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Yahoo
26 minutes ago
- Yahoo
'Earnings misses are going to get punished more than usual': Wall Street raises the stakes as stocks hit records
Earnings season is in full swing, and Wall Street has a clear message to companies: Good just isn't good enough. Market action this week reinforced that growing thesis, with big banks like JPMorgan (JPM) and Bank of America (BAC) ending the week with muted gains despite solid earnings and a message of consumer resilience. Netflix (NFLX), which currently trades at roughly 40 times forward earnings, a steep premium to the broader market and even many of its tech peers, faced an even sharper reaction. Shares fell 5% on Friday despite the streaming giant reporting a beat on both the top and bottom lines and raising its full-year guidance. "An overall 'good' set of results and guide were not good enough for elevated expectations,' William Blair analyst Ralph Schackart wrote in a reaction to the Netflix report. That disconnect between performance and price reaction isn't isolated. As earnings season ramps up, the broader market is contending with elevated valuations and a growing sense that even strong results may not be enough to justify current levels. "The biggest risk right now is valuation," Brian Jacobsen, chief economist at Annex Wealth Management, told Yahoo Finance on Friday. "When we look at the fundamentals, I think that those will be improving. But how much are you paying for those fundamentals?" Companies entered this earnings season with lowered expectations, shaped by growing uncertainties around tariffs, policy, and the path of interest rates. According to FactSet, analysts initially projected just under 5% earnings growth for the S&P 500 (^GSPC) in the second quarter. That estimate rose to 5.6% on Friday as more companies reported stronger-than-expected results. If that number holds, it would still mark the slowest pace of profit growth since Q4 2023. So far, 83% of S&P 500 companies that have reported topped second quarter EPS estimates, above the five-year average of 78%. Still, the average earnings surprise of 7.9% lags the five-year norm of 9.1%. And with a relatively easy bar to clear, strategists warn that investors are showing little patience for any stumbles. "I expect that we're going to be seeing a lot of volatility," Jacobsen said. "Earnings misses are going to get punished a lot more than usual. I don't think investors have the patience to really deal with companies that are missing any of those estimates." Stocks are currently trading at record highs after staging a historic comeback since Trump's initial "Liberation Day" tariff threats in April, which briefly triggered a sharp sell-off after he pledged sweeping duties on some of the US's largest trading partners. The White House later softened its stance, first granting a 90-day extension and then pushing the deadline again to Aug. 1. That walk-back fueled a familiar narrative on Wall Street — the so-called TACO trade, an acronym for "Trump Always Chickens Out." The phrase captures a belief among some investors that the president often talks tough on tariffs but rarely follows through. That assumption has helped fuel a tailwind for markets in recent months as traders increasingly bet on last-minute policy pivots. But even as markets rally on hopes of policy reversals, the underlying uncertainty hasn't gone away. Mark Malek, chief investment officer at Siebert Financial, told Yahoo Finance on Friday that as earnings season continues, investors will have a clearer view of how tariff-sensitive industries are holding up in this environment. "All the flags are heading in the right direction — for now," he said, emphasizing the uncertainty heading into the next wave of earnings. "We know [tariff-related inflation] is going to be a headwind. Either it's going to cost corporations in earnings or it's going to come right to the consumer," he said. "The market's trying to trying to digest all of this, and so far it's done a good job. But I think there's another shoe to drop soon." Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Sign in to access your portfolio
Yahoo
26 minutes ago
- Yahoo
Investors in CACI International (NYSE:CACI) have seen strong returns of 136% over the past five years
When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of CACI International Inc (NYSE:CACI) stock is up an impressive 136% over the last five years. It's also good to see the share price up 15% over the last quarter. But this could be related to the strong market, which is up 23% in the last three months. So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. Over half a decade, CACI International managed to grow its earnings per share at 14% a year. This EPS growth is lower than the 19% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. You can see how EPS has changed over time in the image below (click on the chart to see the exact values). We know that CACI International has improved its bottom line lately, but is it going to grow revenue? Check if analysts think CACI International will grow revenue in the future. A Different Perspective CACI International shareholders gained a total return of 8.4% during the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 19% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand CACI International better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for CACI International you should know about. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
26 minutes ago
- Yahoo
I Asked ChatGPT To Explain Trump's ‘Big Beautiful Bill' To Me Like I'm 12 — Here's What It Said
I'm no stranger to sweeping legislation. I have 30 years of combined experience covering politics and state government, advocating for healthcare and education nonprofits, and negotiating policy from both sides of the table. Discover More: Try This: However, when President Donald Trump unveiled his 'Big Beautiful Bill,' even I had to pause. What exactly is in it? What's at stake for everyday people now and in the future? I asked ChatGPT to cut through the noise and condense sprawling policy documents to provide me with a clear, emotionally neutral summary. In other words, I asked ChatGPT to explain it in a way that I would understand, as if I were a 12-year-old. Here's what it said. It's All In the Branding There's no official legislation called the 'Big Beautiful Bill.' According to ChatGPT, it's a branding phrase Trump used to signal his agenda. It includes tax cuts, deep rollbacks, and restructuring of social safety nets, carrying significant implications for energy, education, and public debt. Read Now: What Does It Mean for Average Americans? One of my first questions while reviewing any public policy, including Trump's budget bill, is how it would affect regular citizens. Same with ChatGPT. I asked how Trump's 'Big Beautiful Bill' would affect average Americans. It said that workers could see slightly larger paychecks if payroll taxes are reduced. However, there's a catch. 'Those same payroll taxes fund programs like Social Security and Medicare, and without a replacement funding mechanism, the long-term stability of those benefits could be in jeopardy,' ChatGPT said. 'We've seen versions of this play out before: short-term relief, long-term risk.' Healthcare on the Chopping Block For those who rely on the Affordable Care Act, it could bring significant disruption. According to ChatGPT, 'Trump has repeatedly signaled interest in dismantling parts of the ACA. That could mean higher premiums, fewer protections for people with preexisting conditions, and a market-wide ripple effect for anyone who buys insurance independently or through the exchanges.' While the bill doesn't eliminate the ACA outright, it lays the groundwork for targeted rollbacks that could weaken coverage and affordability. For millions of Americans, especially gig workers, freelancers, and early retirees, this isn't just a policy; it's a potential threat to their health and finances. Student Debt Relief Could Disappear Tucked into the Big Beautiful Bill are provisions that would unwind key aspects of the Biden administration's student debt relief efforts. While not framed explicitly as an attack on borrowers, the bill signals a sharp policy reversal, one that could shut down or restrict forgiveness programs and income-driven repayment options. According to ChatGPT, 'If you have student loans or are counting on forgiveness programs, they could disappear overnight. The bill includes a rollback of debt relief efforts and the potential return of higher interest rates for federal loans. And if you're a parent planning for college, the financial aid landscape could shift beneath your feet.' Social Security Is Fine Until It Isn't While the Big Beautiful Bill doesn't explicitly cut Social Security, its structural changes to payroll taxes and entitlement spending raise serious questions about long-term funding. By lowering or eliminating certain employer-employee tax obligations, the bill could weaken the primary revenue stream that supports Social Security's solvency. ChatGPT explained: 'Reducing payroll taxes without a clear replacement funding mechanism puts pressure on programs like Social Security and Medicare. Even if benefits aren't cut immediately, the financial sustainability of those programs becomes more fragile.' For retirees and future beneficiaries alike, this isn't just theoretical. A weakened Social Security trust fund could lead to delayed payments, reduced benefits, or increased retirement age, all of which disproportionately affect low-income earners and workers with physically demanding jobs. The Real Power Play From an AI and systems-thinking perspective, the 'Big Beautiful Bill' revealed something deeper: it's not just about the policies; it's about who benefits from speed and opacity. According to ChatGPT: 'Wealthy donors and corporate lobbyists can plan for these changes before they hit. They have access, leverage, and legal teams. The average worker? They're just trying to make rent and keep the lights on.' With a degree of self-awareness, ChatGPT said. 'While AI can help decode the structure, it can't shield anyone from the real-world consequences. That's why clarity, accountability, and deliberate scrutiny still matter. Because in a system where speed favors power, the rest of us need time to see clearly, before the ground shifts beneath our feet.' More From GOBankingRates Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on I Asked ChatGPT To Explain Trump's 'Big Beautiful Bill' To Me Like I'm 12 — Here's What It Said
