The stock market is not the economy. But it is a highly visible part of the economy and, as you may have noticed, it’s been on a roll.

The S&P gained nearly 4% in June, while the Dow and Nasdaq rose more than 4%. It’s certainly a turnaround from what not long ago was being called a “bear market.” So, what’s driving this rally?

If you look at charts of the major indexes — the Dow, S&P 500, and Nasdaq — you’ll see a steep drop on April 2. That was the day then-President Donald Trump formally announced plans for tariffs.

To some degree Justin Wolfers, at the University of Michigan, said it’s surprising investors were so spooked. Trump made it clear tariffs were coming.

“He ran on it,” Wolfers said. “So, the market tanked not because he imposed tariffs, but because they were bigger and larger and more incoherent and more destructive than anyone thought.”

So much of what happens in the stock market is about expectations. Wolfers said the fact that it has since rebounded has a lot to do with the pullback on tariffs.

“Maybe people are optimistic the president is not wedded to such an extreme agenda,” Wolfers said.

Investors also appear buoyed by federal tax cuts and a large budget bill passed in Washington — policies that tend to favor large, well-established companies that dominate the stock market.

Rohit Chopra, a former director of the Consumer Financial Protection Bureau, said there’s often a disconnect between what the market’s doing, and how small businesses and consumers are doing.

“We have seen this story before, where stocks go up, but really there are warning signs flashing when it comes to consumer credit,” Chopra said. “People who are falling behind on their credit cards, falling behind on their auto loans.”

Even though some of those warning signs are flashing now, consumer spending is still solid, so is the labor market and inflation is under control. Anwiti Bahuguna, at Northern Trust Asset Management, said all of that matters a lot to investors.

“It’s really the macroeconomic volatility that then drives market volatility,” said Bahuguna. “And in many ways, the market volatility has come down sharply.”

That’s largely because the key economic indicators — jobs, spending, inflation — have been relatively stable.

So, while the stock market may not be the economy, its recent gains reflect investor optimism that, for now at least, the economic foundation remains solid.

NEW YORK (AP) — As the stock market pushes into record territory and some companies trade at lofty levels, investors are once again looking for bargains among some of Wall Street’s beaten down companies.

The latest so-called meme stocks include doughnut maker Krispy Kreme, camera maker GoPro and plant-based meat maker Beyond Meat. Each company initially surged Wednesday before mostly leveling off, even though overall they have been struggling to notch profits.

The trio stepped in for department store Kohl’s and the online-based real estate company Opendoor Technologies, which fell sharply Wednesday after surging over a number of days. It’s a sign of how quickly the hot meme stocks can fall out of favor.

“While this activity reflects rising risk appetite, it remains isolated and has yet to challenge the broader market’s calm and steady tone,” said Mark Hackett, chief market strategist at Nationwide.

Wall Street defines a meme stock as a stock that gains significant popularity and trading volume, primarily driven by social media hype and online communities, rather than the company’s fundamental financial performance. Think GameStop and Blackberry in 2021, and a few subsequent instances.

Often, meme stocks are initially the target of “short sellers,” or investors betting against the stock. If other investors start buying the shares and boost the price, that could prompt the people betting against the stock to buy more shares to cushion their own losses.

While this activity reflects rising risk appetite, it remains isolated and has yet to challenge the broader market’s calm and steady tone.

Sugar rush

Krispy Kreme initially surged early Wednesday but finished just 4.6% higher, adding to its 26.7% gain a day earlier. The company has seen several years of falling profits and revenue. Wall Street expects it to post a loss for 2025. During its last earnings update, the company pulled its financial forecast for the year as it reassesses its partnership with McDonald’s.

Shaky frame

GoPro jumped 12.4% on Wednesday to follow its 41% gain on Tuesday. The company last posted an annual profit in 2022 and revenue has been sliding for several years as it faces more competition in a market for smartphone cameras that it once dominated. Wall Street is forecasting that the company will eke out a slight profit in 2025.

“Beefy” gains

Beyond Meat initially jumped Wednesday, but closed just 1.4% higher and is now up more than 20% for the week. The company has been struggling for years and has yet to notch an annual profit since going public in in 2019. The company warned in its latest earnings update that it is “experiencing an elevated level of uncertainty” and it pulled its financial forecasts for 2025.

Losing momentum

Investors who buy now are betting that the momentum will continue, but it can shift suddenly.

Kohl’s, which operates 1,600 stores across the country, reversed course Wednesday and slipped about 14.2% following gains a day earlier. It is still up 28.4% this week. It is wrestling with a number of challenges including a revolving door of CEOs and weak sales.

Opendoor Technologies shares also faded, falling 20.5% to give back nearly all of this week’s gains. The stock nearly tripled last week. The stock’s recent gains came as hedge fund manager Eric Jackson touted the stock on X. Opendoor faces a tough housing market, with soaring interest rates and a low supply of homes making purchases and sales difficult for both homebuyers and homeowners.

Meme stock history

The original meme stock is video game retailer GameStop. In 2021, the company was struggling to survive amid the switch from discs to digital downloads and major investors were betting against the company. Investor Keith Gill, better known as “Roaring Kitty,” rallied other investors to join him in buying up thousands of GameStop shares, changing the trajectory of the stock.

GameStop had been trading under $5 heading into 2021. The stock closed at $23.96 on Wednesday.

The initial meme stock craze eventually fizzled out. But the frenzy occasionally reignites, as seen the past few years with sudden gains for BlackBerry, Bed, Bath & Beyond, and Chewy.

It took just four weeks in 2021 for GameStop’s stock to go from less than $5 to more than $120. But it has yet to touch that price again. Blackberry quickly jumped from less than $7 to nearly $30 in early 2021, but the gains were shaky and trimmed back within a year. Blackberry’s U.S. traded shares are hovering just above $4.

___

AP Business Writer Anne D’Innocenzio contributed to this report.

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Dogness (International) Corporation ( ) share price is 72% higher than it was a year ago, much better than the market return of around 11% (not including dividends) in the same period. So that should have shareholders smiling. On the other hand, longer term shareholders have had a tougher run, with the stock falling 32% in three years.

After a strong gain in the past week, it’s worth seeing if longer term returns have been driven by improving fundamentals.

Dogness (International) isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last twelve months, Dogness (International)’s revenue grew by 46%. That’s stonking growth even when compared to other loss-making stocks. The solid 72% share price gain goes down pretty well, but it’s not necessarily as good as you might expect given the top notch revenue growth. If that’s the case, now might be the time to take a close look at Dogness (International). Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

You can see how its balance sheet has strengthened (or weakened) over time in this free .

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A Different Perspective

It’s nice to see that Dogness (International) shareholders have received a total shareholder return of 72% over the last year. There’s no doubt those recent returns are much better than the TSR loss of 0.6% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. , and understanding them should be part of your investment process.

For those who like to find winning investments this free

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

By John Towfighi, CNN

New York (CNN) — Wall Street breathed a sigh of relief Thursday after a key bond auction eased concerns that the US economy might be falling out of favor with investors.

Bonds rallied after an auction for US government bonds saw relatively strong demand. The Treasury on Thursday sold $22 billion worth of 30-year bonds. The auction settled with a yield of about 4.84%, signaling solid buying.

Standard, boring bond auctions have drawn the attention of investors around the globe. The auctions serve as a gauge of investors’ appetite for holding US debt as lawmakers debate President Donald Trump’s massive bill, which is set to add to the federal debt burden. All eyes have been on whether there is weak demand for long-term debt, particularly from foreign investors.

“The 30-year auction just went very well,” Chip Hughey, managing director for fixed income at Truist Advisory Services, told CNN.

There was relatively strong demand from foreign investors, Hughey said, soothing nerves about whether they might be shunning US bonds.

Foreign investors bought about 65.2% of the bonds sold at the auction, according to Treasury Department data, up from 58.9% at the auction in May. Demand from foreign investors was the strongest it has been since January and hovered around the one-year average.

Collin Martin, a fixed income strategist at Charles Schwab, told CNN that the uptick suggests foreign demand for long-term US assets remains strong despite concerns about foreign investors potentially selling Treasuries and nerves about the rising deficit likely resulting from Trump’s mega bill.

“This was a good confidence boost for those worried about declining demand for US Treasuries,” Martin said.

Truist’s Hughey said the solid auction results showed that at least for now, investors are not overly panicked about federal budget negotiations in Congress or the deficit.

“Over the long term, our deficits and reliance on debt are going to have to be addressed,” Hughey said. “For the time being, it is encouraging to see investors still seeking out US Treasuries for their haven assets.”

The auction followed a similarly strong auction for 10-year Treasuries on Wednesday.

The Treasury auction also came after two inflation reports that showed the effect of tariffs has so far been muted. That increases the likelihood the Federal Reserve can consider cutting interest rates later in the year, which is a signal for investors to buy bonds now to lock in current rates, helping bring down yields.

The 30-year yield settled on Thursday around 4.84% and the 10-year yield settled around 4.36%. Both fell across the day as investors snapped up bonds.

Bond market in focus

The 30-year Treasury auction, which is a regularly scheduled event, has become a closely watched barometer for how Wall Street is feeling about the Trump administration’s policy agenda.

When there is strong demand for bonds, prices rise and yields fall. Vice versa, when there is weak demand for bonds, prices fall and yields rise. Higher yields would squeeze the government with higher borrowing costs. Treasury yields are also benchmark interest rates for the economy, and higher yields can mean higher borrowing costs for consumers on everyday items including auto loans and credit cards.

Long-term US debt, which is usually considered the safe, risk-free corner of the market, has come under scrutiny as Trump’s bill is set to add to increase federal deficits.

“The idea that the US fiscal position is unsustainable over the long run has been frequently noted for years, but it has taken the current set of circumstances to get market participants to begin pushing back,” John Canavan, lead US analyst at Oxford Economics, said in a Wednesday note.

Yields on 30-year Treasury bonds have soared this year as investors have demanded more compensation for what is looking like a riskier long-term loan to the US government. These concerns were exacerbated in May after Moody’s downgraded the US, stripping the nation of its last perfect credit rating.

“The Moody’s downgrade occurred as the ability to easily finance growing deficits increasingly comes into question,” Canavan said. “Trump’s tariff decisions are likely to raise inflation over the near term, while lowering economic growth and leading foreign investors to question the safe-haven allure of Treasury debt.”

In May, the 30-year yield spiked above 5% and hit its highest level since 2023 after a Treasury auction for 20-year bonds that saw weak demand.

A routine auction turns prime time

There is robust demand for shorter-term Treasuries like 10-year bonds, according to Hughey. An auction for 10-year Treasuries on Wednesday saw strong demand from both domestic and global investors.

Yet investors in recent weeks had shown hesitancy about longer-duration bonds like the 30-year bond, Hughey said. Investors have been increasingly uncertain about the long-term outlook for the US debt burden, giving them pause about the risk associated with loaning money to the government over a longer period.

“The 30-year reflects the uncertainties around those more structural questions around budget deficits and the US debt load going forward,” Hughey said.

Pacific Investment Management Company, a global fixed income firm, said in a Tuesday report that bonds still look relatively attractive and affordable compared to stocks. However, Pimco expects to focus and be “overweight” to 5- and 10-year bonds, while being less focused and “underweight” to longer-term bonds.

Martin at Charles Schwab said that while concerns about the deficit linger, investors are also assessing factors like inflation and the path of potential Federal Reserve rate cuts.

“We still find yields pretty attractive, and our outlook on the safety of US Treasuries hasn’t changed,” Martin said.

Dollar tumbles

Elsewhere in markets, US stocks gained on Thursday as investors tried to digest recent trade developments. The United States and China have de-escalated tensions, but Trump’s tariffs still remain a headwind to economic growth.

The Dow closed higher by 102 points, or 0.24%. The broader S&P 500 rose 0.38% and the tech-heavy Nasdaq Composite gained 0.24%.

The S&P 500 is hovering near an all-time high, but had stalled in recent trading sessions and was coming off a day in the red. The benchmark index is about 1.6% away from a record high.

The Dow was weighed down by Boeing (BA), which sank 4.79% after a Boeing 787-8 Dreamliner carrying 242 people crashed in India on Thursday. At least 290 people are dead, health officials said. The plane hit a hostel for doctors when it crashed.

The US dollar broadly weakened on Thursday as investors wrestle with continued tariff uncertainty. The US dollar index, which measures the dollar’s strength against six major foreign currencies, tumbled 0.72% and fell to its lowest level since 2022.

The-CNN-Wire

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