Investopedia Markets News (all except PF)

Shoppers using Sparky place orders that are, on average, 35% larger, CFO John David Rainey said on a conference call.

Walmart's chatbot Sparky is generating larger orders, the retailer said.

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Key Takeaways

• Shoppers who use Sparky, Walmart's AI chatbot, spend an average of 35% more than others, Walmart executives said Thursday.
• The retailer plans to further develop Sparky, while also collaborating with AI bots from tech specialists, such as Gemini and ChatGPT.

Sparky is cranking up sales at a massive retailer.

Walmart's AI chatbot—named for the company's yellow logo—is bolstering its shoppers' spending, company executives said Thursday. About half of Walmart (WMT) app users have tried the 20-month old tool, CFO John David Rainey said on a conference call on the company’s fourth-quarter results, and those who engage with Sparky place, on average, a 35% larger order.

“Simply put, Sparky is helping customers find the things they need,” Rainey said, according to a transcript made available by AlphaSense. “It's strengthening our digital unit economics as it scales.”

Why This News Matters to Investors

Tech companies are eager to show investors that they will be able to capitalize on AI. If their technology is used in online sales, tech companies may be able to charge a commission, incorporate ads or find other ways to make money.

Walmart plans to expand Sparky’s abilities and introduce the tool abroad. But it’s also collaborating with Alphabet’s Google (GOOG) and OpenAI to ensure Walmart products are easily available to those using their AI chatbots—Gemini and ChatGPT, which pull from multiple sites and platforms. The company, which has lately acquired a market value of $1 trillion, has sought to establish itself in investors' minds as a tech powerhouse as well as a retail giant, recently moving to the Nasdaq 100 index viewed as a technology stock benchmark.

“We’re approaching AI development through partnerships,” Rainey said. “This lets tech companies do what they do best—develop innovative technology—and it provides us clarity to do what we do best—to translate the best of tech to retail experiences.” 

Other new technology, including the automation of distribution and e-commerce facilities, should boost productivity, Rainey said. That’s built into Walmart’s forecast of a 3.5% to 4.5% year-over-year increase in sales for the year ahead, Rainey said. The outlook takes into account a "somewhat unstable” backdrop, given concerns about limiting hiring, student loan delinquencies and downbeat consumer sentiment, he said.

Consumers may benefit from larger tax refunds, CEO John Furner said. But so far, they remain “choiceful,” with many looking to save, but being willing to pay for the convenience of delivery, Furner said. Households with an annual income of $50,000 or less are showing “some stress,” Furner said. 

“We continue to see that wallets are stretched and, in some cases, people are managing spending paycheck to paycheck,” Furner said, according to the transcript.

Walmart U.S. reported a 4.6% year-over-year boost in comparable sales, excluding gasoline, in the fourth-quarter, while Sam’s Club U.S. reported a 4% increase, according to a press release. The company narrowly beat headline expectations, with $190.7 billion in sales and $0.74 in adjusted earnings per share.

The latest developments in prediction markets products could mean more institutional investors get on board.

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Key Takeaways

• At least three ETF shops are interested in rolling out funds that hold event contracts tied to the outcome of U.S. elections.
• The fund proposals signal a move by the industry to offer prediction-markets products suitable for institutional investors as well as individuals.

Prediction market contracts are hot. Investment shops want in—and not just because they want to lure in sports bettors.

ETF issuers Roundhill Investments, Bitwise Asset Management, and GraniteShares have all recently filed with the Securities and Exchange Commission to launch funds that, if approved, would represent bets on this year's U.S. congressional elections, as well as the 2028 presidential election. They will do this by holding event contracts—derivatives found on prediction market platforms like Kalshi and Polymarket, for example—that typically have binary outcomes; the proposed exchange-traded funds are tied to whether the various elections will swing in favor of the Democratic or Republican parties.

Whether the SEC will approve the ETFs, and how long it takes to review the filings, remains an open question. If they get the nod, they could offer another way for everyday investors to engage with prediction markets—but also institutionalize them much like funds did for cryptocurrency by creating products professional investors, as well as individuals, might want to buy and sell.

It would appear that prediction markets are on a "similar journey" to crypto, Bitwise Chief Investment Officer Matt Hougan told Investopedia. "Maybe the ETFs are a crowning achievement in that journey."

Why This Matters to Investors

Prediction markets could speed-run crypto in gaining legitimacy as investments if the SEC approves these ETFs.

Prediction markets' use and popularity is booming, leading companies to develop new businesses around them. Institution-facing derivatives giants including CME Group (CME) and Cboe Global Markets (CBOE) appear to be interested in bringing event contracts, or financial instruments like them, to their customers: CME partnered with FanDuel to launch a prediction markets app that allows users to trade sports events contracts, but also economic indicators and oil and gas prices, while Cboe Global Markets is reportedly in talks with retail brokerages to bring back yes-or-no options that would rival event contracts. Electronic trading platform Tradeweb Markets today partnered with Kalshi and plans to put prediction markets data in front of its users, some of which are institutional investors.

The ETF filings are for now light on details like which exchanges they'd use and how much in fees they would charge, which is typical in the early stages of the approval process. But they do contain nuggets of information that illustrate the novelty of these proposed ETFs, including how they settle and risks specific to these event contracts.

In the event that election outcomes are counter to the ETF strategy—for example, if the Democratic Party wins control of the U.S. Senate following the Nov. 3 elections—the ETFs that bet on the Republican Party "will substantially lose all of its value," according to filings.

The Roundhill and GraniteShares filings contain a provision that says that if, prior to the formal settlement of contracts, the price of contracts indicate an all but certain victory for five consecutive trading days, the fund will assess that the outcome has been decided early. There is also the possibility of what is called settlement risk in event contracts, according to Roundhill's filing: That means, for example, that if the outcome of the 2028 presidential elections is later found to be incorrect after the fund exits its positions, "there will be no recourse."

Once the event contracts are settled, Roundhill and GraniteShares expect to roll the funds into new contracts tied to the next set of elections. Bitwise's PredictionShares ETFs will terminate the funds soon after the outcomes of the event contracts are determined, effectively mimicking the way prediction market contracts work.

With Thursday's drop, Carvana shares have lost about a fifth of their value since the start of the year.

Kevin Carter / Getty Images

Key Takeaways

• Carvana shares tumbled Thursday after the online car marketplace reported some fourth-quarter profit metrics that came in below expectations.
• The company said some costs came in higher than anticipated, and warned it could face elevated vehicle reconditioning costs in the first quarter.

Carvana stock backed into reverse on Thursday.

Shares of Carvana (CVNA) dropped 8% close to just under $333, a day after the online used car marketplace reported weakness in some key profitability metrics that outweighed solid sales numbers.

The company's gross profit per unit declined year-over-year and came in below analysts' expectations at $6,427 for the fourth quarter. The company said in its letter to shareholders that some costs were higher than anticipated.

Carvana also warned it could face elevated vehicle reconditioning costs in the first quarter, though it expects per-vehicle profits to improve.

Why This Matters to Investors

Thursday's drop could underscore worries about Carvana's profits, and extends the stock's recent slump after a short-seller report raised concerns about the company's finances.

For the full year, Carvana said it forecasts "significant growth" in vehicle sales volume and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), but the company declined to provide specific figures in its forecasts for the current quarter or full year.

Analysts from Wedbush and JPMorgan cut their price targets for Carvana to $425 and $490, respectively, following the results. Still, both firms said they remain bullish on Carvana's potential for gains, pointing to its strong sales growth.

Carvana reported a 58% year-over-year jump in revenue to $5.6 billion in the fourth quarter, topping the analyst consensus compiled by Visible Alpha.

While ratings are still in flux, Wall Street analysts are widely bullish on the stock. Twelve of the 13 analysts tracked by Visible Alpha have issued "buy" or equivalent recommendations, compared to one neutral rating. Their average price target of $450 would suggest 35% upside from the stock's recent level.

With Thursday's drop, Carvana shares have lost about a fifth of their value since the start of the year.

This article has been updated since it was first published to reflect more recent stock prices.

Etsy's sale of Depop to eBay signals a focus on its core business.

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Key Takeaways

• Etsy on Wednesday said it would sell fashion marketplace Depop to eBay for $1.2 billion in cash.
• The deal marks the end of Etsy's "house of brands" era, which once included three other businesses. Its shares are rising on the news.

Etsy is getting a lift today—for selling a business for less than it paid to buy it.

The morning's rise in Etsy (ETSY) shares, recently up 9% to around $48, illustrates the long journey the crafts marketplace company's stock has been on since its pandemic highs, when shares traded in the neighborhood of $300 apiece. While today's move is notable, the shares are still down this year and over the past 12 months.

Why This Matters to Investors

Etsy's history of acquisitions promised growth in years past, but the company has now shed all three of the other companies that once made it a self-styled "house of brands." Management's focus on its core business is energizing investors today, though the stock has had a long downward run.

The sale was announced yesterday: Etsy said it would hand Depop, a fashion marketplace for consumers, over to eBay (EBAY) for $1.2 billion in cash. (Shares of eBay were up about 5% this morning. Read Investopedia's full markets roundup here.) That news closed the book on a $1.6 billion acquisition Etsy announced in 2021.

Etsy is characterizing the sale as letting it focus on its core Etsy marketplace, which as of the end of 2025 had nearly 87 million buyers but saw global merchandise sales fall year-over-year. (Roughly 90% of the company's "GMS," the company says, came from the Etsy marketplace.) When it acquired Depop, Etsy sought to define itself as a "house of brands" that also included Reverb and Elo7. Now, it's moved on from all three of the other properties.

“We are excited that this transaction allows us to focus exclusively on the compelling opportunity we see in front of us: to grow the Etsy marketplace in ways that matter most to our buyers and sellers,” said Etsy CEO Kruti Patel Goyal. “We believe this transaction is a great outcome for Etsy’s shareholders, and a positive next step for all involved."

That's encouraging investors today. Wall Street analysts are broadly bullish on Etsy's stock, though their $67 mean price target, per Visible Alpha, still falls well short of its apex.

U.S. stocks are being outperformed by some of their foreign counterparts in 2026.

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Key Takeaways

• After years of outperformance, U.S. stocks began to trail the rest of the world last year. That's continued in 2026.
• Since the start of 2025, major indexes tracking the European market, developed markets in Asia, and global emerging markets have all more than doubled the S&P 500’s return.

It's a big year for international sporting competitions, with the Winter Olympics ongoing and a World Cup due this summer. In the stock market, the U.S. is losing badly.

U.S. stocks are off to their worst start to a year relative to the rest of the world since 1995, according to a recent Goldman Sachs note. The MSCI World ex-USA Index, which tracks large-and mid-cap stocks in every developed market except the U.S., is up 8.2% so far this year, nearly six percentage points ahead of the equivalent index that includes the U.S. The S&P 500, the benchmark U.S. equities index, is essentially flat. 

Why This Matters to Investors

U.S. investors generally park most of their money in funds that track U.S. stocks—such as those that follow the S&P 500 or other major indexes. This year, some are looking overseas; while it's hard to know what might come next, early 2026 returns have been stronger outside the 50 states.

After years of outperformance, U.S. stocks began to trail the rest of the world last year. Elevated U.S. stock valuations, geopolitical and economic uncertainty, stimulus measures abroad, and a weakening U.S. dollar all played a part in the reversal of fortunes. Since the start of 2025, major indexes tracking the European market, developed markets in Asia, and global emerging markets have all more than doubled the S&P 500’s approximately 17% return. 

The divergence has accelerated this year. All but one major European stock market is outpacing the S&P 500 this year. Belgian, Norwegian, and Turkish benchmarks are all up double digits. (Denmark, the sole outlier, has been weighed down by shares of GLP-1 pioneer Novo Nordisk (NVO), which is feeling the pressure in a fiercely competitive weight loss market.)

In Asia, Korea’s KOSPI Composite has soared nearly 35% in just the last month and a half. Some of the index’s largest components, including chip giants Samsung and SK Hynix, are riding a surge in AI-related data center spending. 

Meanwhile, the tech stocks that led the S&P 500 to a series of record highs over the past year have been a drag on the index in recent months. The Roundhill Magnificent Seven ETF (MAGS), composed of seven tech companies with market caps ranging from $1.5 trillion to $4.5 trillion, is down more than 6% this year.

News of the day for Feb. 19, 2026

Major stock indexes rose on Wednesday but finished the session well off their highs amid uncertainty about the outlook for interest rates.

Stock futures are slightly lower this morning after three straight days of gains for the benchmark S&P 500; Walmart stock is losing ground after the retail giant issued an outlook that came in short of Wall Street expectations; OpenAI is reportedly in talks to raise a new funding round of up to $100 billion from the likes of Nvidia, Microsoft and others; Carvana shares are tumbling after some of the used car seller's profit metrics missed analysts' estimates; and DoorDash stock is surging after the food delivery app operator forecast higher-than-anticipated order value growth. Here's what you need to know today.

Stocks Point Lower After 3 Days of Gains for S&P 500

Stock futures are slightly lower this morning as investors digest a steady flow of earnings reports and prepare for key economic data that's scheduled for release Friday. Futures tied to the S&P 500 and Dow Jones Industrial Average, which are riding three-day winning streaks, were down 0.3% recently, while those linked to the tech-heavy Nasdaq slipped 0.4%. The major indexes rose on Wednesday but finished the session well off their earlier highs as investors reacted to the minutes of last month's Federal Reserve policy meeting, which showed that officials are concerned that further interest-rate cuts could stall progress in taming inflation. Gold futures were little changed this morning at just over $5,000 an ounce, while crude oil futures rose 1.5% to $66.20 per barrel, trading at their highest levels since last summer, as concerns over a potential U.S. military strike in Iran grew. Bitcoin was down slightly at around $68,000, while the yield on the 10-year Treasury note, which affects the rates charged on an array of consumer loans, ticked higher to 4.10%.

Walmart Stock Slips as Outlook Disappoints

Walmart (WMT) shares are moving lower after the retail giant issued a soft outlook, offsetting better-than-expected quarterly results. The country's largest retailer said Thursday that it earned an adjusted $0.74 per share on $190.7 billion in revenue, each narrowly topping the analyst consensus compiled by Visible Alpha. For the first quarter, Walmart said it expects sales growth of 3.5% to 4.5% and adjusted EPS of $0.63 to $0.65, each range coming in below what analysts currently forecast. Analysts and investors will be listening to the company's earnings call to get a sense of Walmart's direction under new CEO John Furner, who took over the top job at the start of the month. Walmart shares were down more than 2% in recent premarket trading.

OpenAI Set for New Funding of Up to $100B, Report Says

OpenAI is on track to secure the first portion of a new round of funding, Bloomberg reported late Wednesday. The new round could reach $100 billion and value the ChatGPT maker at around $850 billion, with the first part of the round coming from current investors including Nvidia (NVDA), Amazon (AMZN), Microsoft (MSFT) and SoftBank, per Bloomberg. OpenAI needs to continue raising money to pay the hundreds of billions in commitments it has with hardware and cloud computing providers, as its AI products are still years away from generating a profit. Bloomberg reported that the funding will likely come in tranches over the course of the year, and said the round will be opened up to other investors including venture capital and sovereign wealth funds later. Concerns about OpenAI's big funding needs and the massive sums that Big Tech companies are spending amid the AI boom have weighed on market sentiment in recent months.

Carvana Stock Slides After Mixed Results

Carvana (CVNA) shares are tumbling ahead of the opening bell after the online used car marketplace reported solid fourth-quarter sales but weakness in some key profitability metrics. Gross profit per vehicle declined year-over-year and came in below analysts' expectations. Carvana said it expects to see "significant" growth in vehicle sales volume and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) this year, with both metrics projected to rise quarter-over-quarter in the first three months of the year. Carvana shares were down 9% recently

DoorDash Surges Despite Weak Earnings

Shares of DoorDash (DASH) are surging after the food and grocery delivery service issued an outlook for order value growth that offset weaker-than-anticipated revenue and profit in the fourth quarter. The platform's gross order value of $29.7 billion and its outlook for that metric in the current quarter each came in above the analyst consensus. Some of the company's tech efforts have hampered its profits recently. DoorDash said it plans to continue spending on integrating the three delivery services it operates around the globe—DoorDash, Wolt, and Deliveroo—into a single platform to make its development process more efficient. DoorDash shares were up more than 6% in recent premarket trading.

Preliminary data shows average tax refunds are larger this year.

bernie_photo/Getty Images

KEY TAKEAWAYS

• The "One Big, Beautiful Bill" is expected to lower the amount owed and increase refunds for 2025 taxes, which are filed in 2026.
• Preliminary data on the 2026 filing season show tax refunds are higher than at the same time last year.
• The IRS is falling behind on processing tax returns compared to the 2025 filing season.

Tax refunds so far this filing season are higher than last year.

The "One Big, Beautiful Bill," passed in July, made more than 100 changes that impact 2025 taxes, which are filed during the 2026 filing season. New tax credits and deductions, such as no tax on tips and overtime and an additional senior deduction, are expected to provide taxpayers with increased refunds or a lower tax burden.

Estimates for how much the average tax refund will increase in 2026 range from $475 to $1,000. The Tax Foundation, a nonpartisan tax policy think tank, estimates the average tax refund will be about $3,800. That is $748 higher than the average refund during the last filing season, the foundation found.

Why This Is Significant

A higher, on-time refund will help many Americans, as many taxpayers rely on their refunds to afford essentials, especially as inflation is still pushing up the cost of many items.

Preliminary IRS statistics from the first couple of weeks of the 2026 filing season show the average refund amount is about $225, nearly 11% higher than at the same time last year.

Refund Amounts In Feb. 7, 2025 Compared to Feb. 6, 2026 20252026% Change Year over YearTotal number of refunds8,054,0007,403,000-8.1%Total amount refunded$16.64 billion$16.95 billion1.9%Average refund amount$2,065$2,29010.9%

These preliminary numbers do not include refunds from tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. To help detect and prevent errors or fraud, the IRS holds returns claiming these tax credits until mid-February, and taxpayers can expect their refunds by March 2.

Once all returns are processed, the average refund amount will generally increase, the IRS said. However, changes between filing seasons are typically greater at the beginning of the year and will even out as more returns are submitted, the IRS said.

For example, the average refund at the same time in the 2025 filing season was 18.6% higher than the 2024 filing season. However, when the 2025 filing season ended in October, the average refund was only 1.6% higher than in 2024, according to IRS data.

The IRS Is Off To a Sluggish Start

Last year, the IRS cut about 27% of its workforce and went through numerous leadership changes. The staffing changes, combined with the introduction of new tax laws through the "One Big, Beautiful Bill," have the potential to disrupt the 2026 filing season and delay refunds, the Taxpayer Advocate Service said last month.

So far, the IRS has processed almost 2.9 million fewer tax returns, or 12.3% less, than at the same time last year.

Returns Processed in Feb. 7, 2025 Compared to Feb. 6, 202620252026 % Change Year over YearTotal returns received23,589,00022,351,000-5.2%Total returns processed23,515,00020,623,000-12.3%

While the IRS has received about 1.2 million fewer returns so far in the 2026 filing season than at the same time in 2025, it is still processing returns more slowly.

In early February 2025, the IRS had processed almost 99.7% of the tax returns it had received. To compare, the IRS has processed nearly 92.3% of the tax returns it has received this February.

The Taxpayer Advocate Service expects a smooth 2026 filing season for most taxpayers, but those who need help deciphering new tax laws or who file their returns incorrectly could experience delays.

"The IRS emphasizes it continues to see a strong filing season with refunds continuing to reach taxpayers as planned," the IRS said in a press release.

According to some forecasts, the annual Personal Consumption Expenditures (PCE) measure will continue rising as companies pass the cost of tariffs along to consumers.

Michael Nagle / Bloomberg via Getty Images

Key Takeaways

• Inflation as measured by Personal Consumption Expenditures is expected to have ticked up in December, according to a widely watched report.
  
• According to forecasts, PCE prices likely rose 2.8% over 12 months, the same annual increase as in November.
  
• One key inflation gauge in this report has exceeded the Federal Reserve's 2% annual target since 2021.
  

The Fed's inflation benchmark likely worsened, not improved, over 2025.

A report from the Bureau of Economic Analysis on Friday will likely show consumer prices as measured by Personal Consumption Expenditures rose 2.8% over 12 months through December, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. "Core" PCE, which excludes volatile food and energy prices, is forecast to rise 3.0%, up from 2.8% in November.

That would put both measures slightly higher than they were in January 2025. The expected rise in core PCE inflation could be especially notable because that's the yardstick the Federal Reserve uses to gauge its 2% annual inflation target.

If the report matches expectations, it could throw some cold water on the optimism that arose in financial markets last week when another inflation measure, the Consumer Price Index, showed a promising slowdown in January.

What This Means for the Economy

Stubbornly high inflation continues to plague the economy, hurting household budgets and keeping interest rates higher than they otherwise would be.

What's more, some forecasters expect the annual PCE measure to continue edging up as companies pass the cost of tariffs along to consumers. Economists at Goldman Sachs, for instance, expect core PCE to rise to 3.05%, which would be the highest since March 2024. (PCE reports are being released a month later than usual because of last year's government shutdown, and the January PCE report will be published in March.)

Officials at the Fed will look at upcoming inflation data, especially PCE, when deciding whether to cut borrowing costs to help boost the job market or keep them higher for longer to wrestle inflation down to the 2% target.

Important

Financial markets currently expect the Fed to cut its key fed funds rate by a quarter-point in June, according to the CME Group's FedWatch tool.

"With inflation well above target for going on five years in a row, policymakers will need more clarity on inflation trends before cutting rates further, especially given that some of the downside risks to the labor market seem to be receding," economists at Deutsche Bank led by Justin Weidner wrote in a commentary. "These data strengthen our view that the Fed will not be able to cut again until later this year."

Federal Reserve Chair Jerome Powell speaks after holding rates steady in January.

Kevin Dietsch / Getty Images

Key Takeaways

• Federal Reserve officials signaled that additional rate cuts are still possible this year, but January’s meeting minutes revealed growing concern about easing policy while inflation remains above 2%.
• With inflation near 2.5% and job growth mixed, the Fed appears firmly on hold for now as it weighs persistent price pressures against moderating employment risks.

The Federal Reserve is still leaning toward cutting interest rates again this year, but the readout of its latest meeting shows all the reasons why it may not.

The minutes of January’s meeting, released on Wednesday, displayed the clear division at the Fed over where it should go next after cutting rates three times in 2025.

Most still think “further downward adjustments” are likely still necessary if inflation keeps decelerating, the minutes show. That’s in line with markets’ current expectations of a couple of rate cuts later this year. 

But with inflation still a bit above the Fed’s 2% target, some central bank officials appeared more reluctant. They argued that cutting rates more than necessary may push up prices again, undercutting their efforts to quell the inflation that spiked in 2022.

“Several participants cautioned that easing policy further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2% inflation objective, perhaps making higher inflation more entrenched,” the FOMC minutes said.

Why This Matters

The Fed’s next move will shape borrowing costs for mortgages, credit cards, and business loans. For investors and consumers, the debate underscores how inflation and jobs data could shift rate expectations this year.

Indeed, several of them even thought the Fed’s communications should remove the current bias toward cutting rates again, the minutes show.

While the Fed kept rates steady at 3.5% to 3.75% in January, its statement said officials would consider the “extent and timing of additional adjustments” —a signal that rate cuts were more likely than not. The minutes released Wednesday showed several “would have supported a two-sided description,” reflecting that rate hikes are just as possible if inflation remains above 2%.

Few analysts see the Fed hiking rates this year, but the minutes nonetheless underline Fed officials’ focus on fully bringing inflation back to 2%. The most recent reading, from December, showed annual inflation was still slightly above 2.5%.

“We must remain focused on our headline inflation objective; otherwise, I believe there is a real risk that inflation will get stuck closer to 3% than 2% in the long run,” Kansas City Fed President Jeffrey Schmid said last week.

Employment Risks Moderating

The Fed’s rate cuts last year were aimed at supporting a job market that was showing signs of weakening. 

But most Fed officials agreed those risks had “moderated in recent months while the risk of more persistent inflation remained,” the minutes said. That assessment came before January’s stronger-than-expected jobs report, which showed U.S. employers added 130,000 jobs and the unemployment rate fell to 4.3%.

A few Fed officials appeared more worried about the job market backtracking—and appeared more confident inflation would keep climbing back down. They cautioned that keeping rates too high could make job losses more likely.

“These participants cautioned that keeping policy overly restrictive could risk further deterioration in the labor market,” the minutes said. 

Fed Governors Stephen Miran and Christopher Waller both voted against January’s decision to keep rates unchanged. In his dissent statement, Waller said job gains in 2025 were “very weak” and that conditions don’t “remotely look like a healthy labor market.” 

With inflation “just slightly above 2% and a weak labor market,” the Fed has room to cut rates a bit further, he argued.

“Employers are reluctant to fire workers, but also very reluctant to hire,” Waller said.

Some analysts agree with that assessment.

“We expect employment growth to drop back to its weak earlier pace over the next few months, putting renewed upward pressure on the unemployment rate,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, wrote on Wednesday.

Inflation “remains the main barrier to additional cuts,” Allen wrote, but those worries should ease in the months ahead as tariff-driven price bumps fade. He sees the Fed cutting rates three times again this year, in June, July and September—all of which would presumably occur under the new Fed chair’s tenure.

The Fed is “firmly on hold…for now,” he wrote.

Investor appetite for hot IPOs may lead to demand for funds that hold stakes in private companies.

Raul Ariano / Bloomberg via Getty Images

Key Takeaways

• A new closed-end fund from Robinhood aims to "open the doors to private investing," chief Vlad Tenev said Tuesday.
• Some institutional investors have started to lean away from private equity as the industry underperforms.

Wall Street is removing the velvet rope from a once-exclusive club. But is the party inside worth attending?

News this week has investors asking that question—in this case, about putting money in companies that haven't gone public yet. Robinhood (HOOD) wants to open up access to private equity for retail investors through a closed-end fund, which raises capital through an IPO and trades on an exchange like a stock.

The move has drawn attention at a time when some private companies sport massive valuations, leading to excitement about what could be massive IPOs. Firms have touted the benefits of private equity in portfolios, saying they enhance diversification and offer higher potential returns historically available only to well-heeled investors. Funds run by star portfolio managers often hold investments in private companies alongside public ones.

Robinhood's goal, CEO Vlad Tenev said Tuesday, is "not just to open the doors to private investing, but to blow them completely off the hinges so that no one can close them ever again."

WHY THIS MATTERS TO YOU

Private equity investments are being increasingly presented to regular investors as things they should want. President Donald Trump in an August executive order called, "Democratizing Access To Alternative Assets for 401(k) Investors" made them available to retirees. Experts say investors should tread carefully.

The Robinhood Venture Fund is expected to list on the NYSE in the coming weeks under the ticker "RVI." Anyone can buy shares, getting access to the companies the fund aims to invest in—including wearable tracker provider Oura Health, expense management platform Ramp and AI startups Databricks and Mercor.io, per RVI's prospectus.

The buy-in, $25 per share, may seem enticing. But there's no guarantee the fund will deliver the returns to make an investment worthwhile. And some institutions and university endowments—well-heeled investors that have long invested private equity—are starting to lean away from the private markets after seeing disappointing returns.

Oregon and Washington's state pension funds recently lowered their target allocations to private equity. And per a Wall Street Journal report, Princeton is lowering expectations for its endowment returns because its private-capital investments have started to lag the broader market, while Harvard is cashing out of its holdings early.

A 2020 academic study by Ludovic Phalippou, a professor at Oxford University's Said Business School, found that private equity funds have returned about the same as broad market stock indexes since at least 2006. Meanwhile, expenses have eaten into those returns: Phalippou estimates that funds raised between 2006 and 2015 collected some $230 billion in performance fees.

The Robinhood Venture Fund, won't charge a performance fee, but the mechanics of closed-end funds and the other fees that it will charge—an average weighted sales load of 3.125% and a 2% annual fee—will compress returns, according to University of Florida professor and IPO expert Jay Ritter. (Robinhood said it would temporarily cut the annual fee after launch.)

If investors buy one share at $25, they will effectively get $24.22 of net asset value after accounting for the sales load, Ritter said in an interview with Investopedia. If the fund trades at a 10% discount to NAV, which is typical of closed-end funds, then that drops to $21.80, he said.

Even without accounting for a 2% annual fee, Ritter estimates that the the portfolio would have to outperform by roughly 13% for investors to break even. The S&P 500 returned about 16% last year.

The reason why private equity has until recently remained in the domain of the very wealthy or big institutions is because "the SEC has historically focused on investor protection," Ritter said. "If you're rich and you lose $100,000 you don't worry about where your next meal is coming from."