Daily Brew // Morning Brew // Update

MARKETS

Nasdaq

20,948.36

-2.15%

S&P

6,368.85

-1.67%

Dow

45,166.64

-1.73%

10-Year

4.440%

+2.0 bps

Bitcoin

$65,969.61

-4.19%

CORRECTION DAY

How much longer can tech support the markets?

Spencer Platt/Getty Images

For three years, tech behemoths have been fueling a bull market on the promise that AI advancements will increase efficiency and profitability. But with investors growing skeptical, and with the continued war in the Middle East, the Nasdaq is now in correction territory after its worst week in nearly a year:

The index is down 11% since it peaked in October and is doing its best New York Giants impression with 10 weekly losses over the past 11 weeks.
Two of the biggest drains since late-October are two of the biggest spenders in AI computing—Microsoft (down 34%) and Meta (down 29%).
Even Nvidia, the AI chipmaker that has everyone throwing money at it like it’s in one of those windy cash booths, is down nearly 20% from its October high.
As a group, Magnificent Seven shares are down 8% since late October.

Microsoft is having its worst quarter since the 2008 global financial crisis. The stock is down 25% as shareholders recoil from the company’s move to continue spending on AI infrastructure. There are also fears that startups like OpenAI and Anthropic will create agents that can replace products made by companies like Microsoft.

Tech’s slide is in keeping with the market as a whole. Remember when US Attorney General Pam Bondi let the world know the Dow was over 50,000 at a congressional hearing in February? After dropping nearly 800 points yesterday, it, too, fell into correction territory from its record high on Feb. 11.

TACO is growing stale

On Thursday, President Trump extended the deadline for peace negotiations with Iran by 10 days. However, markets didn’t rebound like they had in similar situations that have spurred the so-called TACO trade (an acronym for Trump Always Chickens Out).

Instead, crude prices soared to $110 per barrel yesterday, stoking inflation fears. This could be because, while Trump backed down, Israel threatened escalation, and Iran has been resistant to peace talks. Analysts believe the TACO tactic is carrying less weight due to the disconnect between the US and Iran.

But…Big Tech stocks could be viewed as a relative bargain, and a resurgence would almost certainly translate into good news for the markets overall.—DL

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WORLD

Tour de headlines

Myung J. Chun/Getty Images

House leaders reject Senate compromise, likely prolonging DHS funding fight. In yesterday morning’s early hours, the Senate passed a bill that would fund most of the Department of Homeland Security—except for Immigration and Customs Enforcement and Border Patrol. But with senators having already left town for a two-week recess, House Republican leaders said they wouldn’t bring that bill up for a vote, instead backing a short-term funding measure for all of DHS. That’s likely to extend the partial government shutdown, as the Senate probably won’t approve the House version even after they return. But the chaos at airports could end sooner, as DHS says TSA employees will start getting paid as soon as Monday under the president’s executive order.

The market expects the Fed to raise rates. A month ago, traders thought the Fed was poised to cut interest rates, but with oil prices on the rise amid the Iran war—which could drive up inflation—many are now predicting an increase instead. Traders in the futures market put the probability of a rate hike this year at 52%, CNBC reported, citing the CME Group FedWatch tool. Meanwhile, Yahoo Finance noted that CME data shows investors seeing 20% odds of a rate raise by September—even though they considered the odds 90% for a rate cut by September just last month.

Trump’s signature to go in your wallet. Not since John Hancock has a signature loomed so large for America: President Trump is about to become the first sitting president to have his signature on US paper currency. Traditionally, the Treasury Secretary and the Treasurer are the ones whose signatures appear, but the Treasury Department said this week it’d be putting the president’s on to honor America’s 250th anniversary. The department is also controversially planning a commemorative coin featuring Trump’s image for the anniversary, although critics have pointed out that federal law prohibits showing a living president on US money.—AR

CAN’T WAIT TO BE KING, HUH?

Disney CEO’s first week was not hot diggity, dawg

Morning Brew Design, Photo: Kevin Dietsch/Getty Images, Adobe Stock

New Disney CEO Josh D’Amaro may have accidentally wished upon a monkey paw instead of a star. It’s only been a week and a half since he took over for Bob Iger, but that was more than enough time for things to get goofy, as the company has dealt with a trifecta of setbacks in TV, AI, and gaming.

Less than 24 hours after D’Amaro took over, a domestic violence scandal involving The Bachelorette star Taylor Frankie Paul derailed the new season of the show before it even aired on Disney-owned ABC. Five days later, D’Amaro’s dream of a more interactive and immersive Disney experience was hit with a one-two punch:

OpenAI suddenly said sayonara to Sora, its popular AI video-generation app, wiping out a planned three-year, $1 billion partnership with Disney that would have allowed users to create videos with the Mouse House’s iconic characters.
Epic Games, with whom Disney still plans to set up a digital universe, announced it was cutting 1,000+ jobs, citing a drop in engagement with its popular Fortnite game.

The future is D’Amaro: While Disney can always find another AI video partner, the Epic Games development is particularly tough to swallow for D’Amaro, who led the effort to invest $1.5 billion in the gaming company when he was chairman of Disney Experiences in 2024.—BC

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ICYMI

Have you heard...

Here’s everything that didn’t make it into this week’s newsletters but we immediately sent to the group chat.

College professors are increasingly opting for oral exams over essays and take-home assignments after noticing that students were turning in perfect work, but couldn’t explain their thinking—seemingly because they used AI. It harkens back to the good old days of students writing their own essays, which they also couldn’t explain.

An Australian woman pleaded guilty to graffiti charges after putting googly eyes on a public sculpture to make it “look funny” while she was under the influence of MDMA. She has to pay a $1,400 fine and complete 60 hours of community service, which she was kind of already doing in her own way.

The next head basketball coach at Boston College is Bill Murray’s son Luke Murray, who has been an assistant coach at UConn for five seasons. We assume the Ghostbusters actor taught him everything he knows, like how to drive to the rim, tuck your elbow, and destroy the Marshmallow Man with fire.

Costco is coming for Celsius’s crown with a new Kirkland energy drink that’s a few dollars cheaper per 24-pack. We hear Celsius will counter with 24-packs of camping equipment, rotisserie chicken, and prescription eyeglasses.

Following a five-year eradication effort, an island in Northern Ireland is officially free of invasive ferrets that were threatening local avian populations. Time to blast some Alessi Brothers and beckon those lonely seabirds home.—ML

NEWS

What else is brewing

At least 10 US service members were wounded by an Iranian missile attack at Prince Sultan Air Base in Saudi Arabia, which was also hit earlier in the month.
Bank of America agreed to pay $72.5 million to victims of Jeffrey Epstein to settle a federal class-action lawsuit that claimed the bank facilitated Epstein’s sex-trafficking operation.
Google and the Trump administration were hit by a lawsuit from a victim of Jeffrey Epstein for publishing and republishing identifying information in the Epstein files.
The SAVE plan’s days are numbered following years of legal limbo, and the 7 million student loan borrowers who participated in the program have begun receiving notices that they will need to choose a different repayment option.
Organizers are planning more than 3,000 “No Kings” protests across the US today.
Tiger Woods was arrested on suspicion of DUI after a car crash in which he rolled his car over yesterday, Florida authorities said.
Sony is raising prices for the PlayStation 5 due to “pressures in the global economic landscape.”
Savannah Guthrie has set a date to return to the Today show after pausing her hosting role amid her mother’s disappearance.

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COMMUNITY

Crowd work

Last week, we asked, “What’s the most memorable lodging you’ve ever stayed in?” Here are some of our favorite responses:

“A treehouse suspended by wire (not nailed to the tree) in a town named French Lick. When the wind blew, the treehouse swayed and my stomach dropped. There’s the slimmest chance that it passed code.”—Claire from Brooklyn, MI
“The home of a kind family in Blue Earth, MN, after I naïvely drove through a blizzard and the local hotel was full. They took care of me for two full days until the interstate reopened, and we’ve exchanged Christmas cards ever since.”—Colleen from Chicago
“After visiting the Stonehenge in college, I found myself without a hostel bed for the night. A local police station in Salisbury was without ‘customers’ that night and they permitted three of us students to sleep in an unlocked cell. They even provided an English breakfast for us the next morning.”—Patrick from Delaware
“I once stayed in a boathouse in Kashmir. The proprietor heated the bed with hot coals in a clay pot just before bedtime.”—Martha from Texas

This week’s question

What’s an experience from your childhood that makes you feel nostalgic?

Sam’s answer to get the juices flowing: “For me, it was going to this old-timey ice cream shop on Cape Cod called Sundae School to order two scoops of mint chocolate chip ice cream served in an elegant glass cup, while the player piano sounded in the background.”

Submit your answer here.

RECS

Refresh: Get spa vibes at home with this fancy face mask.**

See: Photos of spring flowers blooming around the world.

Learn: The Viking origins of the word “Bluetooth.”

Set sail: A ranking of the cleanest cruise ships, based on government inspection data.

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PLAY

Brew Crossword: Your sample clue for the biggest puzzle of the week is “Infinite Jest, e.g.” Give it a go and play the Crossword here.

Open House

Welcome to Open House, the only newsletter section hoping to bask in the President Coolidge era. We’ll give you a few facts about a listing and you try to guess the price.

Redfin

Today’s neoclassical mansion is in Wichita Falls, TX, and was built between 1926 and 1929. The six limestone columns in front of the oval porch give the home a White House feel without any of the Virginia traffic. Amenities include:

6 beds, 6.5 baths
1,380 square feet of basement
Stunning greenhouse to overheat in on a sunny day

How much for the home just three miles from the still-shuttered Pro Wrestling Hall of Fame?

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ANSWER

$2.9 million

Word of the Day

Today’s Word of the Day is: trifecta, meaning “a set of three things.” Thanks to Louis from Rochester, NY, for tripling our happiness with the suggestion. Submit another Word of the Day here.

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