Latest news with #market rally
Yahoo
3 days ago
- Business
- Yahoo
Return of Meme Stock Mania Has Traders on Alert for Market Froth
(Bloomberg) -- The reemergence of meme stock mania last week has professional investors facing a quandary: ride the excitement of retail traders or take it as the latest warning sign that the frothy markets are due for a pullback. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Trump Administration Sues NYC Over Sanctuary City Policy The speculative stocks caught up in the frenzy this week, like Opendoor Technologies Inc. and Kohl's Corp., gave up some of their gains as the week went on, but most are still trading at their highest levels in months. The broader S&P 500 Index and Nasdaq 100 Index are doing even better, sitting at all-time highs after charging back from the early April selloff set off by President Donald Trump's tariff announcements. There are indicators that investors are abandoning restraint and betting on further gains. The amount that investors are borrowing to buy stocks on the New York Stock Exchange, known as margin debt, has exceeded the tech-bubble highs to reach a new record, according to data from the Financial Industry Regulatory Authority. But signs of fatigue are creeping in. The latest meme stock rally seemed to lose steam after just a few days, and Bitcoin, one of the most visible symbols of the speculative fever, has recently fallen back from its record highs. Some Wall Street trading desks have been urging clients to scoop up discounted protection against possible losses. The current run has stretched valuations, with the S&P 500 trading at nearly 23 times forward earnings, well above the ten-year average of around 18, signaling that stocks have gotten significantly more expensive. 'I'm seeing it and just starting to just tuck my horns in a little bit,' said Eric Diton, president and managing director of the Wealth Alliance. 'I'm longer-term bullish, but I'm just short-term cautious. I really think we're overdue for some kind of a pullback again because of the excessive speculation.' For help in navigating the volatility, some market watchers are looking for comparisons with the most famous meme stock moment back in January 2021, when GameStop Corp. and AMC Entertainment Corp. captured the world's attention. That buying was fueled by retail traders who were flush with stimulus checks and stuck at home, swapping tips on social media. It came after a banner year in the markets, in 2020, but ended up being only the beginning of an even bigger rally in 2021, when the S&P 500 rose another 27%. There was, though, eventually a reckoning in 2022 when the index plunged 19%, notching the worst yearly performance since the great financial crisis. 'With all the bull market euphoria and risk appetite, they tend to go on until they don't, so it's notoriously difficult to predict when it turns,' Victor Haghani, chief investment officer of Elm Wealth and a founding partner of Long Term Capital Management, said. 'We know we're in it, but to me it does not signal whether it's near the end or not near the end. It's the question of when, not if, the market goes back to a more sensible level.' There were many echoes of the 2021 frenzy last week as retail traders sought out small, often troubled companies that had been heavily shorted by hedge funds. Some of the factors behind GameStop's ascent have only grown more prominent as zero commission trading and short-term options have become more widely available and popular. That was reflected in the volume of trading last week. On the busiest day, 1.8 billion shares of Opendoor traded, accounting for nearly 10% of all US stock market volume. Back in 2021, at the peak, a more modest 800 million shares of GameStop changed hands, even though the trading in both stocks was off a similarly small base, according to data compiled by Bloomberg. This time around, though, the excitement appears to have come and gone more quickly and the macroeconomic backdrop is decidedly different. Interest rates are much higher, which leaves investors anticipating that the Federal Reserve will lower its benchmark rate later this year, a move that could give the rally further momentum. 'We're at a place now where the Fed is likely to be cutting interest rates going forward despite the fact that we have high valuations, which tells me valuations might even go higher,' said Don Calcagni, chief investment officer at Mercer Advisors Inc. 'If the Fed brings down interest rates, that's going to be a very nice tailwind for equities broadly.' While the markets are contending with the higher tariff levels put in the place by the Trump administration, the deals with most countries have ended better than was feared back in April. On top of that, inflation appears to be in check and earnings growth intact. 'The meme stuff is kind of disturbing, you know, there's no way around that. But I think the risk is that people focus too much on that,' said Alec Young, chief investment strategist at Mapsignals. 'Markets don't trade on good or bad, they trade on better or worse, and on the trade news every deal is better than what was priced in early April.' Of course, if the Fed doesn't cut interest rates this year or if any of the other market tailwinds falter as a result of tariffs or inflation, markets could see a pullback. 'That's when the market's going to have to really do some reassessment,' Calcagni said. Still, a brief pullback of a few percentage points could be a sign of a healthy market and even give investors opportunities to buy stocks at a discount. 'I'd view any near-term pullback as very buyable against the current backdrop,' Ross Mayfield, investment strategist at Baird, said. --With assistance from Norah Mulinda. It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Burning Man Is Burning Through Cash Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme A Rebel Army Is Building a Rare-Earth Empire on China's Border Elon Musk's Empire Is Creaking Under the Strain of Elon Musk ©2025 Bloomberg L.P. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Ameriprise Financial's quarterly profit rises on higher fee income
(Reuters) -Asset and wealth manager Ameriprise Financial reported a 28% rise in its second-quarter profit on Thursday, as a late-quarter market rally boosted the value of its fee-generating assets to a record high. After a turbulent start to the quarter because of U.S. President Donald Trump's shifting tariffs, the markets regained poise on hopes of a softer trade policy and positive macroeconomic data. Ameriprise's assets under management, administration and advisement came in at $1.58 trillion during the three months ended June 30, up 9% from a year ago. "While markets were volatile in the quarter, client activity remained strong," chairman and CEO Jim Cracchiolo said in a statement. Assets under management and the fees earned by managers depend on two factors - money flowing in and out of the funds and the performance of investments. Ameriprise's management and financial advice fees rose 6% to $2.6 billion during the second quarter, while its net investment income dropped 3% to $891 million. Total client assets at its advice and wealth management business, which primarily targets high net-worth households with $500,000 to $5 million in investable assets, grew to $1.08 billion from $972 million a year earlier. However, the unit posted a 35% fall in quarterly net flows. Rival BlackRock also reported a fall in long-term net inflows last week, after a major Asian institutional client pulled money from an index strategy. Ameriprise's second-quarter profit rose to $1.06 billion, or $10.73 per share, compared with $829 million, or $8.02, a year earlier. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Red Robin (RRGB) Stock Trades Up, Here Is Why
What Happened? Shares of burger restaurant chain Red Robin (NASDAQ:RRGB) jumped 7.8% in the afternoon session after it was among a group of consumer stocks with high short interest that rallied. The move was part of a broader trend where investors targeted companies with a significant number of bearish bets against them. This dynamic can sometimes lead to a "short squeeze," an event where a rising stock price forces short-sellers to buy back shares to cover their positions, which in turn pushes the stock even higher. Red Robin, which has a notable level of short interest, appeared to be caught in this momentum. Reports indicated there was no major company-specific news to account for the rally, suggesting the surge was driven more by retail investor enthusiasm and market positioning than by a change in the company's fundamental outlook. Is now the time to buy Red Robin? Access our full analysis report here, it's free. What Is The Market Telling Us Red Robin's shares are extremely volatile and have had 69 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 8 days ago when the stock gained 9.5% on the news that the casual dining chain announced its "First Choice" strategic plan and an improved profitability forecast for the second quarter. The company unveiled its new "First Choice" plan, a five-point strategy focused on strengthening operations, driving customer traffic, managing costs to reduce debt, improving restaurant facilities, and fostering a high-performance culture. While Red Robin now expects a comparable restaurant sales decrease of about 4% for the second quarter, slightly worse than its previous forecast, it anticipates that its Adjusted EBITDA will come in higher than the prior guidance of $13 million to $16 million. EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, is a key measure of a company's operating performance. Red Robin is up 32.4% since the beginning of the year, and at $7.51 per share, has set a new 52-week high. Investors who bought $1,000 worth of Red Robin's shares 5 years ago would now be looking at an investment worth $928.84. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
The Independent
7 days ago
- Automotive
- The Independent
FTSE 100 hits new high amid US trade talk optimism
European stocks climbed on Wednesday, boosted by hopes of further progress in trade talks after the US struck a deal with Japan. The FTSE 100 index closed up 37.68 points, 0.4%, at 9,061.49, a record closing peak. It had earlier hit an all-time high of 9,080.09. The FTSE 250 closed up 79.23 points, 0.4%, at 22,013.49 and the AIM All-Share closed up 3.85 points, 0.5%, at 773.99. In European equities on Wednesday, the Cac 40 in Paris advanced 1.5%, while the Dax 40 in Frankfurt gained 0.8%. In New York, the Dow Jones Industrial Average was up 0.4%, the S&P 500 traded 0.3% higher and the Nasdaq Composite firmed 0.2%. Late on Tuesday, President Donald Trump said the US had agreed a 'massive' trade deal with Japan that would include a 15% tariff on its exports. He had previously threatened Japan, a major US trading partner, with a tariff of 25% beginning on August 1 if a deal was not reached. 'We just completed a massive Deal with Japan, perhaps the largest Deal ever made,' Mr Trump announced on social media. Under the deal, 'Japan will invest, at my direction, USD550 Billion Dollars into the US, which will receive 90% of the Profits', he added. Japanese Prime Minister Shigeru Ishiba was more circumspect, saying he needed to examine the deal before commenting. 'As for what to make of the outcome of the negotiations, I am not able to discuss it until after we carefully examine the details of the negotiations and the agreement,' he told reporters in Tokyo after Mr Trump's announcement in Washington. The deal comes after Mr Ishiba faced a bruising weekend election that left his coalition without a majority in the upper house. 'The trade agreement is undoubtedly good news for Japan,' said Kathleen Brooks at XTB. 'The auto component is by far the biggest coup for Japan, as that makes up the bulk of exports to the US. 'By lowering the auto tariff rate to 15% – auto tariffs were a flat 25% rate before the exemption for Japan – it is giving hope that those countries who have yet to agree tariff rates with the US can seal good deals if they pledge investment into the US.' The trade pact sent equities soaring in Asia with the Nikkei 225 closing up 3.5% on Wednesday and the Hang Seng in Hong Kong gaining 1.6%. Car makers such as Toyota climbed 14%, and Honda jumped 11%. Mitsubishi rose a more modest 3.6%. European car makers rose, with BMW, Mercedes-Benz Group and Volkswagen up 4.4%, 5.9% and 5.3% respectively, in Frankfurt. Renault was up 2.6% in Paris, and Citroen and Fiat owner Stellantis was up 8.9% in Milan. In London, luxury car maker Aston Martin Lagonda rose 8.1%. Deutsche Bank's Jim Reid said the Japan deal has 'significantly raised hopes that the EU might also be able to reach a trade deal, as they've been threatened with 30% tariffs on August 1'. Attention in the US will also be on tech earnings, with results due from Tesla and Alphabet after the closing bell in New York. The pound rose to 1.3571 dollars late on Wednesday afternoon in London, compared with 1.3508 at the equities close on Tuesday. The euro traded at 1.1737 dollars, slightly up against 1.1735. Against the yen, the dollar was trading lower at 146.33 compared with 146.49. On the FTSE 100, Informa rose 5.3%. It raised its full-year outlook and added to its share buyback after reporting 20% growth in half-year sales and adjusted profit. The London-based international events, digital services and academic publishing business increased full-year underlying revenue growth guidance to at least 6% from at least 5%, including 8% plus in Live B2B Events. The dividend was increased by 9.4% to 7.0 pence from 6.4p. In addition, Informa said it would buy back a further £150 million of shares through the second half of 2025, taking the total commitment to £350 million in 2025. On the FTSE 250, Breedon tumbled 7.3% as it forecast that full-year profit will be at the low end of market expectations. The Leicestershire-based building materials company said that given a 'difficult' first half and macroeconomic headwinds, 'we now expect our result for the full year will be at the low end of the current range of market expectations'. Breedon put the range for 2025 earnings before interest, tax, depreciation and amortisation between £291.4 million to £311.5 million, growth of at least 19% from £245.8 million in 2024. Halfords rose 2.9% as Panmure Liberum upgraded it to 'buy' from 'hold' with a 200p share price target. The broker noted 'evidence of tangible green shoots' and said recent trading has pointed to a fundamental improvement rather than a one-off performance. 'However, given previous false dawns, investors may require further evidence before declaring a new era,' Panmure Liberum added. The yield on the US 10-year Treasury was quoted at 4.38%, up from 4.34%. The yield on the US 30-year Treasury was quoted at 4.94%, widened from 4.91%. The biggest risers on the FTSE 100 were Informa, up 40.8p, at 866.8p, JD Sports Fashion, up 3.9p at 89.7p, AstraZeneca, up 322.0p at 10,674.0p, Ashtead, up 122.0p at 4,857.0p and Croda International, up 62.0p at 2,879.0p. The biggest fallers were Centrica, down 5.3p at 158.7p, SSE, down 58.0p at 1,912.0p, United Utilities, down 28.5p at 1,138.5p, Severn Trent, down 66.0p at 2,717.0p and National Grid, down 22.0p at 1,062.5p. Brent oil was quoted lower at 68.24 dollars a barrel in London on Wednesday, from 68.30 dollars late on Tuesday. Gold eased to 3,412.38 dollars an ounce against 3,426.29 dollars.
Yahoo
21-07-2025
- Business
- Yahoo
Stocks are at records. Investors should keep an eye on 5 things that could break the rally.
The steep rally in stocks faces big risks through the rest of the year, HSBC said. In a note, the bank highlighted five warning signs for investors to watch out for. Strategists said one risk factor, investor sentiment, was already flashing a "strong sell signal." The stock market is on a record-breaking rally, but investors are approaching some big hurdles they'll have to clear through the rest of this year if they want the gains to keep coming. Strategists at HSBC Global said on Monday that they see a handful of key risks facing stock prices through the second half of 2025. The risk factors could jeopardize the market's post-Liberation Day rally, the strategists wrote, adding that "there's an expiration date to our bullish stance — the question is where we could be wrong and therefore what we will have to look out for in terms of downside risks." Here are five things the bank says investors should monitor. 1. The market returns to the "Danger Zone" The "Danger Zone" is when US Treasury yields rise past a certain threshold that's painful for stocks. Higher yields globally also jeopardize the carry trade in markets, which is where investors borrow cheaper currency and covert it to dollars to invest in US assets. Turmoil related to the carry trade has most recently been seen amid rising yields in Japan, which sparked an unwind of the yen carry trade and a subsequent sell-off in global markets. The Danger Zone could be reached in two ways, strategists said: Fewer rate cuts. The economy's resilience could cause investors to push out their expectations for Fed rate cuts, driving up yields on the short end. Traders have already pushed out their rate expectations from the start of the year, and are now pricing in around 4-5 rate cuts through the end of 2026, according to the CME FedWatch tool. Inflation from tariffs. Consumer have begun to tick slightly higher in the lastest CPI readings. The June consumer price index report showed that prices for durables grew 0.7% year-over-year in June, the second-straight month of growth after more than two years of annualized declines. The headline number also drifted higher, hitting 2.7%, from 2.4% in May. Hotter inflation gives the Fed less room to cut interest rates, which would also drive yields higher. "This would put us right back into the Danger Zone in UST yields," strategists wrote of a more hawkish rate cut path. "Apart from the USD, we think the only places to hide out would be asset classes such as short-dated credit, value vs growth in equities or gold." 2. Investor sentiment sours HSBC's gauge for short-term investor sentiment and position is now sending a "strong sell signal," with 20%-30% of inputs within the gauge telling investors to sell, strategists said. "We don't think this is the time to pull the plug on risk assets just yet," the bank wrote, pointing to possible positive earnings surprises for companies reporting second-quarter results. "But clearly sentiment and positions are no longer as supportive a factor as it has been in the last three months." 3. The job market weakens A softer labor market is one of the biggest downside risks to economic growth in the second half, strategists said. The job market remains on strong footing overall. The US added 147,000 payrolls in June, more than economists expected, while the unemployment rate unexpectedly ticked lower to 4.1%, remaining near historic lows. But jobless claims could rise higher through late-July, the bank predicted, pointing to factors like the school holiday, several auto factories being shut down, the hurricane season, and "typical seasonal patterns" in the job market. They added that firms could also become more concerned about the impact of tariffs and slow down hiring in the second half. "A marked softening of the labour market could spark expectations for more aggressive rate cuts from the Fed over concerns to its mandate of maximum employment. From a market perspective, a classic risk-off backdrop would dominate, strategists wrote. 4. Markets sour on AI Much of the rally in US stocks this year has been driven by mega-cap tech and semiconductor stocks, which are seen to be the biggest beneficiaries of the AI boom. The Roundhill Magnificent Seven ETF, for instance, has soared 41% from its post-Liberation Day low on April 8. But investors have been growing more concerned with whether companies will be able to keep up the heavy AI spend, HSBC said. Strategists pointed to comments from Fed Vice Chair Michael Barr earlier this year, who suggested that the hype over artificial intelligence could be "overblown." It's also possible that tariffs on semiconductors could be renewed this year, which would hurt the AI trade, they added. "This adds to the growing sense that the tech-led rally may start to lose steam, which is a risk to our positive H2 view." 5. Trump keeps meddling with the Fed Trump has approached the idea of firing Fed Chair Powell a few times this year. If the president follows through — or if Powell were to unexpectedly resign from his post — that could spark another Liberation Day-style sell-off in the market, the strategists said. The market could also see a negative, but more mild reaction if Trump were to announce a shadow Fed Chair, a new Fed Chair named months in advance to suggest where monetary policy might be headed after Powell's term ends next year, strategists speculated. "We would view any unexpected changes at the Fed as initially US asset negative across the board, much in the fashion of how markets reacted in April," the bank wrote. "Markets would likely view this as a challenge to the institutional framework of the United States, likely prompting USD weakness, steeper US Treasury curves, and an initial drawdown in US equities." Markets were jolted last week after several reports claimed that Trump was getting ready to oust Powell from the Fed soon. Trump appeared to refute the reports, saying it was "highly unlikely" he would fire Powell when speaking at the White House last week. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
