Everyone on Wall Street was watching the Federal Reserve today, but not for the rate decision. The real event was what will likely be Jerome Powell’s farewell speech as Fed chair.

Unsurprisingly, the FOMC decided to keep rates parked at 3.50% to 3.75% as it waits to see how the economy, inflation, job growth, and the war with Iran shake out.

“The US economy has been expanding at a solid pace while job gains have remained low,” Powell explained at the press conference. “The unemployment rate has been little changed in recent months. Inflation has moved up and is elevated in part reflecting the recent increase in global energy prices today.”

Although the FOMC’s call to hold rates steady was no shocker, it was the central bank’s most divided decision since 1992. Stephen Miran voted to cut rates, while three Fed presidents also disagreed with the wording of the FOMC’s statement, particularly the phrases “additional adjustments” and “easing bias,” which signal that more cuts could be coming. But as usual, Powell remained unflappable.

“These are really tough, difficult judgments. So it’s only natural that people have different risk stances,” he said at the press conference. “If everybody agreed, that would be surprising.”

Powell decided to stick around

Powell served on the Board of Governors since 2012 before moving up the ranks to chair in 2018, appointed by President Trump during his first term. Biden reappointed Powell for his second term, which ends in a few weeks. Once he steps down, he’ll be replaced by Kevin Warsh, whose nomination cleared the Senate banking committee today and has moved to a full-floor vote, where Warsh is widely expected to get a green light.

The biggest question on everyone’s mind heading into today’s press conference: Will 73-year-old Powell stick around as governor until January 2028, or will he call it a day and shut his spreadsheets for good?

“After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined,” Powell declared. “I plan to keep a low profile as governor. There is only ever one chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair.”

For reference, all but one Fed chair has retired just after vacating the Fed hot seat.

The future of the Fed

While Powell voiced his support for his successor, many are worried whether Warsh will stand firm once Trump starts leaning on him to slash rates.

Fed independence hangs in this balance, and having Powell stay on could give the central bank more backbone as pressure ramps up. Although the Justice Department has dropped its criminal investigation into Powell, Powell said in March that he has no intention of leaving the Fed until the criminal probe is “well and truly over, with transparency and finality,” and he reiterated that plan today.

JPow’s time as Chair is ending, but it’s nice to know that the bespectacled banker isn’t riding off into the sunset just yet.—JD

🟢 What’s up

• Seagate Technology jumped 11.1% as it delivered a strong earnings and sales beat, lifting memory peers like Micron Technology (2.82%), Sandisk (6.17%), and Western Digital (5.57%).
• Intel gained 12.06%, putting it on track for its best month on record.
• Bloom Energy rose 27.21% as strong earnings and a guidance hike pushed the stock toward a record high.
• Visa popped 8.26% after crushing analyst estimates thanks to strong consumer spending.
• Starbucks climbed 8.45% after posting a second straight quarter of traffic growth and raising its full-year outlook.
• NXP Semiconductors surged 25.55% on a first-quarter earnings beat, marking its best day since going public.
• T-Mobile US advanced 6.13% as subscriber growth and profitability topped expectations.
• Yum Brands beat earnings expectations thanks to strong same-store sales at Taco Bell, pushing shares 2.16% higher.

What’s down

• Pershing Square USA, Bill Ackman’s $5 billion stock-picking fund, made its debut on the NYSE today. It flopped: Shares ended the session down 18.34%.
• Lululemon founder Chip Wilson sent a letter to shareholders urging them to vote for his board candidates. The internal strife pushed shares 2.97% lower.
• Avis Budget Group fell just 0.47% after EPS came in below analyst estimates, likely putting an end to the stock’s recent short squeeze.
• Enphase Energy tumbled 9.07% after the solar stock barely beat analyst forecasts and guided for ‘meh’ growth ahead.
• Robotics parts maker Teradyne sank 19.41% when its pretty good earnings report wasn’t good enough for shareholders.
• Brown-Forman, parent company of alcohol brands like Jack Daniels, dropped 10.31% after it confirmed that merger talks with Pernod Ricard have been terminated.

Markets are sending a lot of mixed signals these days. On one hand, the news cycle is dominated by geopolitical risk, stubborn inflation, and concerns about everything from AI disruption to credit stress. On the other, equities keep pushing higher, brushing off what would’ve been major catalysts for selloffs in past cycles.

So, what’s the market actually telling us, and what are investors getting wrong?

To unpack that, we spoke with Denise Chisholm, Director of Quantitative Market Strategy at Fidelity, who approaches markets through a historical lens. Using decades of data to map how different environments have played out before, she focuses less on predicting headlines, and more on what prices already reflect.

Our conversation has been edited for length and clarity.

When people talk about the biggest risks in markets right now, what do you think they’re missing?

When you say, “Where do you think the biggest risk is,” I think the implicit reaction is that it’s downside risk. I don’t think we talk enough, especially in markets, about upside risk as well—because you can get it wrong both ways.

Maybe there is more bad news, it gets worse, and stocks go down. That’s the risk people usually mean. But there’s also the risk that you get it right—and there is more bad news—but the market has already discounted it, and stocks go up anyway, and you lose out on those returns.

When you look through history, even if you correctly forecast all the things that can go bump in the night, they don’t have a very consistent impact on the equity market. We don’t have to go back very far—COVID, the 2023 banking crisis, inflation in 2022, tariffs. These were all potentially systemic, even existential events. And yet, the market was able to climb the wall of worry. So instead of trying to predict every negative event, I focus more on what the market is already discounting.

Click here to keep reading about how to handle AI disruption, geopolitical upheaval, and the biggest mistake investors can make.

You’d think fintech brokerages would be having the time of their lives: Retail traders are a more powerful force than ever, stocks are ignoring headwinds and climbing higher, and the pattern day trading rule was just repealed, which is expected to bring in more business.

But today, both Robinhood and SoFi Technologies are deep in the red after releasing Q1 earnings reports.

Robinhood fell 13.23% after it revealed EPS of $0.38 on revenue of $1.07 billion, missing expectations of $0.39 per share and revenue of $1.14 billion. The culprit was, as it often is, crypto: Bitcoin’s ongoing rut has been partially responsible for pushing Robinhood’s stock down 37% year to date so far.

Most of the brokerage’s revenue comes from earning a small fee for every customer transaction, but with crypto stumbling, trading activity isn’t growing at the pace it once was: Transaction-based revenue came in at $623 million for the quarter, which was up 6% year over year, but still down 20% from Q4 of last year.

Robinhood’s solution: Throw everything at the wall and hope something sticks. The firm has launched financial advisory services, credit cards, banking services, and has even gotten into the sports gambling game. But until traders start trading again, revenue might be harder to come by.

Then there’s SoFi, Robinhood’s boring little cousin, which performed well over the quarter but still got punished by investors today:

• The company announced $1.09 billion in adjusted net revenue, a 41% increase from the year prior.
• SoFi reported record loan originations of $12.2 billion, up $1.7 billion from the previous quarter. Student loan originations and personal loans both hit record highs.
• But shares fell 15.44%, thanks to the company maintaining its full-year outlook, disappointing investors who were hoping that the full-year forecast would be upped, given how well this quarter went.

Suffering from success

Despite the fact that neither company smashed earnings out of the park, investors are being a little dramatic. After all, SoFi largely reported a pretty good Q1, despite the ‘meh’ outlook. And analysts don’t think Robinhood’s poor report card is an indicator of a deep-seated problem.

“We remain constructive on HOOD’s long-term growth opportunity as management continues to ship new products, broaden the ecosystem beyond trading, and deepen wallet share with [premium] customers,” explained Morgan Stanley equity analyst Michael Cyprys in a note today.

The bigger issue may just be that expectations are too high: As the S&P 500 continues to smash record after record, companies are getting graded on a curve. And a B+ just isn’t a passing grade anymore.—LB

• You’ll soon be able to book hotels through the Uber app.
• The uptick in natural disasters is upending the home-insurance business model.
• Apple and Formula One are teaming up to make the racing franchise an entertainment giant.
• PayPal’s CEO is making Venmo its own separate business.
• There’s a lot of drama about the price of Costco’s famous hot dog combo.
• An AI startup built to do the grunt work of junior investment bankers just clinched a $2 billion valuation.

Economic reports: We’ve got the usual weekly initial jobless claims, plus both the Q4 US productivity report and the import price index.

Earnings announcements: We’ll hear from Costco, Gap, Marvell Technology, Kroger, JD.com, Bilibili, Ciena, and Burlington Stores. And of course, the fifth member of the Mag 7 to report this week: Apple.