last dot plot, released in March, revealed a consensus among Fed officials for two cuts this year as some were already factoring the uncertainties of President Trump's economic policies into their projections. They made the same prediction last December. Many Fed watchers expect central bank officials to stick with what they have already signaled as they weigh numerous unknowns, including the ultimate outcome of trade policies and the ripple effects triggered by a new conflict between Israel and Iran. "I think they'll end up keeping two cuts, but will stick with narrative that they need more time to see effects of tariffs on inflation," Wilmington Trust senior bond fund manager Wilmer Stith said. Read more here. Circle (CRCL) stock rose 15% on Wednesday as the US Senate passed a bill to regulate the sector. The stablecoin issuer has now seen its shares soar more than 460% since its IPO in early June. Marvell Technology (MRVL) stock rose roughly 8% on Wednesday as investors digested the company's AI event. "We continue to like MRVL as the rising tide of AI capex can help drive potential upside for one of the few franchises with a singular data-center focus, and with breadth of leading IP across compute, XPU, networking, electro-optics, security, and memory/storage," Bank of America analyst Vivek Arya analyst wrote in a note to clients on Wednesday while boosting his price target to $90 from $80. Housing activity remains in the doldrums. Privately owned housing starts declined 9.8% in May to hit 1.256 million, the lowest level in five years, according to data from the Census Bureau on Thursday. "Housing starts are running below the level of housing completions," Renaissance Macro head of economics Neil Dutta wrote in a note to clients on Wednesday. "This means that units under construction will continue to decline." Citi economist Veronica Clark pointed out in a note to clients that the weak housing starts data could also be a bad sign for future employment in the sector. "As construction declines, we continue to see downside risks to employment in this sector," Clark wrote. US stocks wavered on Wednesday, with the prospect of the US joining Israel-Iran hostilities keeping investors on edge as they braced for the Federal Reserve's interest rate decision later in the day. The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) were all within less than 0.1% of the flat line at the open. Weekly claims for unemployment benefits remained near their highest level in eight months during the second full week of June, while the number of Americans filing for unemployment insurance on an ongoing basis also remained near the highest level since November 2021. Data from the Department of Labor released Thursday morning showed 245,000 initial jobless claims were filed in the week ending June 14, down from 250,000 seen the week prior and in line with economists' expectations. Meanwhile, 1.945 million continuing claims were filed. This marked a slight move down from 1.951 million the week prior, which had been the highest level since November 2021. Economists see an increase in continuing claims as a sign that those out of work are taking longer to find new jobs. Shares of the largest US stablecoin issuer, Circle (CRCL), popped 3% after the Senate passed new legislation that would establish a framework for dollar-backed cryptocurrencies known as stablecoins. The GENIUS Act still needs to move through the House and President Trump before it's signed into law, but the bill's passage in the Senate was heralded as a win for the crypto industry, which has been pushing for clearer and more positive regulation. 'I feel really good about [this bill],' Dante Disparte, chief strategy officer and head of global policy and operations at Circle, told Yahoo Finance's David Hollerith and Jennifer Schonberger. Circle stock debuted on the public markets on June 5 in an explosive IPO. Since its debut, Circle stock is up more than 380%. Read more here. Toymaker Hasbro (HAS) announced Tuesday it cut 3% of its global workforce, or about 150 employees, as part of a larger cost-cutting effort. The stock fell 3% in premarket trade on Wednesday. The Monopoly maker has been navigating President Trump's tariffs and trade war, especially with China, where it sources about half of its toys and games. The company is working to diversify its supply chain. and reduce its exposure to China. "Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs, and reduced profits for our shareholders," Hasbro's CEO Chris Cocks said during an earnings call in April, per Reuters. Read more here. Here are some top stocks trending on Yahoo Finance in premarket trading: AMD (AMD) stock rose over 1% in premarket trading on Wednesday, following the news it plans to partner with Microsoft to develop custom chips to power the next range of Xbox systems. Tesla (TSLA) stock was up before the bell today. A Bloomberg report on Wednesday said that Elon Musk's artificial intelligence startup xAI was burning through $1B a month as costs of building its AI models increased. Micron (MU) shares rose 1% today in premarket trading, following Wells Fargo analysts maintaining a Buy rating for the tech stock and a price target of $130.00.
Business Wire
an hour ago
- Business Wire
QXO Proposes to Acquire GMS for $95.20 Per Share in Cash
GREENWICH, Conn.--(BUSINESS WIRE)--QXO, Inc. (NYSE: QXO) today sent a proposal to the President and CEO of GMS Inc. (NYSE: GMS) to acquire all outstanding shares of GMS for $95.20 per share in cash. The proposal implies a total transaction value of approximately $5 billion and reflects a 27% premium over GMS's 60-day volume-weighted average price of $74.82. 'Our all-cash proposal to acquire GMS for $95.20 per share delivers immediate and certain value to GMS shareholders at a meaningful premium,' said Brad Jacobs, Chairman and Chief Executive Officer of QXO. 'We believe this is a compelling opportunity for GMS investors to realize the full value of their shares in a single, decisive transaction.' Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are acting as financial advisors to QXO, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel. QXO sent the following letter to GMS's President and CEO today outlining the terms and rationale of the proposal: GMS, Inc. 100 Crescent Parkway, Suite 800 Tucker, GA 30084 Attention: John Turner, President and Chief Executive Officer Dear JT, Thank you for taking the time to meet with me in New York last month. I enjoyed our conversation and learning more about GMS, Inc. (' GMS ' or the ' Company '). As you know, we at QXO, Inc. (' QXO ') have been studying GMS for over a year and have developed conviction around our interest in the Company. We are prepared to acquire 100% of GMS in a $95.20 per share all-cash transaction (the ' Transaction '). This letter contains the summary terms of our acquisition proposal (the ' Offer '). Our Offer will deliver immediate cash to GMS shareholders at a compelling valuation. We have no doubt that our Offer will receive widespread support from GMS's shareholders. 1. Investment Thesis and GMS Underperformance Our conviction in acquiring GMS is supported by its attractive positions in wallboard, ceiling tile and steel framing, extensive distribution network and broad exposure to both residential and commercial end markets. Despite the opportunity available to GMS, the Company's financial performance has been underwhelming. The Company's disappointing results have been reflected in your share price performance and public market valuation: GMS's EBITDA declined at a 4.0% annual clip over the last three years, much worse than its peers, 1 which achieved a median annual increase of 4.6% over the same period; GMS's EBITDA margin declined 315 basis points from FY2022-FY2025, to 9.1% from 12.2%, a 26% drop. This compares unfavorably to peers, which reported a median 89 basis points decline in EBITDA margin during this same period; GMS has missed EBITDA, EBIT and EPS estimates for four of the last five quarters, on average missing EBITDA by 7%, EBIT by 25% and EPS by 9% in this period; GMS has underperformed the S&P 500 by nearly 1,900 basis points over the last 12 months; and Sell-side analysts have lost confidence in GMS – the median analyst 12-month price target has been reduced to $80 per share 2 from $105 per share only a year ago. This underperformance has been frustrating for your shareholders. 2. Business Deterioration Since we first met with you in June 2024, GMS's outlook has deteriorated materially. Sell-side analysts expected GMS to deliver EBITDA of $624 million for the 12-month period ending April 2025. Instead, you delivered just $501 million and today sell-side analysts expect you to deliver NTM EBITDA of $496 million. Furthermore, GMS has experienced a sharp decline in performance since then: A 7% reduction in its NTM revenue as a result of soft end-market demand; A 20% reduction in NTM EBITDA as gross margins have contracted across all major product lines; and A 32% reduction in NTM EPS as the overall performance of the business has deteriorated. 3. Compelling Financial Terms of Our Offer Today, we propose to acquire GMS for $95.20 per share in cash. This is a full and compelling offer at the high end of our valuation range. It represents a substantial premium to your intrinsic value. Our Offer is a: 29% premium to the Company's stock price of $73.74 per share as of market close on May 22, 2025, the day you and I met in New York; 27% premium to the Company's 60-day VWAP of $74.82 per share (as of market close on June 18, 2025); 19% premium to the median 12-month sell-side analyst price target of $80.00 per share as of June 18, 2025; and 2.9x premium to GMS's three-year historical average next-twelve-months enterprise value to EBITDA multiple of 7.0x. Notably, we have observed meaningful changes in the volume and trading levels of GMS shares since our announcement to acquire Beacon Roofing Supply, Inc. ('Beacon'), which, in conjunction with what we have heard from public equity investors, indicate to us that GMS's current share price reflects demonstrable takeover speculation. Specifically, GMS's trading volume since the Beacon announcement was more than 50% higher than the average daily trading volume over the twelve months prior. With respect to the takeover speculation in the stock, we also note the steep rise in your share price following our meeting on May 22, 2025, in New York, as well as a research report by Raymond James, which resulted from a non-deal roadshow with you and your CFO, stating that GMS was a likely acquisition target and GMS's management was willing to entertain a sale. Most recently, we have heard from industry participants that J.P. Morgan and Jefferies have been aggressively marketing the Company for sale. Your FQ4 2025 Earnings Release earlier today included an organic revenue decline of 10%, an EBITDA decline of 25% and an EBITDA margin decrease of 220 basis points each compared to the same period last year. GMS also expects FQ1 2026 flat per day volume in single family housing, 25% to 30% declines in multifamily per day volumes and low teen declines in commercial per day volumes. Despite these poor results and macro outlook, you conveniently painted a positive picture that materially moved your stock price, while at the same time you have bankers actively marketing your company. As a result, GMS stock experienced an 11% increase today, its largest single-day dollar increase ever. Even with this rise in the stock price, our Offer represents a 18% premium to today's closing price. 4. High Certainty of Completion Our Offer and our definitive agreement will not have any financing condition or contingency. We have received strong assurances from Goldman Sachs and Morgan Stanley regarding their ability to deliver fully committed financing for the Transaction. We will provide financing commitments in due course. We do not anticipate the Transaction will give rise to any antitrust or other regulatory issues. We believe the Transaction should close in August 2025. 5. Ready to Move Quickly We are prepared to move quickly with two weeks of confirmatory due diligence, including management meetings, while we negotiate definitive transaction documentation. We are prepared to enter into a customary confidentiality agreement so long as it does not contain any standstill provision or 'backdoor' standstill provision that would prevent us from taking the Offer directly to your shareholders, including as a result of us receiving material non-public information. We have retained Goldman Sachs and Morgan Stanley as our financial advisors and Paul, Weiss as our legal counsel. 6. QXO Following the acquisition of Beacon, QXO is now the largest publicly traded distributor of roofing, waterproofing and complementary building products in the United States. We plan to become the leader in the $800 billion building products distribution industry and generate outsized value for shareholders. We are executing a strategy toward a target of $50 billion in annual revenues within the next decade through accretive acquisitions and organic growth. We have the full support of our Board of Directors to pursue the Transaction. Our leadership team is highly experienced and has a proven track record of building businesses, accelerating growth through investment in technology and building scale through accretive M&A and organic growth. We also have the institutional knowledge and transaction experience to consummate the Transaction expeditiously. 7. Conclusion As we've said before, we don't play games – we're straightforward and we move fast. In that spirit we have put forth a highly compelling offer at the high end of our valuation range. We have the financial capacity and deal expertise to close the Transaction swiftly and with a high level of certainty, and we're willing to commit extensive resources to complete due diligence and negotiate definitive agreements on an accelerated timeframe. Our team and our advisors are standing by. We strongly believe that our Offer is in GMS's and its shareholders' best interests, and we also believe that your employees, vendors and customers will benefit from the significant growth opportunity provided by QXO's platform. To that end we propose that we move forward quickly, and we respectfully request that you respond to the Offer by no later than June 24, 2025. If you choose not to engage with us, or choose to engage in an unconstructive manner, we are prepared to take our Offer directly to GMS's shareholders who we're confident will find the Offer attractive. On behalf of QXO, thank you for your consideration. Sincerely, Ihsan Essaid Chief Financial Officer cc: Brad Jacobs, CEO, QXO Inc. John Gavin, Chairman, GMS, Inc. About QXO QXO is the largest publicly traded distributor of roofing, waterproofing and complementary building products in the United States. The company plans to become the tech-enabled leader in the $800 billion building products distribution industry and generate outsized value for shareholders. QXO is targeting $50 billion in annual revenues within the next decade through accretive acquisitions and organic growth. Visit for more information. Cautionary Statement Regarding Forward-Looking Statements The information herein contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets and goals are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as 'may,' 'will,' 'should,' 'expect,' 'opportunity,' 'intend,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' 'target,' 'goal,' or 'continue,' or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. QXO cautions that forward-looking statements should not be relied on as predictions of future events, and these statements are not guarantees of performance or results. Forward-looking statements herein speak only as of the date each statement is made. QXO does not undertake any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law. 1 Peer group includes the following One-Step Building Products Distribution companies within the peer group used in GMS's annual proxy statement: Beacon, Core & Main, Pool Corporation, SiteOne Landscape Supply, TopBuild and Watsco. EBITDA and EBITDA margin metrics relate to last three years ending CQ1 2025 for peers 2 As of June 18, 2025 as per Bloomberg
Miami Herald
2 hours ago
- Miami Herald
Ram is lengthening powertrain warranty as truck owners hold on longer
Ram will extend the powertrain warranty available on most 2026 models to last 10 years or 100,000 miles - a level of truck coverage the brand says will be America's best. CEO Tim Kuniskis said it's a needed update as truck buyers increasingly opt for extended financing terms - almost 80% of new truck loans exceed five years - and hold onto their vehicles longer. The average age of light trucks in the United States last year was nearly 12 years, and 12.6 years for all vehicles, according to S&P Global Mobility. "They keep it for 12 years because everything's gotten more expensive," Kuniskis said. But even as people spend more money on big pickups and drive them longer, he said, the warranty length never changed: "You're not investing more money to protect them." Ram's warranty announcement is part of a flurry of product and partnership reveals from the Stellantis NV brand, which wants to generate consumer excitement and claw back market share after sales fell 19% last year. The truck maker's current powertrain warranty runs five years or 60,000 miles; its bumper-to-bumper warranty runs three years or 36,000 miles. The longer limited powertrain warranty will apply to all of Ram's 2026 models sold in the United States except its electric ProMaster van. It covers the engine, transmission, transfer case, driveshafts, differentials and axles. Fleet purchases aren't included. Competing trucks from Ford Motor Co., General Motors Co. and Toyota Motor Corp. offer powertrain coverage that runs five years or 60,000 miles. The longer Ram warranty comes as both Ford and GM trucks have recently faced some high-profile problems and recalls regarding their powertrains. Federal regulators are scrutinizing nearly 1.3 million older F-150 pickups over transmission issues reported by dozens of consumers, for example, while GM is dealing with a recall of nearly 600,000 trucks and SUVs due to potential failure of their V-8 engines. Stephanie Brinley, an auto analyst with S&P Global Mobility, said it's too early to say if the new powertrain coverage can significantly boost sales for Ram, "but offering longer warranties has been helpful for some brands in the past." It can give some customers a reason to stick with the brand, she added in an email, while giving Ram "another talking point" to increase consideration of its trucks. The new warranty is the latest of several announcements from Ram, which earlier this month said it was bringing a Hemi engine back to its 1500 pickups and planning to return after a long hiatus to NASCAR's truck series. This week, the brand launched a new ad campaign and an updated tagline, "Nothing Stops Ram." Kuniskis has said Ram will make about 25 product announcements over the next 18 months. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
