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News of the day for June 1, 2026

Stocks ended last month with another day of gains, putting the S&P 500 up for a ninth straight week.
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Stocks futures are slightly higher to kick off the week as announcements from AI chipmaker Nvidia spark big moves in a number of tech sector shares; Nvidia stock gaining after CEO Jensen Huang delivered a keynote address at a conference in Taiwan; Huang unveiled a new line of AI agent-focused laptops Nvidia is building in partnership with a group of companies, news that sent IBM soaring and Intel sliding; Berkshire Hathaway is acquiring Taylor Morrison Home Corp. in the firm's first big acquisition under CEO Greg Abel; investors are preparing for a busy week of earnings reports and economic data. Here's what you need to know today.

Stock Futures Rise as Market Looks to Add to Records

Stock futures are pointing slightly higher as investors digest news from Nvidia (more on that below) and look ahead to another busy week of economic data and earnings reports. Futures tied to the Dow Jones Industrial Average were up 0.3% recently, while futures linked to the S&P 500 and Nasdaq rose 0.2%. The major indexes closed at record highs on Friday, as the S&P 500 posted its 9th straight week of gains. WTI oil futures, the U.S. benchmark, were up 3% at around $90 per barrel after another weekend passed without much reported progress in talks to end the Iran war. Gold futures were down 1.4% at $4,530 an ounce recently, while bitcoin was at $72,100, down from yesterday's high around $74,000 and trading near its lowest level since mid-April. The yield on the 10-year Treasury note ticked higher to 4.46%.

Nvidia Stock Rises After CEO Huang's Keynote

Nvidia (NVDA) shares are rising following a number of announcements from the AI chipmaking giant at an event in Taiwan. In a keynote address at the Computex conference, CEO Jensen Huang discussed Nvidia's plans for physical AI applications such as humanoid robots and announced a new line of laptop partnerships that will be specifically designed for running AI agents more efficiently with a new chip called the RTX Spark. Nvidia and other chipmakers have rallied in recent months thanks to strong earnings reports and renewed enthusiasm for the AI trade. Nvidia shares were up more than 2% in recent premarket trading.

IBM, Intel Among Big Movers on Nvidia News

Several tech stocks are on the move after Nvidia unveiled its plans to work with companies to build new laptops designed for running AI agents. International Business Machines (IBM) shares were up 10% ahead of the opening bell, while Microsoft (MSFT) and HP (HPQ) each gained more than 3%. Shares of software company ServiceNow (NOW) were up 8%, while shares of chip designer and Nvidia partner Arm Holdings (ARM) jumped 11%. Shares of Nvidia chipmaking rivals Intel (INTC) and Advanced Micro Devices (ADM) were down 6% and 4%, respectively.

Berkshire Hathaway to Acquire Homebuilder

Berkshire Hathaway (BRK.A, BRK.B) has made its first big acquisition under new CEO Greg Abel, announcing a deal Sunday to acquire Taylor Morrison Home Corporation (TMHC). Berkshire is acquiring the homebuilder for $72.50 per share, a 24% premium to the company's May 28 closing price. That deal values Taylor Morrison at about $8.5 billion including debt, while the company closed last week with a market capitalization of just under $5.5 billion. Taylor Morrison shares were up 22% recently, while Berkshire shares were little changed.

May Jobs Report, Earnings in Focus This Week

Investors have another busy week of earnings and economic data on tap to kick off June. The May jobs report, due out Friday morning, will provide insight into how uncertainty tied to the Iran war and still-high inflation are affecting the labor market. The latest Beige Book from the Federal Reserve is set to be released on Wednesday, providing new data about the health of the American consumer and broader economy. Among the big names reporting results this week are Dollar General (DG) tomorrow morning, Palo Alto Networks (PANW) and CrowdStrike (CRWD) on Tuesday and Wednesday, respectively, and chipmaking giant Broadcom (AVGO) also on Wednesday.

Broadcom shares are up nearly 30% since the start of the year.
Credit: Jonathan Raa / NurPhoto / Getty Images

Key Takeaways

• Broadcom's latest earnings report is set to be released Wednesday afternoon, with the chipmaker's stock expected to undergo a big swing in the days that follow.
• Analysts are expecting the chipmaker to report surging sales and profits on growing AI demand.

Broadcom is slated to report its latest quarterly earnings after the closing bell Wednesday, with traders anticipating a big move in its stock that could take it to new highs.

Broadcom (AVGO) shares are seen swinging up to 9% in either direction by the end of the week, based on recent options pricing. A move of that size from Friday's record close could lift the stock to a fresh high above $487, or pull it back down to around $406.

Broadcom shares are up nearly 30% since the start of the year amid a broader rally for chip stocks. The chipmaker has also been boosted by signing new deals to design new custom AI chips for big tech giants like Google parent Alphabet (GOOGL) and Meta Platforms (META).

Why This Matters to Investors

A strong showing from Broadcom could add to the renewed enthusiasm around the AI trade that has carried a number of tech stocks to record highs lately.

UBS analysts recently lifted their price target for Broadcom to $490 from $475, and said investors will likely be focused on updates around Broadcom's outlook with new deals in place.

Analysts see Broadcom reporting $22 billion in sales for its fiscal second quarter, up 47% year-over-year, along with adjusted earnings per share of $2.39, up from $1.58 a year ago, according to estimates compiled by Visible Alpha.

Analysts are broadly bullish on Broadcom, with all but one of the 11 analysts with current ratings tracked by Visible Alpha calling the chip stock a "buy," with one neutral rating. Their average price target of $467 would suggest around 5% upside from Friday's close.

Palo Alto Networks shares have added over half their value since the start of the year.
Credit: Chris Jung / NurPhoto / Getty Images

Key Takeaways

• Palo Alto Networks is set to post its next earnings report after markets close Tuesday, with the stock seen potentially reaching new highs in the days that follow.
• Sales are expected to rise while profits are flat year-over-year, as Palo Alto Networks has previously said higher-than-expected costs of integrating recent acquisitions are pressuring its profits.

Palo Alto Networks is set to report its latest quarterly earnings after the closing bell Tuesday, with traders expecting a sizable move in the cybersecurity stock that could push it to new highs.

Based on current options pricing, Palo Alto Networks (PANW) shares are seen moving up to 5% by the end of the week. A move of that size from Friday's record close could see the stock rise to a new high above $295, or pull it back down below $268.

Palo Alto Networks shares have added over half their value since the start of the year, amid a broader rally that has carried a wide range of tech stocks higher this month. Back in February, the shares had taken a hit after the company lowered its full-year profit forecasts, citing higher-than-expected costs related to integrating some of its recent acquisitions.

Why This Matters to Investors

Investors will be watching for signs of how AI is impacting Palo Alto Networks and rival CrowdStrike, which reports Wednesday, after fellow cybersecurity firm Zscaler's latest outlook came in short of expectations.

UBS analysts recently said that sentiment in the cybersecurity sector has "significantly improved" from lows earlier this year, raising expectations ahead of Tuesday's report. Morgan Stanley said they expect a solid quarter from Palo Alto Networks.

Palo Alto Networks is projected to report $2.94 billion in revenue for its fiscal third quarter, up nearly 29% year-over-year, along with adjusted earnings per share of 80 cents, the same as a year ago, per Visible Alpha estimates.

Analysts are largely bullish on Palo Alto Networks' stock. Eleven of the 14 analysts with current ratings tracked by Visible Alpha have called it a "buy," compared to three neutral ratings, though the stock's recent rally has lifted it well past their mean price target around $212.

Dollar General is slated to report earnings this week.
Credit: Jakub Porzycki / NurPhoto via Getty Images

Investor focus will shift from Wall Street to Main Street over the course of the week, with quarterly results from a few big names in tech and retail landing ahead of a key labor market update.

May jobs numbers are slated to arrive Friday, capping off a confusing period for labor economists. Employers hired vastly more than expected in April and May, but experts are divided on what to make of the data. Some economists believe the labor market is rallying after a sluggish 2025. Others say the growth reflects surging demand for health care workers, brought on by an aging population, rather than economic expansion. They're also unsure if recent data has captured how war with Iran is altering the economy.

Unemployment remains low by historic standards. But job hunting is requiring more endurance than it once did. A quarter of unemployed people have been looking for work for more than a year, according to one recent survey.

Analysts wonder whether jobs numbers and other economic indicators will move markets more under new Fed Chair Kevin Warsh. Warsh, who is slated to preside over his first Fed policy committee meeting in mid-June, believes the Fed shares too much information about its approach, and then becomes beholden to the public's expectations. If investors hear less about inflation and interest rates from the Fed, they may rely more on alternative indicators for clues, analysts said.

Investors have some notable earnings reports to parse before the jobs report. Dollar General and Five Below are among those set to publish results this week, which may shed light on how lower-income households are handling inflation. A number of tech companies are also slated to report, including Palo Alto Networks, CrowdStrike, and Broadcom.

Market Recap

The major stock indexes finished a month of gains at record highs, buoyed by enthusiasm for tech stocks and softer-than-expected inflation data. Oil prices fell, with the continuous contract for West Texas Intermediate futures ending the week down about 9%, as the U.S. and Iran continued to negotiate an end to the war. For more, read the Friday market recap here.

This Week's Top Events

Here's a look at major events on tap throughout the week. TradingView publishes a more detailed calendar, but clicking the link will take you off the Investopedia site.

• Sunday, May 31: Nvidia (NVDA) CEO Jensen Huang is slated to give the keynote address at Computex Taipei, an expo on AI, computing, and robotics. His speech is scheduled for 11 a.m. local time on Monday, which is 11 p.m. ET on Sunday. A replay will be available online. 
• Tuesday, June 2: Dollar General (DG) is scheduled to host a conference call on its first-quarter results at 9 a.m. ET, with the figures expected earlier in the morning. Shares of the retailer have drifted in recent months amid concerns that inflation may stifle sales from low-income households. Investors are set to get additional updates from discount retailers when Ollie’s Bargain Outlet Holdings (OLLI) and Five Below (FIVE) report on Wednesday.
• Tuesday: Palo Alto Networks (PANW) is set to publish its fiscal third-quarter results after the closing bell, followed by a video webcast at 4:30 p.m. ET. Palo Alto Networks beat expectations last quarter, but lowered its full-year outlook because it was spending more than anticipated on integrating acquisitions. CrowdStrike (CRWD) is slated to report its results Wednesday. 
• Wednesday, June 3: The Federal Reserve is scheduled to publish the Beige Book at 2 p.m. ET. The publication uses anecdotal information to analyze economic conditions in various sectors and regions.
• Wednesday: Broadcom Inc. (AVGO) is set to host a conference call on its fiscal second-quarter results at 5 p.m. ET, with the figures expected to be released shortly beforehand. Deals with Meta Platforms (META), Google (GOOGL) and Anthropic have lifted the chip designer's shares more than 25% this year. Broadcom topped analyst estimates last quarter.
• Thursday, June 4: Lululemon Athletica (LULU) is slated to report its fiscal first-quarter results after markets close and host a conference call at 4:30 p.m. ET. The activewear company—which is preparing to welcome a new CEO—last week announced plans to add two board members as part of a deal to end a dispute with founder Chip Wilson. Shares of Lululemon rose, but remain 60% below where they were a year ago. 
• Friday, June 5: The Bureau of Labor Statistics plans to release the May jobs report at 8:30 a.m. ET. Employers added 115,000 jobs in April—down from 178,000 in March—and the unemployment rate was flat at 4.3%.

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Micron shares have more than tripled in value since the start of the year.
Credit: Samuel Boivin / NurPhoto / Getty Images

Key Takeaways

• Micron's rally this week brought the memory chip maker into the $1 trillion market cap club for the first time.
• Investors have piled into AI hardware stocks this year as big tech companies continue to spend billions to build out data centers.

After a blistering rally that propelled Micron into the $1 trillion market capitalization club this week, can the memory maker's stock keep climbing next week?

Shares of Micron (MU) added over 5% to close at a fresh high at $971 Friday, topping a record set just days earlier. It's has more than tripled in value since the start of the year, making it the best-performing stock in the S&P 500 behind Sandisk (SNDK), amid a broader rally for AI hardware makers that has lifted the major indexes to new records.

Recent options pricing suggests traders see it potentially swinging close to 10% in either direction by the end of next week. A move of that size from Friday's record close could drive the shares to a new high above $1,065, or pull them back below $877.

Why This Is Significant

Micron has been a favorite among investors in recent months amid growing demand for its memory components to outfit AI data centers and a shortage that's empowered the firm to raise prices.

This week, analysts at UBS more than tripled their price target to a new Street high of $1,625 from $535, anticipating continued sales growth and pricing power for Micron as big tech companies clamor for AI hardware, with Micron poised to win more long-term contracts with customers.

Wall Street analysts surveyed by Visible Alpha are widely bullish on the stock. Nine of the 10 analysts with current ratings tracked by Visible Alpha have called it a "buy," compared to just one neutral rating, though Micron's recent rally has already carried it well past their mean target around $777.

Strong earnings reports from a number of other AI hardware makers in recent weeks, including Intel (INTC), Advanced Micro Devices (AMD), and Nvidia (NVDA), have shown that big tech companies are continuing to spend big on hardware and could be taken as a positive signal for Micron ahead of its own quarterly report after the closing bell on June 24.

Geopolitical shifts are what keeps JPMorgan CEO Jamie Dimon up at night these days.
Credit: Caroline Brehman / Bloomberg via Getty Images

Key Takeaways

• In an appearance Friday, JPMorgan Chase CEO Jamie Dimon cited geopolitics as the "biggest thing" on his mind as he contemplates the forces that will shape the world in the coming years.
• Dimon characterized the state of markets as "exuberant," but stopped short of saying that we were in a bubble.

Jamie Dimon, CEO of the world’s biggest bank, has plenty to worry about. But the Wall Street veteran says he isn’t losing sleep over rising inflation, a frothy stock market or cracks in private markets. 

“Geopolitics, and how this all plays out over the next few years… that’s the biggest thing,” said Dimon in an interview Friday with CNBC’s Morgan Brennan at the Reagan Economic Forum in Simi Valley, Calif. 

Dimon, 70, recently celebrated two decades running JPMorgan Chase. On Friday he echoed comments he made a year ago at the inaugural Reagan forum, where he said that the global tectonic plates were shifting and the outcome was uncertain. On Friday, he listed the wars in Ukraine and Iran, massive global deficits, the remilitarization of the world and the restructuring of global trade as forces that would shape the future.

Those issues, he said, dwarf the shorter-term concerns most Americans worry about given their implications to the United States’ role as the most important economy in the world and the dollar’s role as the leading global currency. If the U.S. loses economic and military power, he said, the days of dominance for the greenback could be short-lived. 

And he cautioned that American political dysfunction would be more likely to lead to a loss of those powers than any actions by countries like China.

“If we are not the preeminent military and the preeminent economy in 40 years, we will not be the reserve currency,” he said.

Dimon, asked whether he thought stocks had risen too far, too fast, with the leading U.S. indexes continuing to chase record highs thanks to fast-climbing AI and semiconductor stocks, did not say the market was in a bubble. He did, however, acknowledge investor enthusiasm, admitting that hyped-up markets do present risk.  

“The market is exuberant,” Dimon said. “We’ve seen this before, and of course exuberance can go on for a long time and it’s not always bad.”

Claude maker Anthropic on Thursday announced its valuation had soared to nearly $1 trillion.
Credit: Chris Ratcliffe / Bloomberg via Getty Images

Key Takeaways

• Anthropic's valuation more than doubled to $965 billion from $380 billion in February, growth that dramatically increases the value of the big tech IPOs expected this year.
• Demand for AI stocks is booming and propelling the market to record highs, but some market watchers are concerned about the impact three mega-IPOs—SpaceX, OpenAI, and Anthropic—could have on the market this year.

The IPO boom investors have been preparing for is looking more like a supernova.

Anthropic this week overtook ChatGPT maker OpenAI as America’s most valuable frontier AI lab when it announced a funding round that valued it at $965 billion, more than double its valuation in February. Booming demand for Anthropic’s Claude, especially its coding abilities, has caused the start-up’s annualized revenue to skyrocket from $9 billion at the end of last year to $30 billion in April and $47 billion this month.

Anthropic’s new valuation dramatically increases the size this year’s IPO pipeline. The start-up is expected to file to go public before the end of the year. Its main rival, OpenAI, valued at $852 billion in March, is reportedly preparing to file in the coming weeks to hit markets as soon as September. 

Why This Is Important

Investors have been hoping for a resurgence of IPO activity ever since the Federal Reserve's rate hiking campaign in 2022 plunged capital markets into a deep freeze. Now, with three gargantuan IPOs on the horizon, investors could face an unprecedented influx of new stocks.

Elon Musk’s SpaceX aims to debut next month in what’s likely to be the largest IPO in history. The company, valued at $1.25 trillion when it absorbed Musk’s xAI start-up earlier this year, could raise up to $75 billion, more than twice the funds raised by current record holder, Saudi Aramco, when it went public in 2019. 

Together, SpaceX, OpenAI, and Anthropic could raise as much in their debuts as all U.S. venture capital-backed IPOs in the past decade combined, according to private market data provider PitchBook.

The impending tsunami of mega IPOs has stoked both euphoria and apprehension on Wall Street. SpaceX’s IPO filing has reinvigorated interest in space exploration stocks: The Procure Space ETF (UFO) is up 65% since the start of the year, boosted by its two largest holdings, satellite operators PlanetLabs (PL) and ViaSat (VSAT), both of which have more than doubled in 2026. The Roundhill Space & Technology ETF (MARS) has risen 69% since launching in March.

Index managers are racing to amend their standards for index inclusion to accommodate this year’s mega-IPOs. Nasdaq announced in March new rules for expedited entry into the Nasdaq 100, and S&P 500 manager S&P Dow Jones Indices is mulling similar changes. Russell FTSE on Tuesday introduced rules that could get SpaceX into its indexes within five days of its IPO to ensure its indexes “accurately reflect developments in the US equity market."

Some markets watchers are worried about the consequences of rewriting the rules. Index eligibility criteria “[aren’t] bureaucratic red tape,” says Nancy Tengler, CEO of Laffer Tengler Investments. They are "the product of decades of hard lessons about what makes an index durable, reliable, and trustworthy for the trillions of dollars benchmarked against it.”

According to Tengler, SpaceX meets the S&P 500’s market capitalization and liquidity requirements, but it doesn’t meet profitability standards, and its public float—or the share of stock available to trade in public markets—will be less than one-tenth the index's 50% requirement. Its float is especially worrying to Tengler, considering SpaceX’s fast-track entry to major indexes will also fast-track its entry to index funds with trillions of dollars in assets. “Forced buying into an index does not reflect genuine investor conviction, it manufactures artificial demand,” said Tengler. 

Others worry what interest in the buzzy issues of tomorrow will do to the hottest stocks of today. “There’s trillions of dollars of private capital that’s slated to come public over the next few years, which is great,” said Savita Subramanian, head of equity strategy at Bank of America Securities, in an appearance on CNBC Thursday. But an explosion of new AI stocks “potentially squeezes out and creates more competition” for existing AI plays. 

Whether the tech sector can absorb mega-IPOs without a hitch likely depends on how badly investors want exposure to AI. So far this year, their demand has been insatiable. Memory and semiconductor stocks have gone parabolic, and the explosive debut earlier this month of AI chipmaker Cerebras (CBRS) hasn’t slowed them down. And while Cerebras stock has fallen since its first day of trading, it still trades a healthy 27% above its IPO price. 

Some investors have cheered signs that stablecoin regulation may be advancing.
Credit: Getty Images

Key Takeaways

• Shares of SoFi have popped this week, helped by news of a stablecoin launch that broadly coincides with optimism that the Clarity Act might be moving toward passage in Washington.
• Fresh comments from Jamie Dimon, however, signal that stiff resistance to Clarity might still be out there.

Stablecoin news is lifting shares of SoFi Technologies. A big bank CEO is trying to tap the brakes.

Shares of bank-and-fintech SoFi (SOFI) were recently up about 8%, lifting them off recent lows and back toward levels last seen in April. This week's news that the company now offers its own dollar-linked stablecoin, SoFiUSD, appears to be the main driver of the stock, which despite its recent climb has had a rough 2026 and remains in the red for the year so far.

Why This Matters to Crypto Investors

Signs of progress in Washington, D.C., regarding the Clarity Act that would help govern crypto have lifted some assets lately. But resistance to the bill as currently written may still be a risk factor.

Investors have seen opportunity in the stablecoin space in recent months amid optimism about the Clarity Act, a piece of legislation that has had trouble getting to the president's desk but could lead to a clear framework for regulating stablecoin rewards and digital assets. Shares of Circle Internet Group (CRCL) have jumped this year, driven in part by hopes that Clarity's passage would eventually spur more adoption of stablecoins.

That passage, however, isn't a fait accompli. Some of the resistance has come from banks, which see stablecoin rewards as competition for the interest they pay on deposits. In an interview earlier today with Fox Business, JPMorgan Chase (JPM) CEO Jamie Dimon said financial firms that take deposits should effectively be regulated on the same terms as banks and broadly said he was unhappy with the current state of the Clarity Act.

"If he takes deposits like a bank, he should have bank rules," Dimon said, referring to Coinbase Global CEO Brian Armstrong. "If he wants to be a bank, be a bank."

Moves higher in stablecoin-linked assets have taken place as bitcoin has receded somewhat from recent highs. Bitcoin, the leading cryptocurrency, recently changed hands around $74,000, marking a pullback from hard-won prices seen this spring above $80,000. Read Investopedia's full coverage of today's trading here.

Rising airfares aren't cutting into demand for flights.
Credit: David Paul Morris / Bloomberg via Getty Images

Key Takeaways

• Demand for air travel remains strong in the face of rising airfares, industry and other executives said this week.
• That's one of the key factors that point to opportunity in airline shares, according to experts, despite high oil prices that are pressing margins.

Oil prices are high. Airfares are high. And travelers? They're lining up to hit the skies.

Despite a steady drumbeat of rising ticket prices, Southwest Airlines (LUV) CEO Robert Jordan said yesterday at an investor conference, interest in flying don't seem to be taking a hit. American Express executives earlier this week noted "record" travel bookings in the first quarter and growth in April; AAA expected a "slight" year-over-year increase in Memorial Day weekend air travel.

Kayak data, meanwhile, show average domestic airfares rising steadily all year.

Why This Matters to Travelers

Rising fuel prices generally aren't good for airlines, and they've contributed to a rise in airfares this year. But that isn't stopping travelers from buying tickets, so it may not pay to expect that rise in prices to reverse anytime soon.

"There's been no drop off in demand at all," Jordan said, according to a transcript made available by AlphaSense. There's "no indication that the consumer is elastic in this fare environment—so, leisure, business, across geographies, across all points in the booking curve, the consumer remains very strong despite this rise in fares."

At American Airlines (AAL), CEO Robert Isom this week observed that his company now manages to get more revenue from upgrades, which once were generally seen as giveaways. That's a measure of the industry's ability to bring in incremental dollars from travelers willing to spend for services—and support margins doing so.

These factors are among the reasons some market watchers see airline stocks as offering opportunities now, with oil prices generally expected to recede and capacity cuts limiting the number of empty seats in the skies.

Deutsche Bank analysts this week raised their price targets on American, Delta (DAL) and two other airlines. The JETS ETF, which includes airline shares, has jumped off spring lows into the green for the year, though it's underperformed the S&P 500.

"Given our positive view on the sector (driven by multiple factors including the gradual removal of loss-making capacity) and the fact that the geopolitical backdrop has modestly improved from several months ago, we believe that the risk to share prices for [the second half of] 2026 is to the upside," they wrote.

The bottom line—unsurprisingly, perhaps—is that people flying is good for business, even if there are some high-level concerns about consumer health, particularly on the lower end of the income scale.

"I feel great about demand overall," Isom said. "No doubt, there is a K-shaped aspect to demand right now, but it is clear that no matter what end of the spectrum you're at, people want to travel."

"People are on planes," American Express CEO Stephen Squeri said Thursday. "They're flying."

Friday's slump puts Gap shares down nearly 20% this year.
Credit: Spencer Platt / Getty Images

Key Takeaways

• Gap shares fell sharply Friday after the retailer posted sales that missed analysts' estimates and lowered its outlook.
• JPMorgan analysts downgraded the retailer's stock and cut their price target following the report.

The gap between the performance of The Gap and the clothing retailer's other brands is weighing on its stock.

Shares of The Gap (GAP) were down over 17% in recent trading to $20.60, giving up nearly all of their recent progress that brought them close to even for the year, after the apparel retailer reported a lackluster first-quarter and trimmed its sales outlook for the year.

The Gap posted adjusted earnings of 38 cents per share for the first quarter, 1 cent ahead of the analyst consensus compiled by Visible Alpha, while sales of $3.50 billion came in just shy of estimates. Comparable store sales for all of Gap's combined brands were up 2%, short of the 3% consensus forecast, as a strong quarter from Gap stores was offset by weakness from its other brands.

The owner of its namesake clothing brand, along with Old Navy, Banana Republic, and Athleta, said it now expects sales growth of 1% to 2% this year, down from 2% to 3% previously. Gap forecast second-quarter sales could be flat to down 1% year-over-year, while analysts had been calling for 2% growth.

Why This Matters to Investors

A weaker market for clothing brands like Old Navy and Banana Republic could be a signal that consumers are pulling back spending on discretionary items like new clothes as rising inflation pressures budgets.

JPMorgan analysts downgraded Gap stock to a neutral rating following the results, and cut their price target to $27 from $35. They said that while CEO Richard Dickson has "implemented a foundation of improved merchandising & marketing across all four brands," the outlook for Gap's brands is mixed, with Athleta and Old Navy facing challenges.

UBS analysts were more bullish, retaining a "buy" rating. They suggested that while Old Navy's comparable store sales miss was disappointing, they expect the company can fix the issues that led to the weak sales in the coming months.

With Friday's slump, Gap shares are down nearly 20% since the start of the year.