Stocks Keep Ignoring All the Bad News. But a Big Test Is Coming.
The S&P 500's 6.3% advance last month, for example, was its best May performance since 1990—powered in part by huge returns for megacap tech stocks, according to data from Bank of America. A series of readings below that figure could raise headline unemployment, which sits at 4.2%.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
20 minutes ago
- Business Insider
Americans have pumped 401(k) holdings to record levels — and been rewarded for their patience
Despite stock market jitters, Americans stayed the course with their retirement savings, and their grit through a period of intense volatility has paid off. While retirement savers saw a drop in average 401(k), 403(b), and IRA balances due to market volatility, they continued to contribute to their retirement accounts at record rates. The average 401(k) savings rate hit a record 14.3% in the first quarter of 2025, according to Fidelity's latest retirement analysis of 17.3 million IRA accounts as of March 31, 2025. That number combines both employee and employer contributions and marks the highest collective savings rate ever tracked by the asset manager. The employee contribution rate was 9.5%, and the employer contribution rate was 4.8%. The 14.3% savings rate is the closest it's ever been to Fidelity's recommended savings rate of 15%. As markets gyrated amid trade war tensions earlier this year, it would be understandable to see many investors pause contributions or even pull money out of the market. Indeed, some retail investors did pull out and increase their allocations to cash. However, with tariff volatility now in the rear-view, staying invested has proven to be the best move. Since the end of March, the S&P 500 is up more than 6%, and the benchmark index is up 1.7% year-to-date. Those who stopped investing in response to market volatility would have missed out on the S&P 500's best May in 35 years. A chart from Fidelity shows outcomes for a starting balance of $100,000 invested in 70% stocks and the rest in bonds and cash between January 2022 and December 2024. Fidelity In this scenario, the worst-performing strategy was to move to cash in July 2022, after the market dropped 20%, and stop contributing. The best-performing strategy was to stay the course and maintain the same asset mix, with annual contributions of $10,000. Even if you moved to cash and continued to contribute, the end result would still be worse than if you had remained invested. Stocks have historically experienced three downturns of 5% a year, one correction of 10% a year, and one 15% decline every three years, so drops in the market are common.
Yahoo
24 minutes ago
- Yahoo
Wall Street Exodus? Why Big Money Is Quietly Fleeing the US Market
Institutional investors are starting to step back from the United States. Between Washington's mounting debt pile, shifting trade policies, and general unpredictability, the case for having a concentrated US portfolio is no longer a given. AllianceBernstein CEO Seth Bernstein put it bluntly: the pace of US borrowing is untenable. The dollar has already dropped nearly 9% this year, and a recent Bank of America fund manager survey showed the largest underweight in the greenback in almost 20 years. For some investors, it's no longer just about tariffsit's about whether the decades-long dominance of US markets is beginning to wobble. Warning! GuruFocus has detected 2 Warning Sign with AMZN. Meanwhile, Europe's looking more like a viable alternative. The Stoxx Europe 600 is up 9% this year, well ahead of the S&P 500's (SPY) modest gains. Neuberger Berman has already shifted 65% of its private equity co-investments to Europemore than double its previous range. Blackstone vice chair Tom Nides said the math is getting clearer: Shifting money to Europe is certainly not a bad bet. Germany's 1 trillion infrastructure and defense plan could add some fuel, especially as European governments project a steadier macro backdrop than Washington can currently offer. The continent still has its challenges, but for now, it's offering something the US isn'tpredictability. Even long-time US investors are quietly pulling back. Caisse de depot et placement du Quebec, which had 40% of its portfolio in US assets, is moving more capital to the UK, France, and Germany. Tesla (NASDAQ:TSLA) and other American heavyweights may still anchor global portfoliosbut the question being asked across boardrooms is different now: are we overexposed? For the first time in years, investors are running that calculation with fresh eyes. And while no one's calling time on the US just yet, the idea of global rebalancing? It's not just talk anymore. This article first appeared on GuruFocus.
Miami Herald
34 minutes ago
- Miami Herald
‘Car Wars' report from Bank of America sees ‘rough ride' for industry in next couple years
FARMINGTON HILLS, Michigan - Bank of America's annual "Car Wars" report forecasts a "rough ride" for the U.S. industry in the next couple of years because of low model replacement rates and struggling electric vehicle growth. The annual study led by analyst John Murphy predicts automaker performance in the U.S. market by looking at product launches over the next few years with the premise that automakers with higher showroom replacement rates will perform better. The report predicts those rates in the next couple of years will be historically low ahead of major truck launches from the Detroit Three later this decade, and because of cutbacks in electric vehicle products from low demand. "What's wild this year is that we expect 159 models to be launched over the next four years," Murphy said before the Automotive Press Association. "Last year, it was over 200. Traditionally, it's over 200" over a four-year stretch. He added: "This year, at 159, is a dramatic decline from above 200 last year. We have never seen this kind of change before." Murphy noted there are 29 new model launches this year, the lowest in decades. He attributed the declines to a pullback in EV investment. Adoption of vehicles with all-electric powertrains has failed to meet industry expectations, with them comprising about 8% of annual U.S. sales. Limited access to charging stations, higher prices of EVs compared to gas-powered alternatives, range anxiety and more have limited adoption. Car Wars is predicting 71 EV nameplates being offered over the next four years. That's about half of what the forecast had expected two years ago. "There are a lot of tough decisions that are going to be made," Murphy said. "Based on the study, I think we're going to see multi-million dollar write-downs that are flooding the headlines for the next few years." Ford Motor Co. last year wrote off nearly $2 billion when it canceled plans for a three-row all-electric SUV, saying it wasn't going to be profitable within the first year. Murphy underscored that automakers will best serve their shareholders by emphasizing their core business - which is gas- and diesel-powered SUVs and trucks - and leveraging connectivity to get customers returning to smaller, strengthened dealer franchises. From those revenues, then, it can invest in future technologies like EVs, autonomy and other software applications and brave threats like tariffs and Chinese competition. "I do think, as we look at this, although we've said lower product intros, that these core products that generate a lot of profit for the companies, including the D3, will likely create a pretty profitable next few years for the industry," Murphy said. "So although it looks a bit scary at the moment, I do think we're looking at a pretty good upside to earnings, and potentially stocks over the coming years." Traditionally, replacement rates average about 15% in the industry. Car Wars predicts rates at about 11% in 2026 and 2027. "It's gonna be a little bit of a rough ride for these two years," Murphy said. The report predicts the Detroit Three's replacement rate from model year 2026 to 2029 will fall around the industry average of 16%, indicating a likely stagnant market share. Ford's was at 16.1%, General Motors Co.'s was 15.7% and Chrysler parent Stellantis NV's was at 15.4%. Ford Motor Co. spokesperson Mike Levine emphasized the Dearborn automaker has new product in the marketplace today, including the full-size Ford Expedition and Lincoln Navigator SUVs that recently went on sale. "Ford is committed to offering our customers vehicles that they love and can't live without," he said in a statement. "We are investing in all-new ICE, hybrid and electric vehicles to provide customers with freedom of choice to find the best vehicle to meet their needs." Representatives for GM and Stellantis declined to remark on the report. On the upper end of replacement rate, meanwhile, is Tesla Inc. It has a 22.4% replacement rate, indicating the Texas EV maker could grow its market share in the coming years. But the rate is also a bit "dubious," Murphy declared, noting Tesla has postponed launches and favors more frequent updates to its vehicles versus total redesigns. "That's questionable whether that all will happen," Murphy said, "given their track record of not really introducing new-generation models." On the lower end is Nissan Motor Co. Ltd. with a 12.3% replacement, indicating it could lose market share. The automaker is under financial stress, has cut jobs and is losing market share in the United States with aging product. "Nissan remains a mess," Murphy said. "It's just unclear what their commitment is, in their current form, to the U.S. market." Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
