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• Middle-income shoppers are exhibiting some of the signs of stress that low-income households have for some time, according to the supermarket giant Kroger.
• Consumers are stretching their budgets by making smaller, more frequent purchases and buying fewer discretionary items, the company said.

A trip to the store isn’t as fruitful as it used to be.

Many consumers aren’t able to buy as many items on grocery runs, and are making multiple, smaller shopping trips, according to supermarket operator Kroger (KR). Middle-income households are stretching their budget across multiple visits, while pressure mounts on the low-income households who have been behaving this way for months, interim CEO Ronald Sargent said Thursday during a conference call with investors following the release of quarterly results.

“Middle-income customers are feeling increased pressure," Sargent said, according to a transcript made available by AlphaSense. “They're making smaller, more frequent trips to manage budgets, and they are cutting back on discretionary purchases."

Fewer people bought meat, where inflation has been particularly intense, as well as discretionary items like snacks and alcohol, Sargent said.

Consumers are reacting to a number of concerns, he said, including a sluggish job market, the government shutdown, the interruption of Supplemental Nutrition Assistance Program benefits, and inflation. Pressure is most acute for low-income households, retailers said.

Low-priced products are critical for low-income shoppers, who are focused on keeping their total spend down, rather than on value or price-per-unit, Dollar General (DG) CEO Todd Vasos said on a conference call Thursday. Sales in Dollar General’s $1 sections grew 7.6% year-over-year last quarter, while same-store sales rose 2.5%, Vasos said.

“The consumer still needed to feed her family” during the SNAP stoppage and used cash, Vasos said, according to a transcript. “As those benefits flowed in, we also then got the SNAP benefit on the second part of the month. So, quite frankly, [that] was a net positive for us.”

Retailers are working through tariffs and rising costs, and in many cases raising at least some of their prices. But increasing prices too much could be problematic during a time when even the well-to-do are shopping at discount stores.

Dollar Tree (DLTR) saw traffic drop amid “sticker shock” this back-to-school shopping season, when the chain raised prices in response to inflation, CEO Michael Creedon Jr. said on a conference call this week. Customers have since returned, he said. But all of the chain’s 4.2% year-over-year growth in comparable store sales last quarter came from pricier purchases, given that traffic was down.

“Consumers are feeling much more uncertain than they have in a very long time,” said Elizabeth Lafontaine, director of research at Placer.ai, which tracks retail foot traffic.

Kroger, Walmart (WMT) and Target (TGT) are trying to put shoppers at ease by announcing price rollbacks. Still, staples feel expensive for many after several years of above-target inflation. 

Price cuts are also part of the competition for affluent Americans, who are increasingly price sensitive, but still spending enough to be the force behind most of our economic growth. The well-to-do are more frequently buying from dollar stores and value-oriented companies.

The K-shaped economy—where the wealthy are comfortable spending, but others are not—is deepening the difference between trends at Walmarts in wealthy areas and those in low-income communities, CFO John David Rainey said at a conference this week.

“The disparity in wage growth between those income cohorts was as large as it’s been in almost a decade,” Rainey said, according to the transcript. “We see that in our customer base.”

• Strong quarterly results boosted a beauty retailer on Friday, Dec. 5, 2025, while a massive buyout sent ripples across the streaming industry.
• Netflix said it agreed to buy Warner Bros. Discovery's studio and streaming business, sending Warner Bros. Discovery stock higher, while Netflix slid and rival suitor Paramount Skydance tumbled.
  
• Ulta Beauty shares surged as a recent acquisition, new store openings, and resilient cosmetics demand helped drive better-than-expected earnings.

A strong quarterly report helped drive big gains for a retailer of make-up and other beauty products, while the end of a high-profile bidding war made waves in media and entertainment.

Major U.S. equities indexes moved higher Friday after a key inflation report came in lower than anticipated, reinforcing expectations of an interest rate cut when the Federal Reserve meets next week. The S&P 500 and the Dow edged 0.2% higher to near their all-time highs, while the Nasdaq rose 0.3%. See here for more from Investopedia on the day's market moves.

Ulta Beauty (ULTA) shares surged nearly 13%, gaining the most of any S&P 500 stock, after the cosmetics retailer reported better-than-expected earnings and hiked its full-year forecasts. The beauty category has seen resilient demand even as economic uncertainty weighs on other retail segments. An increase in transactions and average ticket values from a year ago, along with the acquisition of British luxury cosmetics firm Space NK, and new store openings helped drive Ulta's strong performance.

Moderna (MRNA), which derives the bulk of its revenue from its COVID-19 vaccine, saw its stock jumped close to 9% following the release of a long-term study in France indicating that the vaccine is safe and effective. The nationwide study reviewed data from around 28 million people and determined that those who received the Moderna or Pfizer (PFE) vaccine had an approximately 75% lower risk of dying from COVID-19 compared with those who were unvaccinated. Pfizer shares climbed about 1%.

Medical device maker Cooper Companies (COO) surpassed quarterly earnings forecasts and provided an upbeat outlook. The contact lens and surgical products specialist also announced a comprehensive strategic review aimed at simplifying its business. Cooper Companies shares climbed around 6%.

Shares of dollar-store operators extended their recent gains following strong earnings reports that revealed traction among customers from various income levels seeking deals. Shares of Dollar Tree (DLTR) and Dollar General (DG) each added about 6% in Friday's trading session.

Entertainment giant Netflix (NFLX) said it agreed to buy Warner Bros. Discovery's (WBD) in an $83 billion deal. Warner Bros. Discovery plans to proceed with its plans of spinning off its cable and TV channels into a separate business, with Netflix set to take over the remaining studio and streaming operations. The news weighed on shares of Paramount Skydance (PSKY), which also made a bid for Warner Bros. Discovery. Paramount shares lost nearly 10%, marking the steepest loss in the S&P 500. Netflix shares slipped about 3%, while Warner Bros. Discovery stock climbed more than 6%.

Shares of commercial property and casualty insurer W.R. Berkley (WRB) fell close to 6% after the company announced Japanese firm Mitsui Sumitomo Insurance has acquired at least a 12.5% stake as part of previously announced agreements.

• SoFI's stock is down Friday afternoon after announcing a share sale.
• The company's stock is still riding high after beating analysts earnings expectations for seven of the last eight quarters.

SoFi's been on a winning streak. Today's it's taking a breather.

Shares of SoFi Technologies (SOFI), a fintech-turned-bank, are taking a hit after a $1.5 billion share sale announcement on Thursday caught investors and analysts off guard. The most recent capital raise was its second in six months. Still, its stock remains aloft, nearly doubling so far this year.

The company has been riding high on its achievements over the last two years, with seven of its last eight quarterly reports beating analyst earnings expectations, according to Visible Alpha. And the company plans to invest in its existing businesses, relaunch crypto trading, and expand its product offerings—good reasons to have cash on hand.

SoFi plans to expand its offerings in the coming year. That could boost its stck, but the shares have rallied for much of 2025, sitting near all-time highs, and have recently slid after the company announced a share sale to raise capital. Some analysts believe the fintech could qualify for S&P 500 membership, which could also give the shares a lift.

SoFi's second capital raise in two quarters wasn't widely expected. Keefe, Bruyette & Woods analyst Tim Switzer said in a recent note that he was "a little surprised" since the latest share sale followed another of the same amount in July. That said, the firm's capital levels are low compared to bank peers, according to Switzer.

"We believe the raise is largely opportunistic given the stock is near all-time highs," Switzer wrote yesterday.

The company priced the shares at $27.50 apiece, just a touch below their November all-time high of around $32. Visible Alpha's Street consensus target is just under $26, perhaps an indication that the company managed a good price—though the Street's outlook on the shares, based on ratings, is broadly neutral. The shares closed 6% lower, at $27.78.

SoFi started out as a fintech company primarily offering student loan refinancing, but has since transformed into a full-service bank offering bank accounts, personal loans and investment products. It also relaunched a crypto trading platform last month after pausing that service in 2023 as it was securing its national bank charter. SoFi plans to launch its own branded stablecoin next year, according to the company.

"There's more happening at SoFi today than at any other time in my eight years with the company," SoFi's chief Anthony Noto said in its third-quarter earnings call late October.

SoFi announced a share sale set to close on Dec. 8. An earlier version of this article incorrectly said the sale had already taken place. This article has also been updated to reflect closing share prices.

• In the last two weeks, stocks have rebounded from their November sell-off, buoyed by increased optimism that the Fed will cut interest rates next week.
• Tech stocks, weighed down by concerns about an AI bubble, underperformed the broader market last month in a potential sign of "a change of leadership heading into 2026," according to Bank of America.

The stock market may not be roaring into the most wonderful time of the year, but it is chugging along. Its next big test, however, is right around the corner.

Investors' attention has for days largely been fixed on Wednesday's rate decision from the Federal Reserve. Rising optimism that the Fed will cut at its last meeting of 2025—based on futures market data, it's viewed as a near-certainty—has helped the major indexes recover most of the ground they lost during the volatile first three weeks of November; the major U.S. indexes are within a few percentage points of fresh records as this week draws to a close.

A lot changed below the surface last month. The Magnificent Seven group of tech heavyweights— Nvidia (NVDA), Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META) and Tesla (TSLA)—nearly entered a technical correction as investors debated whether big tech was spending too much on artificial intelligence. On Nov. 20, a blowout earnings report from Nvidia failed to put AI bubble fears to rest, and the Roundhill Magnificent Seven ETF (MAGS) closed the day 9% below its record high. 

It's not that long ago that there was serious doubt among investors about whether the Fed would cut rates at its December meeting, the last of the year. Now it's seen as a virtual certainty. That might increase investor appetite for risk assets, but in the runup to the meeting a broader slice of stocks has been climbing.

This year’s least-loved sectors, meanwhile, including healthcare and energy, became leaders. More than 60% of stocks in the S&P 500 outperformed the index last month, compared with just 33% since the start of the year, suggesting “a change of leadership heading into 2026,” according to Bank of America analysts. Eight of the S&P 500's 11 sectors outperformed the broader index, they wrote, while tech lagged.

The Dow Jones Transportation Average, an index that tracks the stocks of companies that move goods and people around the country, rose for a tenth consecutive day on Friday. According to Dow Theory, that's a bullish sign for stocks if observed alongside a rising Dow Jones Industrial Average. (The Dow Industrials rose on Friday, and is up nearly 5% over the past two weeks.)

Fed officials are divided on how to proceed. Some policymakers fear that cutting rates too aggressively will stoke inflation, which has run above the Fed’s 2% target for more than four years and reaccelerated in recent months. Others fear that leaving rates unchanged will harm the weakening job market, potentially tipping the U.S. economy into recession. The government shutdown delayed the release of several vital economic reports, leaving officials no choice but to fly partially blind next week. 

The most recent official labor market data that policymakers have sent mixed signals, but data from private sources suggest the job market has continued to soften. The private sector shed 32,000 jobs in November, according to payroll provider ADP. Employers announced more than 150,000 layoffs in October, the highest number for that month since 2003. 

Wall Street generally expects the Fed will prioritize employment over inflation next week, moving to bring rates lower. Investors see an 87% chance the Fed cuts interest rates, according to federal funds futures trading data. Just two weeks ago, that figure was 30%.

Update—December 5, 2025: This article has been updated to reflect the end of trading on Friday.

Major U.S. equities indexes rose Friday afternoon after key inflation data came in lower than expected, boosting hopes the Federal Reserve will decide to cut interest rates next week. The S&P 500 and Dow edged up about 0.1% to near their all-time highs. The Nasdaq also ticked 0.1% higher.

Ulta Beauty (ULTA) was the best-performing stock in the S&P 500, with shares up about 14% after the cosmetics and fragrance retailer posted better-than-expected quarterly results and raised its outlook.

Shares of Victoria’s Secret (VSCO) also took off, jumping 11% after the lingerie retailer reported strong earnings and hiked its guidance, citing lower promotional costs and higher prices.

Salesforce (CRM) climbed over 5%, extending its recent gains after the software giant posted better-than-expected earnings with a boost from growing sales of its Agentforce AI offerings and Data 360 products.

Paramount Skydance (PSKY) shares slumped nearly 8% after it lost a bidding war for Warner Bros. Discovery’s (WBD) film and streaming properties to Netflix (NFLX). Shares of Netflix were 3% lower, while Warner Bros. Discovery shares gained 2%.

W.R. Berkley (WRB) shares tumbled 7% after the insurer announced that Japan’s Mitsui Sumitomo Insurance took a 12.5% stake in the firm.

Oil and gold futures advanced. The yield on the 10-year Treasury climbed to 4.13%. The U.S. dollar rose versus the yen, but lost ground to the euro and pound. Most major cryptocurrencies lost ground. 

• Ulta Beauty posted better-than-expected quarterly results, with sales getting a boost from increasing transactions and higher average spending.
• The beauty retailer also boosted its full-year outlook.

Ulta Beauty (ULTA) shares surged to a record high on Friday after the cosmetics and fragrance retailer posted earnings that topped analysts' estimates and raised its outlook.

The stock was up over 14% in recent trading, on track to finish the week at an all-time high and leading gains in the S&P 500. (Read our daily markets coverage here.) 

Ulta Beauty reported third-quarter earnings per share of $5.14 on revenue that jumped 12.9% year-over-year to $2.86 billion. Both figures exceeded analysts' expectations as the beauty retailer said its growth strategy and purchase of British luxury cosmetics seller Space NK were paying off.

Comparable store sales climbed 6.3%, boosted by a 3.8% rise in average ticket and a 2.4% increase in transactions. The company said its revenue gain was primarily driven by those higher comparable sales, the acquisition of Space NK, and the addition of new stores.

Beauty has been among retail’s most resilient categories, outperforming apparel and other goods as consumers continue to spend on cosmetics, fragrances, and skin care. Ulta's strong traffic, higher ticket values, and improved guidance suggest resilient demand while other parts of retail struggle to attract anxious consumers.

"Exciting assortment newness, improved in-store and digital experiences, and bold marketing efforts are resonating with our guests," said Ulta CEO Kecia Steelman.

Ulta and Victoria's Secret (VSCO), which also reported better-than-expected earnings Friday, may be benefiting from the so-called "lipstick effect," which describes the consumer's tendency to maintain spending on smaller indulgences like cosmetics and lingerie even when broader economic conditions are uncertain.

Ulta Beauty now sees full-year EPS of $25.20 to $25.50, and sales of about $12.3 billion. Previously, it anticipated EPS in the range of $23.85 to $24.30, and sales of $12 billion to $12.1 billion.

With Friday's gains, shares of Ulta Beauty have added nearly 40% of their value in 2025.

• Netflix on Friday agreed to buy the studio and streaming service of Warner Bros. Discovery, beating out rivals Paramount Skydance and Comcast.
• Shares of Warner Bros. Discovery rose Friday morning, but traded nearly 10% below the $27.75 acquisition price, suggesting some skepticism about the deal on Wall Street.
• Paramount and Netflix stocks both fell Friday, as did the stocks of movie theater chains AMC and Cinemark.

One of the most closely watched bidding wars of the year is over—maybe.

Netflix (NFLX) on Friday agreed to buy the movie studio and streaming service of competitor Warner Bros. Discovery (WBD) in a deal valued at nearly $83 billion. The deal is expected to close after Warner Bros. Discovery spins off its cable division as a separate company in the third quarter of next year. When complete, Warner Bros. Discovery shareholders will receive $27.75 per share.

Netflix shares opened sharply lower on Friday morning before paring back some of their losses to trade down less than 1%. The shares of an acquiring company often fall on news of a deal, because the acquirer usually pays a premium.

The stock price of an acquiring company often falls as investors assess the deal's terms, which usually require the buyer to pay a premium. When a target company's shares trade below the offer price, it may reflect concerns that the deal could face regulatory hurdles.

Shares of Warner Bros. Discovery climbed about 3%, but remained below the acquiring price, indicating investors see some risk of the deal falling through. The White House and federal regulators have reportedly expressed opposition to the deal on the grounds it could make Netflix too dominant in streaming. 

Shares of Paramount Skydance (PSKY), Netflix’s top competition in the bidding war, were down 5% Friday morning. The company, formed earlier this year by the merger of Skydance Media and Paramount Global, accused Warner Bros. Discovery of conducting an unfair bidding process, according to reports Thursday. Paramount Skydance’s close ties to the White House—the company is run by the son of Larry Ellison, the tech mogul and prominent ally of President Donald Trump—could give it a shot at blocking the Netflix deal.

NBC parent company Comcast (CMCSA) also bid on Warner Bros. Discovery, but was not seen as a serious contender in recent days. Its shares were up nearly 3% in recent trading.

Beyond the main parties, shares of AMC Entertainment (AMC) were down about 3% Friday. As part of the deal, Netflix promised to continue giving Warner Bros. Discovery films theatrical releases, though investors in America’s largest movie theater chain may be concerned Netflix’s streaming-first DNA could change Warner Bros. Discovery’s theatrical strategy. Shares of Cinemark (CNK) were down 7% Friday. 

• Victoria's Secret stock popped Friday after posting a smaller third-quarter loss and higher revenue than analysts expected.
• The lingerie retailer posted strong comparable store sales and lifted its full-year outlook, crediting less promotional activity and price hikes.

Victoria’s Secret (VSCO) shares jumped on Friday after the lingerie retailer posted better-than-expected results and boosted its guidance as it cut back on promotions and raised prices.

The company reported a third-quarter loss of $0.46 per share, $0.13 lower than forecasts from Visible Alpha. Revenue increased 9.2% to $1.47 billion, also better than expected. Comparable store sales were up 5%. When including direct-to-consumer sales, they gained 8%. 

Victoria’s Secret has spent the past two years trying to recover from falling sales and heavy discounting. The lingerie company's turnaround strategy, which includes fewer promotions and more full-price selling, appears to be gaining traction. Comparable sales growth, stronger margins, and higher guidance are all signs of stability for the retailer.

Sales in North America increased 5.4% to $778 million, and direct-to-consumer sales rose 4.3% to $428.5 million. International sales jumped 33.5% to $264.8 million. 

CFO Scott Sekella said adjusted gross margin grew 170 basis points, “driven by a reduced promotional approach and higher regular-priced selling, while leveraging the strength of our business model.” Victoria’s Secret remains “focused on managing costs while prioritizing investments in product innovation, brand strength, and customer experience,” he said.

The company raised its outlook for full-year adjusted EPS to between $2.40 and $2.65, and revenue to $6.45 billion to $6.48 billion. Previously, it anticipated adjusted EPS of $1.80 to $2.20, and revenue of $6.33 billion to $6.41 billion.

Shares of Victoria’s Secret were up nearly 13% in recent trading, putting the stock's year-to-date return at 13%.

• Federal Reserve officials are widely expected to cut the central bank's key interest rate by a quarter-point next week.
  
• In doing so, the Fed is prioritizing helping the faltering job market over fighting inflation.
  

The Federal Reserve is widely expected to cut its key interest rate next week to give a boost to the faltering job market, despite concerns that lower borrowing costs could stoke inflation.

As of Friday, financial markets were pricing in a 90% chance the central bank would cut its key interest rate by a quarter-point to a range of 3.5% to 3.75%, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data. It would be the third rate cut in as many meetings.

The 12 members of the central bank's policy committee have been sharply divided over whether to cut rates to encourage spending and stabilize the faltering job market, or to keep them higher for longer to fight inflation that is still well above the Fed's target of a 2% annual rate.

Recent data on the labor market has shown a hiring slowdown, giving the upper hand to those advocating for rate cuts. The Fed has a dual mandate from Congress to maintain price stability while preventing unemployment from rising excessively.

Lower interest rates encourage borrowing and spending, which can be a double-edged sword: easier money can also push up inflation.

The Fed uses monetary policy to pursue its dual mandate: The federal funds rate influences borrowing costs on short-term loans such as credit cards and car loans and all kinds of other credit. So, the Fed can either encourage or discourage spending and saving depending on where it sets rates.

Economic policies implemented by the administration of President Donald Trump have put pressure on both sides of the dual mandate, creating a dilemma for the Fed about which to prioritize. Tariffs have pushed up consumer prices, fueling concerns about inflation, while also stoking uncertainty among business leaders, discouraging expansion and hiring. His immigration crackdown has also contributed to a reduction in hiring.

In public speeches last month, Fed officials generally fell into two camps: one that thought inflation was the greater risk, and another that was more confident tariffs represented a one-time price hike rather than a source of inflation, which, by definition, is a sustained increase in prices.

Fed officials have kept silent on monetary policy since last week due to the Fed's customary pre-meeting communication blackout. However, before that, the balance seemed to tilt in favor of cutting rates.

A belated inflation report Friday showed some consumer prices rose less than expected in September, further improving the odds of a rate cut.

Update, Dec. 8, 2025: This article has been updated with the most recent estimates from the CME Group.

• Inflation in September showed a mixed trend with overall inflation accelerating and "core" inflation, which excludes food and energy, slowing down.
  
• The decrease in core inflation was unexpected and leaves the Federal Reserve on track to cut interest rates next week, putting the battle against inflation on the back burner in favor of helping stabilize the job market.
  

A seriously belated government report confirmed what you may already have known by looking at your grocery receipts: inflation stayed hot in September.

Consumer prices rose 2.8% over the 12 months through September as measured by the Personal Consumption Expenditures index, up from a 2.7% annual increase in August, the Bureau of Economic Analysis said Friday.

The rate was in line with forecasters' expectations. The report was originally due to be released in October, but had been delayed by the government shutdown. "Core" prices, which exclude food and energy, rose at 2.8% over the year, down from a 2.9% annual increase in August. It was the first decrease in core inflation since April, and was lower than the 2.9% rise that forecasters had expected.

Inflation is still higher than the Federal Reserve's target, but the downtick in annual inflation in September takes some pressure off the Fed to keep interest rates higher for longer. Friday's inflation report could pave the way for a Fed rate cut next week, which was already widely expected.

The report is especially significant because the Federal Reserve uses PCE core inflation as its benchmark for whether inflation is running at its target of a 2% annual rate—it hasn't been since 2021.

Nevertheless, Fed officials are widely expected to cut the central bank's key interest rate next week, lowering borrowing costs to stabilize the faltering job market and putting the battle against inflation on the back burner. The deceleration in core inflation could ease some concerns among Fed officials about tariffs stoking inflation, and help cement a rate cut next week.

The data will "help them feel more confident about a third straight cut," Ali Jaffery, an economist at CIBC, wrote in a commentary.