Investing
- Earlier this month, Fed governor Adriana Kugler announced her resignation and President Trump nominated Council of Economic Advisers head Stephen Miran to take her seat.
- Pressure is now mounting on a second Fed governor, Lisa Cook, to resign in favor of a governor more inclined to lower interest rates.
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The Vanguard S&P 500 ETF closed at 584.27 Thursday, down 0.4%.
In analyst action, Morgan Stanley analyst Erik Woodring upgraded shares of HP Enterprise (NYSE: HPE) to overweight with a $28 price target this morning.
“Our thesis is straight-forward,” said the analyst. “With the closure of JNPR, we see 18% upside to FY26 Consensus EPS, with EPS growing to $2.70-3.00 in FY27, and believe that as the market comes to better understand nearly half of HPE’s business is networking, inclusive of more AI exposure (JNPR in xAI cluster), HPE’s multiple will re-rate above the current 8x multiple.” And if not 8x, how much does Morgan Stanley think HP Enterprise’s earnings are worth?
11x is the answer.
HP Enterprise stock is up 3% today, and the Voo is now down 0.4%.
In non-earnings news, Cracker Barrel (Nasdaq: CBRL) stock is getting decimated this morning, as a social media firestorm kicks up over the company’s rebranding of its logo. Gone after nearly five decades is the old man sitting in a porch chair, leaning on a barrel logo — replaced by a simple text font of the company’s name, inside a gold hexagonal shape.
The CEO says consumers love it, but investors sure don’t. Cracker Barrel stock is down more than 11%.
Part of the reason the Voo is moving lower today may lie at the feet of Walmart (NYSE: WMT). Reporting Q2 earnings this morning, the world’s largest retailer and S&P 500 component company missed analyst targets by six cents, saying it earned only $0.68 in the second quarter. This was despite revenues eclipsing expectations at $177.4 billion.
Adding to investor dismay, Walmart warned that full year profits will range from $2.52 to $2.62 per share, the entire range of which falls below analysts’ forecast $2.64. About the only good news in Walmart’s guidance is that nearer-term (where with any luck, Walmart has a clearer view of things than farther out in the year), the retail giant says earnings will be better than Wall Street expects: $0.58 to $0.60 per share, instead of the forecast $0.57.
Walmart stock is down more than 5% in the first few minutes of trading. The Voo’s decline has shrunk to 0.3%.
This article will be updated throughout the day, so check back often for more daily updates.
President Trump is pressuring a second member of the Federal Reserve Board of Governors to resign, and it may be making investors nervous.
The Wall Street Journal reports this morning that Federal Housing Finance Agency Director Bill Pulte is asking the Department of Justice to investigate allegedly fraudulent mortgage applications made by Federal Reserve Governor Lisa Cook in 2021, a year before she took office. President Trump says Cook “must resign, now!!!”
If he gets his way, a second vote against lowering interest rates at the Fed may vanish. Earlier this month, Fed governor Adriana Kugler (another historic “no” vote on lowering interest rates) resigned, and the President has already nominated his head of the Council of Economic Advisers, Stephen Miran, to fill that vacancy.
The way things are going, the Fed Chair Jerome Powell may be able to keep his job — and the Federal Open Market Committee will still vote to lower interest rates. You’d think investors would applaud the prospect (because lower interest rates are generally considered “good” for the stock market).
Instead, in premarket trading, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is down 0.4%.
Tariffs news
Tariffs could be part of the problem. The way Wall Street thinking goes, lowering interest rates is supposed to boost the economy to offset any slowdown caused by President Trump’s “reciprocal” tariffs against the world.
In recent weeks, the President has announced a series of trade deals to lower tariffs from the much higher rates earlier threatened, albeit actual changes in the announced rates have been slow in coming. This morning, CNBC reports new details on those negotiations, including the revelation that European pharmaceutical exports to the U.S. will be capped at a 15% tariff rate.
Tariffs on semiconductors and on European lumber, and potentially automobiles as well, will also be capped at 15%, and any certain other goods,, including airplane parts and airplanes, may receive even lower most-favored nation tariff rates.
As with the prospect for lower interest rates, you’d expect these developments to be bullish for the stock market. And yet, it’s still going down…
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