Target is the best example of how the third quarter of 2025 is starting with a huge vibe shift in the stock market.
The retailer’s shares are surging as part of a massive factor rotation that’s seeing traders dump high-flying stocks and bid up cheap companies.
The iShares MSCI USA Value Factor ETF is outperforming the iShares MSCI USA Momentum Factor ETF by nearly 3%, one of its best days of relative performance this year. Target traded at less than 13x its expected forward earnings, making it one of the cheaper consumer staple companies in the S&P 500 and a significant discount to the benchmark US stock index, at 22x forward earnings.
The stock is also being aided by a flurry of bullish bets. More than 51,000 call contracts had changed hands by 2:22 p.m. ET, already more than double the retailer’s 20-day average. Investors are betting on a bounce, with Target shares down 24% this year as it struggles with slowing demand and weak guidance.
“Aggregate market morbidity in those states is significantly higher than, and materially inconsistent with, the Company’s assumptions,” it said in a statement.
Oscar Health, another company that specializes in selling health insurance on the ACA marketplaces, also dropped 13% in the after-hours session.
“Aggregate market morbidity in those states is significantly higher than, and materially inconsistent with, the Company’s assumptions,” it said in a statement.
Oscar Health, another company that specializes in selling health insurance on the ACA marketplaces, also dropped 13% in the after-hours session.
S&P 500 dips as traders ditch high-flying stocks and go bargain hunting
The start of the third quarter was marked by a vibe shift: an intense rotation from the market’s winners into value stocks. Alas, since value stocks often get that title from underperformance, making them smaller members of a benchmark, this shift in allocations saw the S&P 500 end 0.1% lower despite advancers outnumbering decliners by 255. Until today, the S&P 500 hadn’t declined during a session in which this many of its constituents rose in all of 2025.
The Nasdaq 100 fell 0.9% while the Russell 2000 rose 0.9%.
Top performers in the S&P 500 included casino stocks Las Vegas Sands, Wynn Resorts, and MGM, which were all up over 7% on the back of strong June Macao gaming numbers. On the flip side, GE Vernova and Axon Enterprise fell 4.3% and 6.3%, respectively, leading the day’s declines.
Target shares rose 5% as bullish call option activity surged, part of the broader factor rotation where traders are pivoting from high-flyers to beaten-down names.
Ford and GM jumped 4.7% and 5.7%, respectively, after both posted solid Q2 vehicle sales. Ford’s sales rose over 14%, while GM’s climbed more than 7%.
Tesla slipped 5% after President Trump threatened to have “DOGE take a good, hard look” at EV-friendly government subsidies — a critical part of Elon Musk’s business.
AI trade names like Meta, Palantir, and Cloudflare, along with chipmakers Nvidia, AMD, and Broadcom, all declined in this factor rotation, also weighed down by Senate Republicans scrapping a bill provision that would have banned state-level AI regulation.
AMC sank 9% after the movie theater chain and meme stock favorite struck a debt-for-equity swap and settled litigation with creditors.
Rivian shares dipped 1.9% while Lucid’s fell 3.7% as the Senate worked to advance a version of Trump’s “big, beautiful bill,” which would slash a number of EV benefits and charger network budgets.
Warner Bros. Discovery dropped over 4% after the Newhouse family — longtime media moguls and Condé Nast owners — sold $1.1 billion worth of shares.
Modelo maker slips on earnings miss, gloomy guidance
Constellation Brands slipped a little under 1% in after-hours trading after it missed earnings estimates and gave a gloomy guidance for the rest of the year.
The company reported adjusted earnings per share of $2.90, compared to the $3.31 analysts polled by FactSet were expecting. It also reported $2.5 billion in sales, which is about what analysts were penciling in, but down 6% from the same period last year.
Constellation also said it expects its full-year earnings per share to be between $12.07 and $12.37, below the $12.66 analysts expected. Its fiscal year ends in February.
The company said in its last earnings call that the Trump administration’s tariff threats and immigration policies were weighing on its sales. This was reiterated in executives’ prepared remarks on Tuesday.
Booze companies have found it harder to keep sales up as consumer preferences change. Constellation has been bolstered by sales of Modelo, which has in recent years become the most sold beer in the US. Still, Constellation is down about 25% since the start of the year.
At first glance, it seems like there was at least some expectation in the market that AI might be able to avoid such state rules. AI-related software stocks including Meta, Palantir, and Cloudflare dropped Tuesday, as did AI data center trades like chip giants Nvidia, Advanced Micro Devices, and Broadcom.
It’s also possible that some rejiggering of portfolios after the end of Q2 might have something to do with today’s slump as well.
At first glance, it seems like there was at least some expectation in the market that AI might be able to avoid such state rules. AI-related software stocks including Meta, Palantir, and Cloudflare dropped Tuesday, as did AI data center trades like chip giants Nvidia, Advanced Micro Devices, and Broadcom.
It’s also possible that some rejiggering of portfolios after the end of Q2 might have something to do with today’s slump as well.
Ahead of Tesla’s first-quarter earnings, Reuters had reported that the company’s low-cost Model Y would be delayed “at least several months.” However, on the company’s earnings call the following day, executives reiterated that the low-cost models would go into production in the first half of 2025. But it looks like Reuters might be right again.
Of course, Tesla has a lot of other things going on at the moment that could be directing the company’s attention elsewhere. That includes a recent robotaxi launch, what’s expected to be disappointing Q2 delivery numbers tomorrow, as well as a renewed feud with the president of the United States that could threaten all of the above.
Ahead of Tesla’s first-quarter earnings, Reuters had reported that the company’s low-cost Model Y would be delayed “at least several months.” However, on the company’s earnings call the following day, executives reiterated that the low-cost models would go into production in the first half of 2025. But it looks like Reuters might be right again.
Of course, Tesla has a lot of other things going on at the moment that could be directing the company’s attention elsewhere. That includes a recent robotaxi launch, what’s expected to be disappointing Q2 delivery numbers tomorrow, as well as a renewed feud with the president of the United States that could threaten all of the above.
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