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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of over 23,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

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Market Talk

The major indexes were off to a strong start despite the credit downgrade, but today’s treasury auction sent equities tumbling and treasury yields surging.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Retail Roundup: Mixed Signals as Retail Names Struggle with Tariffs and Consumer Hesitation

The latest wave of retail earnings paints a picture of diverging fortunes and cautious optimism. Home Depot and Lowe’s are weathering the storm with stable forecasts and pro customer strength, while Target finds itself facing a demand drought, margin pressure, and cultural backlash. Together, these results offer investors a snapshot of the retail landscape under rising tariff pressures and consumer caution.

🔑 Key Points

• Home Depot $HD ( ▼ 2.05% ) beat sales expectations but missed on EPS, sticking to full-year guidance despite a 0.3% comp sales decline. Execs say pricing will hold steady despite tariffs, and pro demand plus SRS Distribution acquisition helped bolster results.

• Lowe’s $LOW ( ▼ 1.87% ) also reaffirmed its full-year forecast, beating EPS but missing slightly on revenue. Comparable sales dropped 1.7% YoY, but mid-single-digit growth among home professionals and spring-season product strength offered tailwinds.

• Target $TGT ( ▼ 5.32% ) saw revenue and EPS miss expectations and cut its full-year outlook, citing weak discretionary spend, consumer pushback on DEI rollbacks, and tariff uncertainty. Comparable sales fell 3.8%, driven by store traffic and ticket size declines.

• Tariffs Divide Strategy: Home Depot will hold prices steady, Lowe’s will attempt to limit consumer impact, while Target expects some pricing increases. All three retailers are actively working to shift sourcing away from China.

• Market Response: Target shares fell over 5% after results. Home Depot and Lowe’s saw relatively muted market reactions, buoyed by reaffirmed guidance and stability among pro customers.

👀 What You Need to Know

The retail sector continues to tread cautiously amid a sluggish housing market, rising tariffs, and evolving consumer behavior. Home Depot and Lowe’s are leaning hard into pro customers and supply chain agility, while Target struggles with core identity issues and weakening discretionary demand. Investors should watch for further divergence as second-half tariff impacts become clearer. Cost management, sourcing flexibility, and customer strength are proving to be critical differentiators in this environment.

Moody's cuts America's credit rating, citing rising debt

Moody’s downgrade of the U.S. sovereign credit rating to “Aa1” marks a historic shift in global market perception and a sharp warning to policymakers in Washington. With federal debt now surpassing $36 trillion and projected to reach 134% of GDP by 2035, the agency cited persistent fiscal deficits and rising interest burdens as unsustainable. This marks the third major credit agency to strip the U.S. of its top-tier rating, following S&P in 2011 and Fitch in 2023.

🔑 Key Points

• Moody’s cuts U.S. rating to Aa1 from Aaa for the first time in over a century, citing runaway deficits and rising interest costs.

• Treasury yields surged, with the 10-year rising above 4.5% and the 30-year topping 5%—levels not seen since 2023—tightening financial conditions.

• Trump’s tax bill passed in Congress; Moody’s warned the plan would worsen the debt trajectory, not reverse it.

• Tariff policy backlash is intensifying. While recent breakthroughs with China sparked optimism, the broader inflationary impact continues to weigh on confidence.

• Stocks vulnerable to rising yields: With the S&P 500’s forward P/E at 21.7, well above its historical average, higher yields could drive valuation compression.

👀 What You Need to Know

This downgrade is not just symbolic, it raises borrowing costs, steepens the yield curve, and questions the long-term viability of U.S. fiscal policy. For investors, the key takeaway is that the era of cheap debt is ending. With equity valuations already stretched, rising Treasury yields may act as a gravitational pull on stocks. Longer-duration assets and rate-sensitive sectors could come under pressure. Investors should brace for heightened volatility and scrutinize both fiscal policy outcomes and the bond market’s reaction in the weeks ahead.

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Waymo and Tesla Race Toward an Autonomous Future

Alphabet’s $GOOGL ( ▲ 3.25% ) Waymo and Tesla $TSLA ( ▼ 1.21% ) are on a collision course in the robotaxi market, with very different philosophies on how to get there. Waymo just hit a milestone 10 million paid rides, doubling in just five months and expanding its reach in the Bay Area. Meanwhile, Elon Musk confirmed that Tesla will launch its own robotaxi fleet in Austin by the end of June, starting with 10 vehicles using its upcoming FSD “Unsupervised” software and no human drivers onboard.

🔑 Key Points

• Waymo has completed 10M total paid trips and now delivers 250K rides weekly, expanding into San Jose and beyond.

• Tesla’s robotaxi launch begins in Austin next month with 10 Model Y vehicles using FSD Unsupervised—no safety drivers, but remote monitoring.

• Waymo uses lidar + radar, calling it the safest approach. Tesla rejects those sensors, citing cost and scalability limits.

• Musk promises scale, eyeing expansion to San Francisco and L.A. after Austin, depending on safety results.

• Political & financial backdrop: Waymo remains unprofitable with a $1.23B quarterly loss; Tesla faces EV demand challenges and political controversy tied to Musk’s growing role in the Trump administration.

👀 What You Need to Know

Waymo is proven, scaled, and focused on trust. Tesla is bold, fast-moving, and chasing lower costs with higher risk. Investors should monitor regulatory response, public safety incidents, and unit economics. If Tesla’s launch succeeds without setbacks, it could reshape the autonomy narrative, but if safety becomes an issue, Waymo’s methodical path may win the long game. The real edge? Whichever company can safely scale autonomy without burning through billions.

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

• Trump tells Walmart to eat the tariffs, Walmart responds

• UnitedHealth falls after report it secretly paid nursing homes to reduce hospital transfers

• Nvidia announces new tech to keep it at the center of AI development

• 20-Year Treasury Auction Goes Badly, Yields Spike as Bonds Sell Off

• Palantir Teams Up With Divergent to Reinvent Manufacturing With AI

• Retail Traders Go on Record Dip Buying Spree, Calming a Jumpy Stock Market

• OpenAI is buying iPhone designer Jony Ive’s AI devices startup for $6.4 billion

• Palo Alto Networks Q3 earnings fail to wow investors. Stock falls.

• Bitcoin jumps to new all-time high, surpassing prior record in January

• Blackstone bets on soaring power demand with $11.5 billion TXNM Energy deal

• Baidu tops earnings, says domestic tech will shield AI push from US curbs

• Trump Tax Bill Advances After Deal for Faster Medicaid Cuts

• Japan's super-long yields rise to all-time highs on fiscal, auction concerns

The Second Half

With most of the major companies reporting already this week, a quiet week continues as we only have a handful of economic reports to watch to end the week.

Earnings Reports

Earnings season is winding down and none of the names we cover are scheduled to report in the second half of the week.

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

There are a number of economic reports on the calendar to end the week. We get initial jobless claims, composite PMI and two housing reports.

Here is the full calendar of events scheduled for the remainder of the week:

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.