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- [00:02]
Ann Barry
Hear that?
- [00:02]
John Coteau
That's me in Tokyo, learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with spy, the world's most traded etf. Getting there starts here with State Street Investment Management.
- [00:18]
Ann Barry
Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other information. Read it carefully. Spy subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal.
- [00:29]
John Coteau
Alps Distributors Inc.
- [00:30]
Ann Barry
Distributor Target and Best Buy looking to pull their stocks out of the bargain bin. We survey the earnings results that just sent both their shares up. Another day, another activist investor, and this time buying into Pinterest. We break down the latest move in consumer tech and why The S&P 500 is like a duck floating along with gentle growth. But with frantic paddling beneath the surface, we take a look at something called dispers for Tuesday, March 3rd. It's blue markets Daily, and I'm Ann Barry. More market details to come. But first, one philosophy we repeat on the show is that exposure to the broad market is important for all investors. But digging in to understand the stories of specific companies and their stocks is really critical, and that's to spot patterns that hint at which of those may emerge as the winners or losers over time. I mean, I've been on TV lately. I've mostly been talking about how the wave of sector enthusiasm that we saw in 2025 kind of feels behind us. Like in the most extreme example, the promise of AI and its use by software companies that we saw last year. And the waves upward to now much more granular focus on which among the sector may actually gain or lose from AI more than others, a phenomenon that we've seen this year. While this matters for retail investors, particularly because baskets of stocks grouped by sector in the form of ETFs or tracker funds have exploded in popularity. And the reason is that these solve for limited time or limited interest in researching individual stocks. That's fine, but what happens when the more interesting stories are now about the constituent parts of indexes instead of the whole? It's a phenomenon called dispersion, and the Wall Street Journal just shone a light on it, too, pointing out that while The S&P 500 is up less than 1% in 20, so it looks like it's smooth sailing, there is in fact huge volatility beneath the surface. And by the way, that's not coming from meme stocks, which are the usual scapegoat for wild individual share price moves. Instead from massive mature names like Microsoft, down just under 20% year to date, that's half a trillion dollars in market cap down and we're only two months into the year. Or there's Intuit, known for TurboTax and Mailchimp, down 37%. On the flip side, we've got SanDisk up a whopping 142% so far this year, hitting nearly $87 billion in market cap. But even that name is experiencing volatility. That's not for everyone, and certainly not for the faint of heart. SanDisk swun down 7% today alone. That's as rising energy costs hit memory stocks. And again, that's for one of the winners. So the Journal cites an interesting data set from Barclays which shows that while The S&P 500 has traded within a 2.7% range up or down since January 1, the average company inside the index has moved in a band seven times wider, meaning much, much wilder swings than the overall index would indicate. And it's the largest divergence or dispersion since 1994. Now for the history curious among us, 1994 was a major year. It's when the financial markets fluctuated dramatically in response to a series of unexpected aggressive interest rate hikes by the Federal Reserve, which doubled rates from 3 to 6% throughout the year, crushing the bond markets in the process and sending the equity indices swinging. And so this association of dispersion with market corrections is getting some investors nervous who are getting deja vu for the dot com bubble of the late 1990s. But dispersion on the flip side is getting others excited for chances to go stock picking. And by the way, just to make that process of stock picking even harder, just wanted to flag. It's a little tricky these days to see what actually gets the market's juices flowing. For some it just blow out earnings. For others Q and video, it's about guidance, what the forward look is, while for others still it's about just not doing as poorly as everyone expected. So Best Buy, we're looking at you and we're going to be talking about you a little bit later. So these are wild times. They're expensive times, but then one person's expensive is another person's bargain. It's what makes the market and it's why we love it. So we'll keep watching. Coming up, we look at the not so bad earnings results from Target and Best Buy that sent their shares up. And on the second day of active trading following those weekend strikes on Iran and the counter strikes, we survey the market's reaction in the sectors most directly affected. But first, a word from our sponsor, Charles Schwab. Trading at Schwab is powered by Ameritrade Unlocking the power of thinkorswim. The award winning trading platforms loaded with features that let you dive deeper into the market. You can visualize your trades in a new light on thinkorswim desktop with robust charting and analysis tools all while you
- [05:32]
John Coteau
uncover new opportunities with up to the minute market news and insights. ThinkOrSwim is available on desktop, web and mobile to meet you where you are so you never miss a thing. It's built by the trading obsessed to help you trade brilliantly. Learn more@schwab.com trading so let's talk about
- [05:47]
Ann Barry
those two retail giants whose stocks have been literally in the doldrums for years. That's Target and Best Buy. But together they brought a little bit of sunshine to this almost spring Tuesday with price upticks in their stocks over the course of today. Well, both reported earnings this morning and both led the market as the top two best performers in the S&P 500 over the course of the trading session. So John, let's kick off with what the long awaited results coming from Target, formerly known as Target. And that's because there's been a change at the top and the market's eyes have been all over this to see if there were signs that there are good things to come.
- [06:23]
John Coteau
Yes. Are there green shoots in the turnaround? Right, let's get into it. Target Ticker TGT on the New York Stock Exchange market cap of $55 billion shares were up almost 8% today and for the quarter revenue of $30 billion beat estimates and adjusted earnings per share of $2.44 beat by 28 cents.
- [06:42]
Ann Barry
So it's worth just framing and being really specific about this. So the earnings results that just came out were for specific to Q4 2025. So these were holiday shopping results so important for retail. And again just to talk about that revenue number 30.5 billion for the quarter. So again for that holiday season in a vacuum, they weren't the most motivating results. Comparable or same store sales declined so down two and a half percent for that quarter. It is the magic metric for retail, not particularly inspiring. It was also the 13th consecutive quarter of weak or falling sales. The problem though is you put all of that in the context of the stock which is about 50% down from its November 2021 all time high down by the way, over 33% over the past five years. So it's not just this quarter. It's been a whole slew of earnings that have just been disappointing and frustrating and the stock price and has really gone under investors skin. But, but this is what happened. The market did seem to buy a little bit into a forward look at a turnaround today and basically said despite the fact that that was a very sort of middling set of results, objectively the company did beat EPS estimates and it just was not as bad as folks had expected. Which seems to be the best news possible to have come out of Target.
- [08:00]
John Coteau
Yes, exactly. And Target has a new CEO and that was a big part of the day was him getting out there and showing people what the future might look like. That's Michael Fidelke. He took over the role last month and, and he's been at Target for decades. He was previously the cfo. We've talked about it. He started his whole career there as an intern decades ago.
- [08:17]
Ann Barry
Yep.
- [08:18]
John Coteau
And so today at the investor event, he outlined the pillars of the growth plan that he sees, including improving the shopping experience and improving merchandising. So starting with the shopping experience, Target is looking to increase staffing at its stores. In October, the company laid off 8% of its corporate employees and the company says it looks to invest billions in bulking up the floor staffing and they're also looking to improve in stock levels and change store layouts. I've had that experience of going to a Target and there's empty shelves.
- [08:45]
Ann Barry
Ghost town.
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John Coteau
Yeah.
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Ann Barry
Many, many senses. Yeah.
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John Coteau
And Ann, I was struck today that they had an investor day event that reminded me of the one that you really recently went to at Starbucks and told us about.
- [08:54]
Ann Barry
Yeah. So these investor days, when their high production as the Starbucks one was, it was here in New York. I went over to the Glass House and they were literally mock ups of coffee shops, kitted out with all of the latest coffee machines, fabulous furniture, so really gussied up versions of what the future of Starbucks could look like. And it was sort of the poster child for what these invest yesterdays can look like, the huge amount of effort that goes into them. Well, Target had theirs at their Minneapolis headquarters today and they turned conference rooms in a similar fashion into sample store displays. I wasn't at it, but you could see all the footage coming through today. And this was a way of showing not telling. Right. Their goal of improved merchandising and just to go back in history, Target was known for its merchandising not just for the brands it brought onto its shelves, but also for its private or its own label.
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John Coteau
Yes.
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Ann Barry
And the idea that this is where you went to get great product, tasteful product, elevated product at value prices. And so Target really leaning into what good literally physically looks like over the course of today. The other thing that struck me is Target really leaned into beauty as a category to drive traffic into their stores. Newly announcing Beauty Studio which will carry prestige beauty products and that is to replace Don Jump. You and I have talked about this before. Ulta Beauty used to have shopping shops. So literally little sort of Ulta stores inside those massive Target footprints. And we all. There was an announcement came out said we're not continuing this. I thought Ulta broke up with Target. That was my gut at the time. It subsequently did look in fact like that was accurate and it looked as though it's because Target just wasn't cool enough and Ulta with its own turnaround underway, didn't want to be dragged down. So Target's getting back in the beauty game. It's doing it its own way and it's doing it with these new beauty studios also on display over the course of today. But a key thing here that felt as though was core to the messaging was identity. Right. Used to Target, used to be nicknamed Target Bougie products, Bougie Sense. And it since evolved into the sort of all things to all people, all the time model which by the way is something Walmart was known for. But doing that at everyday low prices, which is a tagline that Target never really credibly stepped up to. So it's had an identity crisis for a while. And Fidelke again the new CEO month into the job, though he's been there for decades, acknowledged that. And just to read a quote, John, he said today Target is not an everything store. That's not what guests want from us. They want a strong trend forward assortment that they can trust to deliver quality and value. And that to me is Target in
- [11:33]
John Coteau
a punchline and thinking if we're going to bring an executive back who's been there, maybe he doesn't have forward thinking ideas. He's too into the past. Sometimes he might worry about. But if his part of his past was coming up through the Target system when it was working, maybe he knows how to deliver it back to.
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Ann Barry
Well, he knows what success feels like. I mean the question for Fidelki and so many others like him, he was there for the go go days the halcyon days. So he knows what good or excellent looks like. But is he responsible for the decline that we have seen since? And by virtue of being appointed CEO, the board has said no, we're not going to hold him responsible. And by virtue of the investors having the kind of reaction that we saw today, they're leaning into the oh, he knows what good looks like thesis.
- [12:12]
John Coteau
And in terms of not being things to all people, according to Target, grocery and beauty like you mentioned, are slated to keep growing and a focus on adding new unique brands while sports gear, big ticket electronics and certain home collections will be slimmed down.
- [12:26]
Ann Barry
Well, that makes complete sense because also let's call grocery and Beauty Buy another name which is fast moving, rapid turn. They're consumable, right? You think about what Target wants to get. Have less of sports gear, big ticket electronics and home collections. Those are long life. You don't replace them very often. They're certainly not consumable. And they're higher prices, price points, bigger price tickets. Grocery and beauty, we've seen this from Walmart. Grocery in particular is what gets feet through the front door into physical and doing repeat purchases online. So very interesting to see Target doubling down on those two particular categories and
- [13:00]
John Coteau
a focus on curated. Yeah, we talked about this with Dillard's department stores, which are more in the south and them compared to Macy's and just the idea that fans of Dillard love the products there. They feel like they're being chosen and that was something that Target didn't have going for it.
- [13:14]
Ann Barry
Yeah, exactly. So loyalty. Now Target does have a big loyalty program, so I'm getting to be spending a bit more time digging into what exactly the plan is there to activate repeat purchases as well. But for the current year at least, Target said it's expecting net sales to grow around 2% compared with last year. And investors sort of saying we'll take the 2%. It's better than nothing. I don't know. I don't. I personally don't find it particularly compelling. I think there are other places to go, but at least loyal Target investors saying that this, this feels good to us. Well, just as Target is pulling back from Big ticket electronics, Best Buy is doing something a little bit different. So let's pivot over there and see what we learned from their earnings today. Right.
- [13:55]
John Coteau
Best Buy reported earnings ticker BBY on the New York Stock Exchange market cap of $13.5 billion and similarly shares up 7 to 8% today. Revenue of $13.8 billion was down from last year. And just a bit under forecast. But adjusted earnings per share of $2.61 beat by 15 cents and was an improvement for the fiscal year. Revenue rose to $41.7 billion, which was up $100 million and ended three years of annual declines. I think that was the big headline today. Same store sales fell 0.8%. That magic metric. But it was within the the company's guidance. So not too bad.
- [14:36]
Ann Barry
Yeah. So analysts weren't surprised to. This is, to me, this is, you know, like the lowest of expectations. Right. Basically analysts saying they didn least good outcome. We're going to forgive them. And this is very interesting because Best Buy also is trying to figure out what is its value proposition, what is its identity, what does it stand for? And Best Buy is really leaning into this idea of curation. Now. The company did point to softer sales of appliances and home theater related products. Just as a side note, those are some that have been hit particularly by tariffs when you think about the price tag. So we know that folks aren't choosing Best Buy for their new dishwasher. Either they're choosing not to go buy dishwashers or they're not going to Best Buy for them. But there are certain new electronics that Best Buy is serving up to consumers and where consumers are electing to go visit them.
- [15:22]
John Coteau
That's right. And that's a trend that we talked about when we covered Dell a couple months ago, that there is an idea that when folks were home during the pandemic, they purchased laptops and other computer equipment that's now starting to wear out and needing an Upgrade. Similarly, Windows 11 came out recently and so folks are looking to upgrade and Best Buy is seeing people do that. They're buying gaming consoles, electronics. During the last quarter, Best Buy saw strength in computing, mobile phones and growth in 3D printers. Yes, collectibles and toys.
- [15:54]
Ann Barry
That makes all of this makes intuitive sense to me. So my last laptop for my personal use I got in 2021 and I absolutely want to upgrade it because I want to make sure it's got the chip cape, the processing capabilities to do the latest on the sort of AI and applications I want to be able to use. That sort of of sat with me. But the 3D printer thing really sat with me. So I have a niece and a nephew and I asked them what they wanted for their holiday gift last year and they were super clear they wanted 3D printers under the Christmas tree. So a lot of fun and actually others using it too. We're seeing collectibles and toys as you just said John, gaining traction in Best Buy again, I think of those as the equivalent of grocery and beauty for Target. I can see why collectibles and toys are the equivalent for Best Buy. You want to go see it in person sometimes you want to sample it, feel it, touch it. It's those kinds of that bricks and mortar retailers doubling down on to try and make sure that people are literally physically going into their stores. And the kiddo economy too. We've seen that in speaking to Hasbro, Gamestop's talked about it. We're seeing adults increasingly leaning into collectibles and physical items that you call them toys, but they're important part of what people are spending their time with outside the digital world. Yeah.
- [17:05]
John Coteau
Because some of these legacy big box stores, when I walk by them, I just think, who's shopping there?
- [17:09]
Ann Barry
Yes.
- [17:10]
John Coteau
And so this answers that question. And also just to follow up on this, we talked about this last August, August Best Buy launched a third party digital marketplace trying to diversify out. CEO Corey Berry said today that the company has drastically increased its available product count. And so that's something to keep an eye on. My thought is if you can't beat them, sell their products on a third
- [17:29]
Ann Barry
party marketplace and join them. From that perspective, it also reminded me of Wayfair. So I saw the CEO of Wayfair get interviewed, I think it was on CNBC recently post their earnings and something. We know it, but she articulated it so well, which is when it comes to the marketplace and specifically when the products are exposed to tariffs or pricing pressure, what the marketplace does is get all of the suppliers onto one place and they compete with each other naturally to bring prices down. Right. And it's therefore not Best Buy being bad cop or Wayfair being bad cop. It's just natural competition unfolding by virtue of all these suppliers being able to see what everyone else charges, which I thought was pretty interesting and a way to mitigate tariffs without it eating into one's own margins as the retail partner. Which I thought was sort of interesting way to look at it. Well, best buy forecasting 1% sales growth for this quarter. Again, the market liked it. Lots of people would say that's not a particularly fabulous outcome, but it is not as bad as have been expected and possibly a little bit more positive. Well, let's take a break and when we come back, we'll take a spin through the headlines that were moving the markets today. Vaneck believes gold is evolving into a more durable part of a portfolio. And with ongoing global uncertainty, the case for gold remains compelling.
- [18:39]
John Coteau
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- [18:48]
Ann Barry
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- [19:02]
John Coteau
Learn more@vaneck.com brewgdx that's vaneck.com brewgdx read fun disclosure in Podcast Description get in
- [19:12]
Ann Barry
the game with the College Branded Venmo Debit Card Wreck your team with every tap and earn up to 5% cash back with Venmo Stash, a new rewards program from Venmo. No monthly fee, no minimum balance, just school pride and spending power. Get in the game and sign up for the Venmo debit card@venmo.com collegecard the Venmo MasterCard is issued by the Bancorp Bank NA Select Schools available Venmo Stash terms and exclusions apply at venmo me stashterms max $100 cash back per month There it is, the closing bell. It's 4pm on the east coast and so the market's wrapping up for the day. We don't have a ticker tape, so we'll throw it over to our human ticker, our producer John that's right, the
- [19:52]
John Coteau
dow ended down 0.8%, the S&P 500 finished down 0.9%, and the Nasdaq finished down a percent. Here are some specific sectors reacting to the escalating conflict in the Middle East. Brent crude oil, the global energy benchmark, briefly topped $85 a barrel today for the first time since July 2024, up as much as 18% just in the past two days. And defense ETFs largely lowered today after many defense contractors saw their shares hit 52 week highs yesterday, including Lockheed Martin which finished down over 1% today. Gold futures traded lower, countering the typical narrative that geopolitical conflict boosts demand for safe haven assets. Some analysts have expressed concerns that escalating tensions in the Middle east east could fuel inflation and keep interest rates higher for longer. And the stock selloff continues worldwide, with London's Footsie down 2 1/3 percent, Germany's DAX down more than 3.5% and Japan's Nikkei index down about 3% today.
- [20:50]
Ann Barry
So very interesting. So we saw some real reaction yesterday. We've seen a bit of a Paring back. Just wanted to hone in on two things, John, that you mentioned. That was gold giving back a little bit of its valuation because inflation fears are back fears that higher oil prices worldwide is going to ultimately come through as higher prices. And when that inflation risk goes up, you do see, you know that that impact on gold. The other thing I just wanted to point out Abu Dhabi, which is an important Abu Dhabi in Dubai, excuse me, two stock markets in the United Arab Emirates which is important among the Gulf states. And that market, it, that sort of markets are important amongst the Gulf markets that has been closed those two stock markets yesterday and today currently set to reopen tomorrow. So we're going to keep eyes on that one. Just as a bit of an indicator as to where activity is perhaps coming back on some of the more local stock exchanges. Well, in other news this morning Amazon announced it was working to restore cloud computing services in the Middle east after drone attacks damaged 3 of its data centers. Amazon had said early today that customers with remote computing workloads running in the Middle east should move them to other regions where its Amazon Web Services unit has servers. Also, shares in Amazon finished flat. So a bit of a shrug from the market but clearly glad to see that Amazon has contingency plans and can help their their local customers get things
- [22:08]
John Coteau
moved around and elsewhere around the markets. Shares in Pinterest ticker pins jumped more than 8% today after activist investor Elliott Management to close to $1 billion investment into the company which they say will be used to buy back shares.
- [22:22]
Ann Barry
Well, we've talked about Elliott's previous positions in Pepsi and Starbucks. We like to follow the money on this one. When Elliott makes a move, we like to try and keep up with it. Pinterest shares just for context, down around 27% year to date. And the stock sold off again following disappointing fourth quarter earnings in which management cited tariff related uncertainty causing retailers to slash their advertising spend on the platform. Big portion of Pinterest revenue comes from that customer base. Well, Pinterest CEO Bill Ready said that he sees Elliot's investment as a strong vote of confidence. I love his confidence, the way he's choosing to interpret that. We're going to keep watching that one
- [23:00]
John Coteau
for sure and finally have to keep up with the sneaker business. Shares in. On. Ticker on. On. We're down 11% today after the Swiss company's annual sales guidance. Underwhelmed investors. One interesting note. Apparel now accounts for almost 15% of total net sales at ON and the category is expected to quote meaningfully outpace overall growth in the coming years.
- [23:22]
Ann Barry
Well, it is still earnings season, so just have that thought. So we're about to go brew another cup of coffee, cup of tea, and make sure we keep up with it all. That's it for today's Blue Markets Daily.
- [23:31]
John Coteau
Brew Markets Daily is hosted by Anne Bar and produced by John Coteau, Tarkab Delatif and Emily Millarn. Our technical director is Uchenawa Ogu, Brittany Dotako is our audio engineer, and the president of Morning Brew Inc. Is Devin Emery. If you have any feedback or a company you'd like us to COVID leave a comment or send an email to BrewMarketShoworning Bukom.
- [23:48]
Ann Barry
Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place. Sam.