Markets
Nia Warfield, Luke Kawa

Chip stocks lead widespread rally

A big rally in chip stocks amid continued optimism on the AI boom coupled with smaller advances in most stocks made for another strong session on Wall Street.

The S&P 500 rose 0.6%, the Nasdaq 100 ended up 0.8%, and the Russell 2000 led the way with a 1.6% gain on Tuesday.

Tech was the best-performing S&P 500 sector ETF, but unlike Monday, gains were more widespread, with advancers in the S&P 500 outnumbering decliners by 218. Real estate, communication services, and consumer staples were the lone sectors to end negative.

The day’s gains were led by discount retailer Dollar General, which soared nearly 16% after crushing Q1 estimates and upping its forecast as more shoppers go bargain hunting. Rival Dollar Tree was also a standout performer, benefiting from its competitor’s solid showing and outlook. Declines were led by Neutrogena parent Kenvue, which sank 6% after the consumer health giant said seasonal demand is off to a slow start.

Elsewhere…

Broadcom set an intraday and closing record high after announcing that it’s started to ship some new AI hardware.

Shares of Nvidia-backed CoreWeave surged surged 25% in a strong follow-through to the already warm reception to its data center deal with Applied Digital on Monday.

Rocket Lab soared as much as 5% after the commercial space company (and retail favorite) received a pair of price target hikes: one from Deutsche Bank, to $27 from $24, and another from KeyBanc Capital Markets, which raised its target by a buck to $29. It then pared those gains to finish up just 0.5%

Similarly, Constellation Energy was up double digits in the premarket after striking a deal to sell power to Meta, but finished marginally in the red.

Bumble shares slid 6% after JPMorgan downgraded the women-first dating app to underweight (or a “sell” rating) as the platform faces slowing growth and hotter competition.

Pinterest shares climbed about 4% after JPMorgan upgraded the stock to “overweight” (buy) and lifted its price target to $40, citing deeper user engagement and momentum in its ad business.

Hims & Hers fell 3.5%, giving up all its gains after rising more than 17% in early trading following its announcement that it would acquire a European peer, Zava.

Nio finished modestly higher even as the Chinese luxury EV maker missed Wall Street’s Q1 revenue estimates and posted a much larger loss per share than analysts had forecast.

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markets
Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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