Investors are stunned after the stock market closed its worst quarter in 3 years

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Good morning. Congratulations to Vice President JD Vance, who sold his home just outside Washington, DC, for $172,000 over the asking price after less than three weeks on the market. The buyer? A former Trump official.

In today's big story, investors are shocked to be battling against President Donald Trump as the stock market closed its worst quarter in three years.

What's on deck

Markets: BlackRock CEO Larry Fink is setting his sights on private markets.

Tech: Move over, Disney. YouTube is about to dominate media.

Business: America has an affordable housing problem. Paris has the solution.

But first, there may be more pain ahead for Wall Street.

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The big story

Wall Street is short on optimism

Investors have come to a grim realization: Trump's not in their corner.

The stock market on Monday wrapped up its worst quarter since 2022.

After back-to-back years of double-digit gains, yesterday's plunge showed just how much Trump has surprised markets since returning to the White House.

It seems he is no longer the market's champion. The White House has telegraphed its position stating as much, BI's Jennifer Sor writes.

"Wall Street's done great, Wall Street can continue to do fine, but we have a focus on small business and consumers," the Treasury secretary said last month. Instead of equity prices, the White House is focusing on the 10-year Treasury yield to lower borrowing costs.

Meanwhile, inflation and recession fears have intensified under Trump's tariff campaign. Consumer sentiment has dropped to multi-year lows and CEO confidence is spiraling as planning for the future becomes more difficult.

To make matters worse, investors should prepare for another three months of pain ahead.

Once-bullish investors are feeling shellshocked coming into the second quarter.

"The expected fallout from Trump 2.0's Reign of Tariffs undercuts our former bullishness and dims the prospects of our base-case Roaring 2020s scenario for now," veteran analyst Ed Yardeni wrote. He lowered his S&P 500 year-end target to 6,100 from a prior forecast of 6,400.

At the same time, Goldman Sachs cut its three-month target for the index to 5,300, a possible 5% drop from current levels.

It's now the eve of Trump's "Liberation Day," and investors are nervously awaiting the unveiling of a range of reciprocal tariffs on US trading partners. With so much uncertainty ahead, Deutsche Bank flagged three risks to watch in the coming quarter.

3 things in markets

1. Floyd Mayweather's big commercial real estate boasts don't match reality. The retired boxing champ has bragged about a $400 million purchase of 62 Manhattan apartment buildings. But in the month since his announcement, there's been no evidence of a sale.

2. CEO Larry Fink wants to build a new BlackRock. After decades of dominating the liquid markets, BlackRock is betting big on private markets. Fink wrote about the transformation in his annual letter to investors, saying the firm is focused on a "$68 trillion boom" in infrastructure.

3. Newsmax might be the newest Trump trade. The conservative media company soared more than 700% in its stock market debut, valuing Newsmax at about $8 billion. That's double the valuation of Trump Media and a third of Fox Corp.

3 things in tech

1. YouTube is about to eclipse Disney as the biggest media company in the world. The company brought in $54.2 billion in revenue in 2024, according to MoffettNathanson analyst Michael Nathanson, which is only $5.5 billion behind Disney. But people still don't seem to understand how big YouTube really is, BI's Peter Kafka writes.

2. Elon Musk is spending millions on a supercomputer, but can he run it? xAI is spending at least $400 million on building the world's largest supercomputer in Memphis, Tennessee, according to documents viewed by BI. But it's short on the power needed to operate it.

3. Tumblr is Gen Z's newest safe space. Yes, millennials, you heard that right. Gen Zers, fed up with Musk and Zuckerberg, are reviving Tumblr dot com. How long they'll stay, however, is another question.

3 things in business

1. Tesla told salesworkers to "stay vigilant" in a video sent before last weekend's protests. The company described a "dynamic environment" in a clip sent to sales staff. It featured smiling employees, promo footage of Optimus and Robotaxi, and a dog — but no direct mention of the recent protests. One employee called it "trivial" and "disappointing."

2. To fix America's affordable housing problem, be more French. Paris' 19th-century redesign achieved both an unrivaled urban population density and a signature look for the city. Adopting Euro-style zoning can help US cities lower housing costs and look good doing it.

3. Don't be surprised to see Gucci ads on Fox News. Conservative media outlets say they're seeing an uptick in advertising from major brands. It's a sign advertisers now see avoiding right-leaning media as a risk — and it's also a 180 from the brand boycotts of Trump's first term.

In other news

• The age of AI has ushered in a new kind of hacker.
• Gold just hit a fresh all-time high with tariff worries sending investors scrambling for safety.
• The CEO of LexisNexis thinks AI could make lawyers more expensive — to the tune of $10,000 an hour.
• OpenAI notches a $300 billion valuation — and says it will roll out its first open-weight AI model in years.
• 'Look what you made me do': Tesla owners post videos of their trade-ins set to Taylor Swift.
• Celebrities are rallying behind 'Snow White' actor Rachel Zegler amid backlash to the movie. Here's what to know.
• How Mastercard is building the Venmo of crypto.
• KPMG's legal boss says there's one area where the Big Four can have an edge over Big Law.
• I'm a Brit with American clients. The more time I spend in the US, the more I realize how different British people are.

What's happening today

• Wisconsin Supreme Court election. Elon Musk has spent more than $20 million supporting the conservative favorite.

• Forbes' World Billionaires List of the world's richest people announced.

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