Friday’s big stock stories: What’s likely to move the market in the next trading session

Tesla shares plummeted 14% on Thursday, contributing to pressure on the S&P 500 and pulling the stock down 42% from its December high, impacting funds with significant allocations to Tesla and SpaceX, such as Ron Baron's Focused Growth Fund and Cathie Wood's ARK Venture Fund. Broadcom shares also declined over 4% despite beating earnings expectations, while Lululemon shares fell sharply after hours following a cut in guidance despite a strong fiscal first quarter. Investors are now focused on Friday's nonfarm payrolls report, with bond yields remaining elevated ahead of the release.

Analysis

The S&P 500 experienced downward pressure, significantly influenced by a sharp 14% decline in Tesla (TSLA) shares on Thursday, which have now fallen 42% from their December high amidst a reported online dispute involving CEO Elon Musk. This volatility impacts funds with notable exposure to Musk's ventures, such as Ron Baron's Focused Growth Fund (BFGIX), with 8% in Tesla and 11% in SpaceX, and Cathie Wood's ARK Venture Fund (ARKVX), holding 13% in SpaceX and nearly 6% in Musk's startup xAI. Despite Tesla's direct negative performance, BFGIX and ARKVX reported year-to-date gains of over 2%, with BFGIX up approximately 8% and ARKVX nearly 1% in the past month, though ARKVX carries a substantially higher expense ratio of 4.71% compared to BFGIX's 1.06%. Other significant tech and retail names also faced headwinds: Broadcom (AVGO) shares declined over 4% in after-hours trading despite exceeding fiscal second-quarter earnings expectations and hitting a high on Wednesday. Lululemon (LULU) shares plummeted approximately 23% after hours as the retailer cut its guidance citing a tough overall economic picture, even after beating fiscal first-quarter Wall Street estimates; the stock is now 23% from its January 30 high. Apple (AAPL) shares are also under pressure, down 23% from their post-Christmas high and, as reported in the article, down about 20% 'so far in 2025', ahead of its Worldwide Developers Conference. In stark contrast, Microsoft (MSFT) shares achieved an all-time high, gaining 7% over the past month. Market participants are now closely watching for Friday's May nonfarm payrolls report, with U.S. Treasury yields remaining elevated; the 10-year Treasury note yields 4.39%, and various high-yield corporate bond ETFs show yields ranging from approximately 5.85% for HYG to 10.5% for XCCC.

Key Decisions for Investors

• Investors should exercise caution with stocks like Broadcom, which declined over 4% despite an earnings beat, and Lululemon, which fell 23% after cutting guidance, as these reactions may signal heightened market sensitivity to forward-looking statements over current performance.
• Holders of Tesla should reassess their positions given the stock's 42% drop from its December high and ongoing volatility; similarly, investors in funds like BFGIX and ARKVX should be aware of their specific exposures to Musk-led ventures including Tesla, SpaceX, and xAI, noting the performance impact of diversified holdings within these thematic funds.
• The divergent performance between Microsoft reaching new all-time highs and Apple's significant 23% decline from its post-Christmas high suggests a selective approach to mega-cap technology investments, potentially favoring companies with demonstrated current momentum and robust outlooks.
• Anticipate potential market volatility surrounding the upcoming May nonfarm payrolls report, as this data will be a critical input for assessing economic health and future monetary policy direction, especially with current Treasury yields, such as the 10-year at 4.39%, reflecting market attentiveness.
• When considering thematic or actively managed funds, investors should scrutinize not only the flagship holdings but also the complete portfolio composition and particularly the impact of expense ratios on net returns, as highlighted by the 4.71% expense ratio of ARKVX compared to 1.06% for BFGIX.