Investors are increasingly confident the US economy will achieve a “soft landing,” a scenario in which higher interest rates lead to lower inflation without a major hit to economic growth.
On the surface, it appears all signs point to that outcome. Inflation has eased. The economy is still expanding. Consumer confidence has risen. Retail sales are healthy. Corporate profits remain strong. And stocks continue to hover at record highs, with the Federal Reserve on tap to cut interest rates as soon as its next meeting on Sept. 18.
But one strategist warned on Yahoo Finance’s “Stocks in Translation” podcast that there are cracks under the surface.
“We’re skating on ice that’s a bit thinner than a lot of people presume,” said Michael Darda, chief economist and macro strategist at Roth Capital Partners.
Darda pointed to a rising unemployment rate and elevated earnings expectations, both of which contributed to the stock market routs seen at the start of August and September.
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“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
To that point, the S&P 500 shed 2% on Tuesday, dragged down by the tech sector after Nvidia (NVDA) earnings didn’t deliver enough of a beat to satiate investors’ appetites. Stocks seesawed in the subsequent days as markets struggled to find their footing following the sell-off.
“What’s unfolding now actually makes a lot of sense to me,” Darda said of the pullback. “We’re seeing companies that had been soaring off of repeated beats on either revenues or earnings not do so well in this most recent period.”
The recent drawdowns point to how the current market — one in which investors consistently chase hot stocks and hot areas like artificial intelligence — can be a “dangerous” game, according to Darda.
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“What that tells me is that the expectations have just gone up so much. It’s impossible to beat expectations indefinitely. Eventually they’ll catch up,” he said. “We’re in a bit of a frenzy here. And if things start to go wrong, whether it’s the earnings not living up to expectations or the business cycle faltering, that’s when you see stock markets roll over in potentially a material fashion.”
‘Choppy waters’
But it hasn’t just been earnings. The jobs market is also telling a particular story.
Last month, the July jobs report spooked markets after unemployment unexpectedly rose to 4.3%, its highest level in nearly three years. The move higher also triggered a closely watched recession indicator known as the Sahm Rule.
The rule, which has accurately predicted recessions 100% of the time since the early 1970s, measures the three-month average of the national unemployment rate against the previous 12-month low. It’s triggered when unemployment rises 0.5% from that level.
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Cracks in the markets and the US economy are beginning to show, according to one strategist. (Getty Images) (caitlin_w via Getty Images)
Traders instantly panicked that the economy was slowing more than anticipated. But then the debate ensued: Why was unemployment suddenly seeing an uptick?
Economists and strategists began to lay out the possible scenarios, including a theory that above-trend immigration is driving up labor force participation rates, therefore pressuring unemployment as more workers enter the jobs market. This eased investor fears as stocks rebounded to finish August with wins across all three major indexes.
But Darda said the rise in unemployment is still “a bit concerning.” And he’s not completely sold on recent bullish commentary that higher unemployment doesn’t really matter as long as the economy keeps growing.
“4.3% is still an incredibly low unemployment rate level that looks quite good in the historical context,” he explained. “The problem, if there’s a problem, is that we’re up to 4.3% from a cyclical trough of 3.4%.”
“Those kinds of movements and the level tell us that the economy, if it’s still growing, is growing below trend or below the growth rate of potential,” he said. “There’s an exceptionally fine line between that and an actual recession.”
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Investors will receive another update on unemployment Friday with the August jobs report on deck. Darda said that report could likely lead to even more market volatility in the weeks and months ahead.
“I do think we’re probably in an environment now where volatility is going to stay elevated,” he surmised. “The risk of a more material pullback and/or correction is quite high.”
Ultimately, his view is one of caution: “With what we saw for the last two years with this market backdrop, from these valuation levels, and based on where I think we are in the business cycle, I think we’re going to be in choppy waters for a little bit.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.
When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.
The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.
Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).
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Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.
However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).
Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.
San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).
The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.
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A peek inside the scorecard’s grades shows where trouble exists within California.
Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.
Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.
Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
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On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
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Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
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$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
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Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.
Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.
“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.
What You Need To Know
High school athletes with Division I prospects are learning to manage NIL money before they even reach college
Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources
Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era
Preston said the experience has already been eye-opening.
“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.
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For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.
“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.
Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.
“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.
The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.
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“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.
For these athletes, having the right support system makes all the difference.
“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.
Collins-Howard said the program has given him a broader perspective beyond just the game.
“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.
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“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.
NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.
