Investopedia Markets News (all except PF)

Another trading break is right around the corner.

U.S. stock and bond markets are closed Monday, Feb. 16, to mark Presidents' Day, which is when the birthday of former President George Washington is observed.

Monday is the last trading holiday until April. Here's the 2026 holiday trading schedule through the start of the summer:

• Monday, Feb. 16 (Presidents' Day/George Washington's birthday observed): Stock and bond markets closed
• Friday, April 3 (Good Friday)—Stock markets closed; bond markets close at noon
• Monday, May 25 (Memorial Day)—Stock and bond markets close; bond markets close at 2 p.m. on Friday, May 22

Several more trading holidays, starting with Juneteenth, are set to follow in 2026.

• The toy business rebounded last year, according to a recent report, with shoppers both buying more things and spending more on them.
• Much of the growth has come from adults, many who are buying for themselves, according to industry data and experts.

The toy business has shaken off a slump. You can thank the grownups. 

After a period of declining sales exacerbated by tariffs turbulence and softer household spending on discretionary purchases, the toy industry appears to have rebounded from a two-year decline with a pickup in sales in 2025, according to a report from market research firm Circana.

Shoppers not only bought more toys and games last year, but they also spent more, according to Circana, which said U.S. dollar sales came to more than $45 billion. “The U.S. toy industry regained its footing in 2025, fueled by renewed consumer demand and a clear shift toward higher‑value purchases,” wrote Juli Lennett, toys industry advisor at Circana.

Games and puzzles saw double-digit dollar sales growth last year, driven primarily by Pokémon, building sets and trading cards, Circana said. Those three “supercategories,” along with toy purchases associated with pop culture, contributed to 92% of all toy industry growth in 2025.

Recently catch yourself eyeing an expensive Lego set in a toy store? You're not alone. Adults—of all ages—are increasingly buying toys, games and related collectibles, often for themselves. That's helped some companies protect profit margins as adults buy comparatively expensive stuff.

Previously popular categories like plush and dolls were among the steepest decliners. Despite the viral frenzy ignited by Labubus last year, Circana told Investopedia that plush toy sales peaked in 2024 with Squishmallows. 

Adults are increasingly buying toys for themselves. Circana said the toy market is being propelled by older consumers: People aged 18 and older in 2025 represented about a fifth of all toy sales, or about $9.1 billion, up nearly 20% year-over-year.

Older kids, young adults, Millennials and GenX are reaching for boardgames and toys, including nostalgic properties, according to Ali Mierzejewski, editor-in-chief of The Toy Insider.

“Games and puzzles really took off during the pandemic,” she said. “From there, we’ve seen a cultural shift in the way people view toys—and that you’re never too old to reap the benefits that play gives you.”

Scooter maker Razor plans to soon unveil an adult version of a go-kart-like toy it says has already sold more than 1 million units. Binho has created kidult-friendly tabletop soccer games that substitute fingers for legs. Hasbro is also expected to soon unveil a new line of kidult products.

Quarterly results from industry leaders illustrate some of the challenges and opportunities facing the business.  

Shares of Mattel (MAT), which owns iconic properties including Barbie, Hot Wheels, Fisher-Price and American Girl, plunged this week after the company reported a disappointing year-end quarter, citing order delays tied to tariffs, and warned about its profit outlook.

Hasbro (HAS), owner of Transformers, Nerf and My Little Pony, reported better-than-expected quarterly results on Monday. The company said its customers didn’t balk at higher prices for its products as it logged year-over-year increase in revenue and profit. 

Toymakers are preparing to share their newest products this weekend at the New York Toy Fair, one of the industry’s biggest trade shows. The four-day event showcases products expected to arrive in stores later this year.

Mierzejewski expects consumers will see entertainment and licensed properties dominate new toys in 2026, citing the sustained popularity of KPop Demon Hunters, a Pokemon anniversary, and new Mario and Toy Story movies. 

“All of these are cross-generational opportunities for toymakers,” she said. 

• Shares of Apple dropped 5% Thursday after a string of bad news. The latest: Federal regulators sent Apple a warning letter Thursday about its news app.
• A day earlier, Bloomberg reported some of Apple's AI features have been delayed.

It was a rough day for Apple.

Shares of the tech giant and Magnificent Seven stock slumped 5% Thursday, the stock's worst session since April, on what was already a rough day for tech shares. The drop followed a string of bad news, as the company's news app drew the ire of federal regulators and reports emerged that its latest AI efforts could face delays.

The Trump administration hasn't been shy about engaging with U.S. companies—even some of the country's biggest and most valuable—in support of policy goals. Apple today caught the government's eye, leaving unanswered questions that led to a decrease in its value.

The Federal Trade Commission on Thursday said it sent a letter to Apple (AAPL) CEO Tim Cook about the company's Apple News app, warning it could violate the law if found to be misrepresenting its terms of service and accusing it of systemically favoring "left-wing" news outlets over conservative ones.

The development raised worries that the company's relationship with the Trump administration could be fraying. The iPhone maker made inroads last year with its investments in U.S. manufacturing.

Bloomberg, meanwhile, reported Wednesday that an AI-enhanced Siri upgrade has been delayed, adding to concerns the iPhone maker has lagged peers with its AI efforts. Apple could not be reached for comment in time for publication.

Thursday's losses erased much of Apple gains in the last few weeks, after the iPhone maker posted  record revenue for the holiday quarter, driven by strong iPhone and services revenue. Apple's shares are in the red for 2026 so far.

• U.S. consumers are shouldering the vast majority of the cost of President Donald Trump's tariffs, according to a pair of analyses this week.
  
• The research contradicts Trump's statements that foreign companies are paying the import taxes.
  

If you were wondering who is paying for President Donald Trump's sweeping import taxes, look in the mirror: nearly every penny ends up coming out of U.S. consumers' pockets.

That's according to a pair of research reports this week by the Federal Reserve Bank of New York and the Congressional Budget Office, both of which found that the burden of tariffs was falling hardest on Americans, not foreigners.

The research sheds light on one of the main points of contention about the tariffs Trump imposed on nearly every U.S. trading partner last year: The findings differ from statements by members of the Trump Administration who say foreign companies and entities are absorbing much of the cost.

As of November, importers were paying 86% of the import tax costs, meaning the vast majority of tariff costs fell on U.S. companies and consumers, researchers at the Federal Reserve Bank of New York said Thursday.

The researchers analyzed trade data collected by the Census Bureau. They found importers always pay the tariffs, but exporters can effectively bear the costs themselves if they cut their prices, which they have only done slightly.

"U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025," Mary Amiti, head of labor and product markets at the New York Fed's Research and Statistics Group, wrote in a blog post sharing the findings.

Supporters of the tariffs, however, say that data may be misleading. Federal Reserve Governor Stephen Miran, who served as Trump's chair of the Council of Economic Advisers before the president appointed him to the Fed in September, addressed the concept Monday.

“It's entirely inappropriate to say that we can conclude from those data…that U.S. agents are bearing the burden of the tariff, because some of those companies are actually subsidiaries of foreign companies," Miran said, according to Reuters.

On Wednesday, the Congressional Budget Office estimated that foreign companies were paying only 5% of the tariffs, leaving U.S. companies and consumers to pay the remaining 95%. The CBO went further and estimated that U.S. companies only paid 30% of the tariff burden, passing the rest on to consumers.

What's more, the nonpartisan research group concluded that the tariffs will allow U.S.-based competitors to raise their own prices, offsetting whatever costs the companies absorbed.

Some members of Trump's own party have expressed concerns about the economic effects of the tariff policies.

On Wednesday, the Republican-controlled House of Representatives voted to end the state of emergency that Trump used to justify the tariffs on Canada that he announced shortly after taking office last year. The vote was nearly along party lines, with six Republicans breaking ranks.

The measure was largely symbolic because even if passed by the Senate, it does not have enough support to override a presidential veto.

• Palantir shares tumbled Thursday, extending their recent slide as the data analytics software provider's stock gained another bearish call from high-profile investor. 
• Michael Burry, who inspired the film and book "The Big Short," said he believes the stock is overvalued, based on his analysis of the company's fundamentals.

The bears have been piling into Palantir lately.

The stock fell nearly 5% to around $129 today, extending this year's declines, after former founder and CEO of Scion Asset Management Michael Burry, who inspired the film and book "The Big Short," suggested it was worth as little as $46, based on his analysis of the company's fundamentals.

"I believe Palantir's recent winning streak will not endure," Burry reportedly wrote in a Substack newsletter Thursday, citing its high spending and suggested the company inflated its margins, among other things. Though Burry said he's not currently shorting Palantir (PLTR), he has put options on the stock.

Burry's criticism could deal another blow to sentiment surrounding Palantir's stock, which has slumped from its November highs. Wall Street analysts, meanwhile, are still bullish about the shares, which in recent years have been high fliers.

Burry isn't the only one on Wall Street who's voiced concerns about Palantir's valuation lately. The stock logged a torrid 2025 as the company's revenues surged, lifted by the growing popularity of its flagship Artificial Intelligence Platform. Burry and Palantir could not be reached in time for publication.

Of the eight Wall Street analysts with current rating tracked by Visible Alpha, only half recommend buying Palantir's stock. The other half have "hold" ratings amid some worries the shares may have surged too high, too fast. The stock more than doubled in 2025, after soaring 340% in 2024.

None are as bearish as Burry, however. Visible Alpha's lowest price target, $180, is still nearly four times as high as Burry's estimate, though well off the stock's November highs.

With Thursday's losses, shares have Palantir are down nearly 40% from their November record. The stock jumped earlier this month after the company reported earnings and an outlook that cheered investors, but the shares have since moved below their pre-earnings price.

Read Investopedia's full daily markets roundup here.

• If you buy market folklore about January being an indicator for the rest of the year, the start of 2026 bodes well for small-cap stocks.
• The table is set for a "positive surprise" in small caps, according to State Street's Michael Arone.

A stock market surprise almost a decade in the making could arrive this year.

Experts have time and again called for small-company stocks—roughly defined as those with market capitalizations below $2 billiobn—to outperform large-company shares. And they've been wrong for the past nine years. This year, according to State Street chief investment strategist Michael Arone, that could change.

If it does, investors will likely be caught off guard: They pulled some $12 billion from small-cap ETFs over the past year through the end of January, according to Arone. Meanwhile, the Russell 2000, an index of small-cap companies, has risen 8% year-to-date, well ahead of the Russell 1000 or S&P 500.

Arone offered that as one of three 2026 predictions in a recent report, the other two being that healthcare stocks will outperform the broader market, and that inflation will undershoot expectations.

The so-called smart money, also known as institutional investors, has been tilting portfolios away from U.S. large-cap stocks lately—moves that would appear prescient alongside financial experts' calls for bigger relative returns from underappreciated pockets of the broader market.

Market folklore—that January is an indicator for the rest of the year—signals small-cap outperformance, but a slew of fundamental and macroeconomic factors could also put the wind in small-company sails, including a weaker dollar and deregulation boosting IPO activity, Arone wrote earlier this week.

Expectations of lower interest rates also bode well for small-cap companies, and the impact is becoming more visible: "Interest expense for small companies has been declining and should continue to fall as the Fed extends its rate cutting cycle," he said.

Lower rates would boost small-cap profitability, and consensus estimates for small-cap earnings for 2026 exceed large-cap companies', he said.

That said, the Federal Reserve Open Market Committee isn't expected to lower rates this year until June, according to CME FedWatch, when Chair Jerome Powell's term ends and his successor—Trump's nominee is Kevin Warsh—steps in.

The Bureau of Labor Statistics' consumer price index report on Friday should show relatively lower price increases for the month of January. Rising oil prices, which have historically coincided with higher inflation, may not instill much confidence in investors. But Arone expects the jump in oil prices, primarily driven by concerns of supply disruption related to geopolitical tensions, will be "short lived." Arone's predicts that tariff-related price increases will drop off by the middle of the year and that ultimately, "inflation surprises to the downside."

Another set of underloved stocks that could deliver big gains: healthcare. ETFs tracking the sector have seen net inflows of just $537 million in the 12 months ended January, while the industrials sector had some $10.6 billion, Arone said. That would make sense given the sector's lackluster performance lately, which has driven its overall weight in the S&P 500 to a 40-year low, he said.

The Health Care Select Sector SPDR ETF (XLV) over the past five years produced the second-lowest returns of the other sector funds, behind just real estate. So far this year, it's in the middle of the pack.

The sector's depressed valuations relative to the broader stock market makes for a "compelling" opportunity, Arone said. Investors appeared to favor so-called value stocks as last week's volatility drove them to tweak their portfolios. That health care stocks tend to outperform the broader market in mid-term election years also bodes well for the sector this year, he said.

• Crocs shares surged on Thursday after the footwear maker's fourth-quarter results topped Wall Street estimates.
• International and direct-to-consumer sales grew in the quarter, while sales in North America and through its wholesale partners fell.

Crocs were cool with investors on Thursday.

Shares of the footwear maker soared 19% after the company reported better-than-expected fourth-quarter results. The company's revenue of $958 million and adjusted earnings per share of $2.29 were both down from a year earlier but came in above the consensus estimates of analysts compiled by Visible Alpha.

Crocs (CROX) said its wholesale revenue fell more than 14% in the quarter, while direct-to-consumer revenue grew by nearly 5%. International sales rose 14%, while its North American business was down about 7% for the period.

Thursday's jump suggests investors are bullish on Crocs' international sales results and plans to cut costs as the company works to return to sales and profit growth.

CEO Andrew Rees said the holiday season was better than the company had expected. He also said Crocs has identified about $100 million in costs it can cut this year to become more efficient while still investing in its namesake brand and Heydude shoes.

Crocs expects first-quarter revenue to be down 3.5% to 5.5% from a year ago, with adjusted EPS of $2.67 to $2.77, while analysts estimate a 3.5% revenue decline and $2.66 adjusted EPS. The company forecasts full-year sales between a 1% decline and a slight gain, and adjusted EPS between $12.88 to $13.35—both better than the analyst consensus.

The company has been cutting costs for a while. In August, Crocs said it cut $50 million in costs in the first half of last year amid concerns about the impact of tariffs on its sales and margins. Crocs shares plunged nearly 30% in one day following the release of that earnings report.

Thursday's gain was the biggest for Crocs since its quarterly report a year ago, when results handily topped estimates. Crocs shares, which are back to their August levels, have risen 11% over the past 12 months following today's surge.

• Several Federal Reserve officials said the central bank should keep interest rates at current levels while monitoring further progress on inflation.
• Inflation remained their key concern following better-than-expected jobs data.
• Tariffs could also continue to fuel inflation, though officials debated how much they will drive price increases.

The job market is showing signs of stability. Now, if the Federal Reserve can only get inflation under control. 

Employers added 130,000 jobs in January, surprising economists. But some Fed officials this week said their focus remains on elevated prices as the central bank looks at whether more interest rate cuts are needed for the economy. The comments come ahead of this Friday’s release of January inflation data, following the December report that showed annual price increases of 2.7% remained well above the Fed’s target. 

“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,” said Kansas City Fed President Jeffrey Schmid in a statement.

But just because the job market is strong doesn’t mean that there isn’t more room to cut interest rates, Fed Governor Stephen Miran told Fox Business after Wednesday's jobs numbers were released.

Miran has pushed for larger interest rate cuts since President Donald Trump appointed him to fill a vacancy at the Fed last year. He said on Wednesday that fewer regulatory burdens on the U.S. economy would help it produce more, which would lower prices and give the Fed the opportunity to further cut rates.

If the Federal Reserve holds interest rates at their current levels, that will keep borrowing costs higher for longer. That has the potential to affect everything from mortgage and credit card rates to stock valuations, since the expectation of future rate cuts often drives market moves.

“I view there being a variety of reasons to why I want to see lower interest rates,” Miran said. “While today’s job data made me feel really good about the economy, I think the truth is that pushing out the supply side of the economy still allows for monetary policy to accommodate that.”

Schmid, along with other regional central bank presidents, said that the Federal Reserve should keep interest rates at their current levels while they watch for inflation to subside. Dallas Fed President Lorie Logan said that the federal funds rate is near its “neutral” point, where it neither constrains nor stimulates the economy.

The central bank kept interest rates steady at its most recent meeting in January after cutting interest rates at the prior three meetings. Investors are pricing in a strong likelihood that the Fed will again hold rates steady when it issues its next decision on March 18, according to the CME FedWatch Tool.

“Looking ahead, I anticipate we’ll see progress on inflation this year,” Logan said. “But I am not yet fully confident inflation is heading all the way back to 2%.”

Cleveland Fed President Beth Hammack also said the Fed should keep rates where they are, given that inflation remains high. She added that the tariff policies championed by Trump will still likely affect inflation.

“One notable development over the last year has been the rise in goods inflation, especially for items that are more exposed to global trade,” Hammack said. “While some firms have already passed these costs along, others say that more price increases are coming.”

But in separate remarks earlier this week, Miran argued the impacts of tariffs on the U.S. economy have been “quite muted,” according to a report from Reuters. In comments at the Boston University Questrom School of Business, Miran said that he disagreed with reports indicating that American consumers were largely bearing the brunt of Trump’s tariffs. 

• McDonald's will continue to experiment with menu items that appeal to high-income consumers, who are expected to increase their visits to fast-food restaurants this year, according to executives.
• On the flip side, McDonald's expects lower-income consumers to "continue to be under pressure" this year.

The well-off are still hitting the drive-thru, and McDonald’s wants to make sure its theirs.

Higher-income consumers are increasingly trading down, substituting meals at full-service restaurants with less expensive outings to chains like McDonald’s. It's a trend that's been visible across industries in recent years—and McDonald's is eager to keep serving those customers.

“On the premium side, we’re going to have menu innovation that I think is going to continue to appeal to the upper-income consumers,” said CEO Chris Kempczinski on the fast-food giant’s fourth-quarter earnings call Wednesday evening. 

Elevated inflation and economic uncertainty has caused middle- and upper-income consumers to visit low-cost retailers and restaurants more often. McDonald's and other fast-food chains are attempting to attract higher-earners to offset pressure on the lower-income consumers who make up the bulk of their base.

Kempczinski said in November that traffic among upper-income consumers was “up almost double digits” across the quick-service industry, and that McDonald’s was gaining share among high earners. Kempczinski on Wednesday estimated mid-single digit growth among upper-income consumers this year. 

Growth with those diners has helped offset softness among lower-income consumers, who are feeling the pressure of years of elevated inflation and a steadily weakening labor market. “That low-income consumer is going to continue to be under pressure” in 2026, said Kempczinski on Wednesday.

Kempczinski said he hopes new items in two high-priority categories—beverages and chicken—will be among those that attract higher-income diners to the value-focused chain. The company is also eyeing opportunities to add “energy, indulgent iced coffees, fruity refreshers, and crafted sodas” to its menu this year, according to Kempczinski. 

The beverage category is particularly attractive to McDonald’s as a driver of “check”—the dollar amount a diner spends in one visit—and margins.

“It’s check add-on,” said Kempczinski in November. New drink offerings helped drive “higher average check” in more than 500 test locations last quarter, according to Jill McDonald, head of McDonald’s Restaurant Experience team. With the success of that test, the company plans to roll out a new beverage line later this year. 

The chicken category, meanwhile, is “two times the size of beef and faster growing,” said McDonald on Wednesday. McDonald’s reintroduced McCrispy chicken strips and its popular chicken-filled Snack Wraps this year as part of efforts to keep up with rapidly growing competitors like Raising Cane’s, Chick-fil-A, and Dave’s Hot Chicken. McDonald on Wednesday said the company is on track to grow its share of the chicken category by one percentage point before the end of 2026.  

• Cisco shares tumbled Thursday after the networking giant's latest quarterly results showed rising memory costs squeezed its margins.
• A memory shortage has driven up costs, forcing Cisco to raise its prices and renegotiate contracts.

Networking giant Cisco Systems is the latest tech firm to see its stock drop after revealing it's grappling with the impacts of a global memory shortage.

Shares of Cisco (CSCO) were down over 10% in recent trading, a day after the company reported fiscal second-quarter revenue and earnings per share that topped analysts' estimates, but its gross margin fell short as memory costs surged.

Cisco's adjusted gross margin of 67.5% slipped from 68.7% a year ago, and the company warned it could slide to 65.5% to 66.5% in the current quarter.

Prices for advanced memory components have climbed in recent months amid a worsening shortage as demand for AI hardware booms. That's helped shares of companies that make the parts, but weighed on stocks of companies squeezed by rising costs.

CEO Chuck Robbins said during Wednesday night's earnings call that Cisco is taking a number of steps to address the impact of higher memory costs, including raising prices and renegotiating contracts with partners. Robbins also said he expects the company's scale and influence could help it "manage this industry-wide dynamic better than our peers," according to an AlphaSense transcript.

Thursday's drop dragged Cisco shares into negative territory for the year. Still, the shares have added close to 20% over the last 12 months.