Bitcoin (BTC 1.01%) and XRP (XRP 0.93%) might be a bit safer than some crypto assets, but it isn’t as though they’re rock solid when things are falling apart. As the Nasdaq Composite and S&P 500 enter correction territory, investors are starting to worry more about a potential market crash.

And some are pondering which of these two assets would hold up better in a crash and which would be worth buying in the aftermath?

History is worth understanding

To start, let’s take a look at how Bitcoin and XRP performed during the early 2020 coronavirus market crash.

Here’s the chart:

Bitcoin Price data by YCharts

As you can see, both assets dumped hard during the crash, along with the rest of the market, which is to be expected. Then, over the next five years both climbed.

Bitcoin has done slightly better since the 2020 crash, and its price action was generally less volatile than XRP’s, which isn’t an advantage, except for those who like to sleep more soundly without worrying about the value of their investments.

But what about during the next market crash?

XRP is a cryptocurrency with value that’s derived from its utility as a medium of exchange rather than as a store of value. For it to have value as a medium of exchange, it needs to be actively demanded by its users, who must then transfer the coin between each other, and who must also have a reason to need more of it in the future. Given that its users are financial institutions seeking to avoid incurring currency exchange fees and international money transfer fees, the health and activity level of those financial institutions is a key consideration for the future demand for XRP.

Market crashes tend to coincide with periods of great uncertainty, particularly economic and financial uncertainty. Financial institutions, like most businesses, are loath to make big investments or big strategic plays during such periods. And, on average, that means the odds are good that they won’t need to make as many international money transfers. So investors will likely assume that the level of demand for XRP will be lower when uncertainty is highest.

Bitcoin, on the other hand, does not have much value derived from its utility. While it can be a medium of exchange, most investors look to it as a store of value. That makes sense given its supply dynamics, which ensure that there’s a smaller and smaller quantity of Bitcoin produced over time, generating scarcity. Scarcity doesn’t necessarily create demand, but it ensures that the price level will continue to rise over time so long as there is demand.

Investors might tend to liquidate some of their stores of value during turbulent times so that they have enough fiat currency on hand to cover contingencies, but wise holders of Bitcoin understand that doing so is a compromise, as the odds of the coin being worth more in the long term are quite good thanks to its increasing scarcity. Therefore the odds are also good that holders who sell coins will become buyers once again, perhaps even in advance of the market deciding that the hard times have passed.

There’s only one real choice

No ones knows when the next market crash will happen, but Bitcoin looks like the better market-crash play.

It is possible to imagine the circumstances of a crash being events that create a high probability of a global or localized economic recession, which could last years. Under those conditions, Bitcoin is unlikely to flourish. Still, XRP would almost certainly suffer more, as the very thing that makes it valuable, its usefulness, simply wouldn’t be very appealing anymore, as users would be scaling back investments in new financial technologies rather than deepening them.

Furthermore, Bitcoin’s supply dynamics will continue grinding onward regardless of whether there’s a lot of demand. That means when demand eventually does come back, the new buyers will be competing fiercely, driving prices up. XRP doesn’t have any similar mechanic, even if it’s a good coin to buy generally.

Don’t sweat the possibility of a market crash too much. If you’re concerned, just keep some capital on hand so that you’re ready to buy.

Economists are reportedly concerned that recent stock market turbulence could drive down consumer spending.

That’s because, per a report Sunday (March 16) by The Wall Street Journal (WSJ), the top 10% of American earners have in the last four years boosted spending by 58%. And it’s not just the ultra-wealthy investing in the stock market, with Vanguard and Fidelity reporting record participation and contributions to their 401(k) plans for wage earners.

At the close of 2024, 43% of American households’ financial assets were in stocks, the highest percentage on record, WSJ said, citing Federal Reserve data. And while many lower-income households don’t own equities, the share that does is rising.

This has left economists worried that a severe market collapse could lead Americans to reduce spending on things like vacations and new apparel, what’s known as the wealth effect.

There are already some signs this is happening, with companies such as Delta Air Lines, Foot Locker and Jack Daniel’s maker Brown-Forman reporting consumer caution.

That’s on top of the strain witnessed among discount merchants, such as Dollar General, which discussed tighter spending during its fourth-quarter earnings report last week.

“Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation,” Todd Vasos, the company’s CEO, told analysts. “Many of our customers report that they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”

And last week, the University of Michigan published its monthly survey of consumer sentiment, showing that metric had hit its lowest level since November 2022, partially because of sliding expectations for personal finances and the stock market.

“Consumers are souring on their job prospects, and their expectations about inflation are worsening. For merchants, that means a perfect storm is brewing,” PYMNTS wrote at the time. “Their own costs are rising, their ability to pass those costs along (in the form of higher prices) will be truncated, and gauging customer demand will be difficult at best and impossible at worst.”

As PYMNTS CEO Karen Webster wrote in a recent column, when economic conditions tighten, high earners are known to curtail their spending, much as lower-income households do.

“Consumers across all income brackets are likely to pull back on spending, but for different reasons,” Webster wrote.

“Those with savings cushions may voluntarily push pause on spending until they have more certainty in order to preserve cash and income, while those without financial shock absorbers in the form of savings will be forced to cut back out of necessity.”

In mid-February, President Trump spoke at an investment conference and offered a prediction.

“We’re on the verge of soaring markets,” he told the crowd in Miami that evening. “I think the stock market is going to be great.”

Unfortunately for him and for investors, it turned out to be tough timing. That Feb. 19 speech ended up taking place during the peak of the recent market, with the S&P 500 (^GSPC) then beginning a now weeks-long decline.

And the selling hasn’t abated. Markets are now firmly in correction territory with prices down over 10% this week from the levels on that February evening.

That turn in market fortunes has forced Trump into a rapid reorientation of how he has talked about stocks, even as he has also repeatedly said that the long-term gains he sees coming from his tariff agenda will outweigh the current “turbulence.”

But even amid the selling, Trump couldn’t resist an occasional foray into his long-held role as a sort of stock pundit-in-chief.

Last Tuesday, Trump appeared alongside Elon Musk to buy a Tesla and perhaps prop up that beleaguered stock (TSLA). And he couldn’t resist a message to overall investors to buy the dip.

“Some people are going to make great deals by buying stocks and bonds and all the things they are buying,” he said, adding that “smart” businessmen he knows “are now investing because of what I’m doing because long term what I’m doing is making our country strong again.”

A round-trip journey since Election Day

During Joe Biden’s presidency, Trump’s rhetoric on the market often whipsawed dramatically as he tried to explain price increases under a Democratic administration that he had promised would be bad for investors.

“If he’s elected,” Trump said in 2020 while pointing across the debate stage at Biden, “the stock market will crash.”

Bitcoin failed to sustain levels above $85,000 on March 14, despite a 1.9% gain in the S&P 500 index. More importantly, it has been over a week since Bitcoin last traded at $90,000, prompting traders to question whether the bull market is truly over and how long selling pressure will persist.

Bitcoin basis rate rebounds from bearish levels

From a derivatives perspective, Bitcoin metrics have shown resilience despite a 30% drop from its all-time high of $109,354 on Jan. 20. The Bitcoin basis rate, which measures the premium of monthly contracts over spot markets, has recovered to healthy levels after briefly signaling bearish sentiment on March 13.

Traders typically demand a 5% to 10% annualized premium to compensate for longer settlement periods. A basis rate below this threshold signals weak demand from leveraged buyers. While the current 5% rate is lower than the 8% recorded two weeks ago, it remains within neutral territory.

Central banks will eventually boost BTC price

Bitcoin price action has closely tracked the S&P 500, suggesting that factors driving investor risk aversion may not be directly tied to the top cryptocurrency.

However, this also challenges the idea of Bitcoin as a non-correlated asset, as its price behavior has aligned more closely with traditional markets, at least in the short term.

If Bitcoin’s price remains heavily dependent on the stock market, which is under pressure due to fears of an economic recession, investors are likely to keep reducing exposure to risk-on assets and shift toward short-term bonds for safety.

However, central banks are expected to implement stimulus measures to avoid a recession, and scarce assets like Bitcoin are likely to outperform as a result.

According to the CME FedWatch tool, the markets are pricing less than 40% odds for interest rates in the US below 3.75% from the current 4.25% baseline ahead of the July 30 FOMC meeting.

Nevertheless, Bitcoin should reclaim the $90,000 level as soon as the S&P 500 pares some of its recent 10% losses. But in a worst-case scenario, panic selling of risk-on assets could continue.

Under such conditions, BTC would likely keep underperforming over the next few months, especially if spot Bitcoin exchange-traded funds (ETFs) continue to experience significant and sustained net outflows.

Bitcoin derivatives show no signs of stress

Professional traders are not actively using Bitcoin options for hedging presently, as shown by the 25% delta skew metric. This implies that few market participants expect the BTC price to retest the $76,900 level anytime soon.

Bullish sentiment typically leads to put (sell) options trading at a 6% or higher discount. In contrast, bearish periods cause the indicator to rise to a 6% premium, as seen briefly on March 10 and March 12. However, the 25% delta skew has recently stayed within the neutral range, reflecting a healthy derivatives market.

To better gauge trader sentiment, examining BTC margin markets is important. Unlike derivatives contracts, which are always balanced between longs (buyers) and shorts (sellers), margin markets let traders borrow stablecoins to buy spot Bitcoin. Similarly, bearish traders can borrow BTC to open short positions, betting on a price drop.

The Bitcoin long-to-short margin ratio at OKX shows longs outweighing shorts by 18 times. Historically, excessive confidence has pushed this ratio above 40 times, while levels below five times favoring longs are seen as bearish. The current ratio mirrors sentiment on Jan. 30, when Bitcoin traded above $100,000.

There are no signs of stress or bearishness in Bitcoin derivatives and margin markets, which is reassuring, especially after over $920 million in leveraged long futures contracts were liquidated in the seven days ending March 13.

Therefore, as recession risks ease, Bitcoin price is likely to reclaim the $90,000 level in the coming weeks, given the resilience in investor sentiment.

Elon Musk’s electric carmaker Tesla has warned it and other US exporters could be harmed by countries retaliating to Donald Trump’s trade tariffs.

Mr Musk is a close ally of the US president and is leading efforts to reduce the size of the federal government.

But in an unsigned letter addressed to the US trade representative, Tesla said while it “supports” fair trade it was concerned US exporters were “exposed to disproportionate impacts” if other countries retaliated to tariffs.

The letter was dated the same day that Trump hosted an event at the White House where he promised to buy a Tesla in a show of support for Mr Musk.

It is unclear who at Tesla wrote the letter as it is unsigned, or if Mr Musk was aware of it.

Tesla’s share price has dropped 40% since the start of the year. Mr Musk is the carmaker’s chief executive and while some have argued his alignment with the Trump administration is hurting its brand, market analysts say the share fall is more about worries over Tesla meeting production targets and a drop in sales over the past year.

In the letter, Tesla said it was making changes to its supply chains to find as many local suppliers for its cars and batteries so it was less reliant on foreign markets.

“None the less,” it warned, “even with aggressive localisation of the supply chain, certain parts and components are difficult or impossible to source within the US.”

The US president has imposed an additional 20% tariff on all imports from China, prompting Beijing to respond with retaliatory levies including on cars. China is Tesla’s second biggest market after the US.

“For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries,” the letter reads.

The EU and Canada have both threatened sweeping retaliations for tariffs on steel and aluminium imports into the US, which went into effect earlier this week.

Demonstrators have targeted Tesla showrooms in recent weeks in protest against Mr Musk’s cost-cutting role in Trump’s administration, where he is head of the Department of Government Efficiency (Doge).

Earlier this week, Trump hosted an event at the White House where he said people protesting against Tesla should be labelled domestic terrorists, while sitting in the driver’s seat of a brand new red Tesla that he said he planned to buy.

Trump said demonstrators were “harming a great American company”, and anyone using violence against the electric carmaker would “go through hell”.

Stocks rallied Friday, clawing back some of the steep losses seen over the week, as investors got a reprieve from tariff-related headlines.

The Dow Jones Industrial Average rose 674.62 points, or 1.65%, to close at 41,488.19. The S&P 500 climbed 2.13% to end at 5,638.94, and the Nasdaq Composite advanced 2.61% to settle at 17,754.09. It was the best day in 2025 for both the S&P 500 and the Nasdaq.

Big tech shares that were rattled earlier this week saw a sharp recovery on Friday. Nvidia shares popped more than 5%. Tesla jumped nearly 4%, and Meta Platforms gained close to 3%. Amazon and Apple also rose.

Stocks bounced after a lack of new headlines out of the White House related to tariffs, easing concerns around escalating tensions for the time being. Investors might also be scooping up shares after a stock market pullback on Thursday.

A decline of more than 1% Thursday pulled the S&P 500 into a correction – a decline of at least 10% from the record close notched just 16 days ago. The session’s sell-off dragged the Nasdaq further into correction, and it brought the small-cap Russell 2000 closer to a bear market, or a drawdown of 20% from its high.

That marked another milestone in the pullback that has gripped investors over the past three weeks as President Donald Trump’s on-again-off-again tariff policy drove up uncertainty and market volatility.

Indeed, even Friday’s rally couldn’t spare the three major averages from weekly losses. The Dow fell roughly 3.1% for its worst week since March 2023. The S&P 500 and the Nasdaq both dropped more than 2% and posted their fourth consecutive losing week.

Adding to Friday’s positive sentiment was Senate minority leader Chuck Schumer, D-N.Y., saying he wouldn’t block a Republican government funding bill.

However, data released Friday from the University of Michigan confirmed that consumer confidence has suffered from the ongoing tariff-related uncertainty, worries that have driven the market down the last three weeks. Consumer sentiment dropped in March to 57.9, lower than the 63.2 economists polled by Dow Jones had expected.

“Consumer sentiment came in worse, inflation expectations are rising, the 10-year Treasury yield is rising. You would think that the market would be off. So a lot of folks are watching to see if this rally has any breadth or legs,” said Thomas Martin, portfolio manager at Globalt Investments.

Investors are gearing up for the Federal Reserve policy meeting scheduled for next week, where fed funds futures are pricing in a 97% likelihood of interest rates holding steady, according to CME’s FedWatch tool.

“What we would like to see is rates not go up, because that would be an indication that the Fed is losing control. If the Fed says they’re cutting and rates go up, that’s a lack of confidence,” Martin added.

The stock market is taking a beating—again. The Nasdaq just hit its lowest level since 2020, the S&P 500 is deep in the red, and investors are scrambling. Recession fears, inflation worries, and policy uncertainty have Wall Street on edge. But Warren Buffett? He’s been here before. And if history is any guide, he’d tell you that now is not the time to panic—it’s the time to pay attention.

Fear Is Your Worst Enemy

Buffett has spent decades reminding investors that bad news is often their best opportunity. During the depths of the 2008 financial crisis, he penned a New York Times op-ed titled “Buy American. I Am.” The market was tanking, fear was at an all-time high, and yet Buffett was buying. Why? Because, as he put it, “bad news is an investor’s best friend.” Economic downturns bring stock prices down, giving long-term investors the chance to buy great companies at a discount. The trick isn’t predicting what the market will do next—it’s understanding the difference between price and value.

The Mistake of Market Obsession

Buffett has always dismissed the idea of timing the market. “Will stocks decline in the coming days, weeks, and months? This is the wrong question to ask… primarily because it is entirely unanswerable,” he said. What really matters is whether stocks are selling for less than they’re worth. And he’s been right. The S&P 500 kept dropping after his 2008 op-ed, losing another 26% before finally turning around in March 2009. But those who listened to Buffett and bought during the chaos ended up reaping massive gains in the years that followed.

Fear vs. Opportunity

Buffett has a simple rule: “Be fearful when others are greedy, and be greedy when others are fearful.” That lesson has held true in every major market crash, from the Great Depression to 2008 to COVID-19. At Berkshire Hathaway’s (NASDAQ:BRK, BRK.B)) 2020 shareholder meeting, Buffett compared fear to the virus itself: “Some people are more subject to fear than others.” He argued that some investors “really shouldn’t own stocks” because they panic when prices drop and sell at exactly the wrong time. “You’ve got to be prepared, when you buy a stock, to have it go down 50%—or more—and be comfortable with it, as long as you’re comfortable with the holding,” he said.

The Real Risk? Holding Cash

While many investors scramble for safety in cash, Buffett warns against it. “Today people who hold cash equivalents feel comfortable. They shouldn’t,” he wrote in 2008. Inflation erodes the value of cash, while equities almost always outperform over time. That said, despite Buffett’s well-documented distaste for holding cash, Berkshire Hathaway is currently sitting on a record $350 billion. Some believe this signals that Buffett sees the market as overvalued and is waiting for a correction—positioning himself to deploy that cash when stocks become a bargain, just as he has done in past downturns. His advice was to think like hockey great Wayne Gretzky: “I skate to where the puck is going to be, not to where it has been.” Markets move ahead of sentiment and economic recovery. By the time things “feel safe,” the best opportunities are long gone.

Buffett’s Takeaway: Stay the Course

Buffett doesn’t pretend to know what the market will do tomorrow. But he knows that over time, the stock market has always rewarded those who stay invested. “Most major companies will be setting new profit records five, 10, and 20 years from now,” he predicted in 2008. And history has proven him right—again and again. Ultimately, investing in stocks isn’t for everyone. Not everyone has the risk tolerance to weather major market declines, and that’s okay. There are plenty of ways to build wealth, and for those who prefer stability, safer options like bonds or diversified index funds might be a better fit. The key is knowing your own financial comfort zone and making decisions that align with your long-term goals.a

As gold races to new records, Wall Street analysts have rushed to raise their price targets, with the latest call from Macquarie Group predicting the precious metal will touch $3,500 in the third quarter. On Thursday, gold futures (GC=F) climbed above $2,990 per ounce as a trade war intensified and the release of modest inflation data raised questions about whether the Federal Reserve may be more inclined to cut rates this year. “Year-to-date, gold has been running ahead of our expectations,” Marcus Garvey, head of commodities strategy at Macquarie, wrote on Thursday. “We are raising our gold price forecast to a 3Q25 quarter average peak of $3,150 per ounce and our single point price high to $3,500 per ounce,” Garvey wrote. “President Trump’s rapid move to announce, if not always to enact, import tariffs has contributed to geopolitical uncertainty and boosted inflation expectations, helping push down front-end real rates and supporting gold in the face of periodic USD strength and initially reduced expectations for Fed rate cuts,” the strategist wrote. The target raise comes after strategists at BNP Paribas called for prices to push above $3,100 per ounce in the second quarter. “The Trump administration issuing a slew of tariff threats and the realigning of international relationships have added a new layer of macroeconomic and geopolitical uncertainty, providing a significant boost to gold,” BNP’s David Wilson wrote in a note on Wednesday. Gold futures have rallied more than 11% year to date, hitting multiple record highs since January. Wall Street has attributed much of these gains to continued central bank buying and tariff uncertainty, including the possibility that even imports of the precious metal into the US won’t be spared. Institutional investors have shipped elevated amounts of physical gold bars to vaults in New York in a move to front-run tariffs and take advantage of a price disparity between London and New York. Last month, Goldman Sachs analysts raised their year-end gold price forecast to $3,100 per ounce, up from their prior projection of $2,890.

NEW YORK, March 12 (Reuters) – Global stocks rose on Wednesday with U.S. Treasury yields as relief over cooler U.S. inflation in February was countered by uncertainty around U.S. President Donald Trump’s tariff policies and their potential impact on inflation and global growth.

Oil prices settled higher after data on slower stockpile builds, while the euro pulled back slightly after hitting a five-month high in the previous day’s session on hopes for a ceasefire between Ukraine and Russia.

Wednesday’s U.S. Department of Labor data showed the Consumer Price Index rose 2.8% on an annual basis in February, below the 2.9% forecast from economists polled by Reuters. On a monthly basis, it rose 0.2% after accelerating 0.5% in January and versus economists’ estimate of 0.3%.

The S&P 500 (.SPX), opens new tab opened higher but then lost steam in morning trading. It returned to positive territory before

midday and stayed there for the rest of the session.

“It’s maybe some liquidity coming back into the market,” said Paul Christopher, head of global market investment strategy for Wells Fargo Investment Institute in St. Louis, Missouri.

“What we’re seeing is some money coming back in buying the dip. That’s a good sign.”

While investors were relieved that inflation was lower than expectations, Christopher said that strength in services price increases also showed that the economy was still solid.

On Wall Street the Dow Jones Industrial Average (.DJI), opens new tab fell 82.55 points, or 0.20%, to 41,350.93, the S&P 500 (.SPX), opens new tab rose 27.23 points, or 0.49%, to 5,599.30 and the Nasdaq Composite (.IXIC), opens new tab rose 212.36 points, or 1.22%, to 17,648.45.

But investors were still wary of U.S. trade policy and the impact that could have on inflation going forward.

“Today’s inflation report is obviously good news but it’s also backward-looking and doesn’t tell us anything about where we’re headed from here and what the inflationary impact of all these tariffs might be,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

Investors had to scramble to keep up with events on Tuesday after Trump threatened to double steel and aluminium tariffs on Canada to 50%, then reversed course later in the day.

“The hard part is the uncertainty around tariffs,” said Baird. “It’s one thing to understand that the rules of the game are changing, but understanding what those rules will be and when they’ll be clearly defined is another thing entirely.”

Trump threatened on Wednesday to escalate a global trade war with further tariffs on European Union goods

This was after the European Commission said Europe would impose counter tariffs on 26 billion euros’ ($28 billion) worth of U.S. goods, including dental floss, diamonds, bathrobes and bourbon. Europe’s threat came after Trump’s 25% tariffs on all steel and aluminium imports took effect on Wednesday.

MSCI’s gauge of stocks across the globe (.MIWD00000PUS), opens new tab rose 4.08 points, or 0.49%, to 830.72 after rising earlier to 834.73

The pan-European STOXX 600 .STOXX index earlier closed up 0.81% after four straight sessions of declines on optimism around a potential Ukraine-Russia ceasefire and some help from the cooler-than-expected U.S. inflation report.

In Treasuries, yields rose with the potentially inflationary impact of tariffs offseting optimism about cooling inflation.

“This is the last reading not impacted by tariff distortions, so to some extent the market’s a little bit hesitant to over-react to a better print,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.

The yield on benchmark U.S. 10-year notes rose 2.8 basis points to 4.316%, from 4.288% late on Tuesday while

the 30-year bond yield rose 3.2 basis points to 4.6355%.

The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5 basis points to 3.991%, from 3.941% late on Tuesday.

With investor concerns mounting about recession and a global trade war, the yield spreads between corporate bonds and U.S. Treasuries widened late on Tuesday to their widest level since September.

In currencies, U.S. dollar performance was mixed due to counter currents of cooling inflation versus worries that tariffs could crank it up going forward.

The euro was down 0.25% at $1.0891 and against the Japanese yen , the dollar strengthened 0.38% to 148.33.

But the Canadian dollar strengthened 0.45% versus the greenback to C$1.44 per dollar and against the Swiss franc , the dollar weakened 0.08% to 0.882.

The Russian rouble reached a more than six-month high on Tuesday, but pulled back on Wednesday , weakening 1.75% against the greenback to 87.147 per dollar.

Oil prices rose as U.S. government data showed tighter oil and fuel inventories than expected, though investors kept an eye on mounting fears of a U.S. economic slowdown and the impact of tariffs on global economic growth.

U.S. crude settled up 2.16% or $1.43 at $67.68 a barrel while Brent settled at $70.95 per barrel, after rising 2% or $1.39 on the

day.

Safe-haven gold rose, aided by tariff uncertainty and the cooler U.S. inflation report.

Spot gold rose 0.53% to $2,931.59 an ounce. U.S. gold futures rose 0.74% to $2,934.40 an ounce.

Elsewhere in metals, copper rose 1.31% to $9,789.00 a tonne while three-month aluminum on the London Metal Exchange fell 0.11% to $2,700.00 a tonne.

American Eagle warned investors on Wednesday that consumers are pulling back on spending and it’s seen a “slower start” to the year than it expected.

“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” CEO Jay Schottenstein said in a news release. “While we anticipate improvement as the Spring season gets underway, we are also taking proactive steps to strengthen the top-line, manage inventory and reduce expenses. As we navigate through an uncertain consumer and operating landscape, we will also remain focused on our long-term strategic priorities.”

Shares fell about 5% in extended trading.

The downbeat commentary, which came along with weak guidance for the current quarter and year ahead, is the latest warning sign that the consumer might be slowing down as shoppers contend with persistent inflation and concerns around tariffs.

Over the past couple of weeks, a string of other retailers, including both strong companies and ones that tend to struggle, issued weak guidance and cautious commentary about the current macroeconomic conditions and warned 2025 might be a weaker than expected year for sales.

Beyond its outlook, American Eagle issued mixed holiday results and comparable sales that beat expectations. Here’s how the apparel company did in its fiscal fourth quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: 54 cents vs. 50 cents expected
• Revenue: $1.60 billion vs. $1.60 billion expected

The company’s reported net income for the three-month period that ended Feb. 1 was $104 million, or 54 cents per share, compared with $6.31 million, or 3 cents per share, a year earlier.

Sales dropped to $1.60 billion, down slightly from $1.68 billion a year earlier. Similar to other retailers, American Eagle benefited from an extra week in the year-ago period, which has negatively skewed results.

Comparable sales, which don’t include the effect of one less selling week, were up 3% during the quarter, ahead of expectations of up 2.1%, according to StreetAccount. Aerie, American Eagle’s intimates and activewear line, drove the company’s growth during the quarter with comps up 6%. Meanwhile, the company’s namesake banner saw comparable sales up 1%.

For the current quarter, American Eagle is expecting to see a mid-single-digit decline in sales, while analysts expected revenue to increase 1.3%, according to LSEG. For the full year, it is expecting sales to decline by a low single digit, compared with expectations of 3% growth, according to LSEG.

On a call with analysts, finance chief Michael Mathias said Aerie sales are expected to be positive for the year but that growth will be offset by a steeper decline at the American Eagle banner.

Tariffs are also expected to weigh on results, Mathias said. The company currently sources just under 20% of its products from China and is expecting a $5 million to $10 million hit from the new duties in fiscal 2025, which will also affect American Eagle’s gross margin. At the moment, the company isn’t planning on passing those costs on to the consumer and is working to get its China exposure down to under 10% by the end of the fiscal year, Mathias said.

Over the past year, American Eagle has made significant strides in improving profitability but has seen slower sales growth. In the three prior quarters, it missed Wall Street’s sales expectations, and on Wednesday, it issued revenue numbers that were in line with analysts’ forecasts but didn’t exceed them.

During the quarter, the company acknowledged it had some product misses and had certain items that were out of stock, which affected sales, but American Eagle’s stores are also weighing on its results. The company still has a large mall footprint, and while there are some signals that malls are seeing a resurgence, traffic is still down significantly at U.S. malls, which means fewer people are coming into the retailer’s stores. For example, online sales are expected to be positive during the first quarter while store sales are expected to fall steeper than a mid-single-digit.

To combat the effect of declining malls, rival Abercrombie & Fitch has worked to move its stores to locations outside of malls while American Eagle has been working to remodel its existing fleet. Currently, the company’s stores are on average 12 years old, and it’s working to get that down to seven. In fiscal 2024, it remodeled around 56 stores, and in the year ahead, the company plans to remodel between 90 and 100 doors as part of its $300 million capex guidance.

In prior quarters, American Eagle has said it’s been contending with an uncertain economic environment and a consumer that tends to only come out and shop during key moments, but now a wide range of other retailers are reporting similar dynamics as cracks in the economy spread.

In February, consumer confidence saw the biggest drop since 2021, job growth slowed more than expected and unemployment ticked up. These signals and the effect they’ve had on the markets have led to concerns that a recession could be coming, especially if President Donald Trump’s trade war with Canada, Mexico and China continues.

A slowing economy is bad news for any retailer but especially those that primarily sell discretionary goods such as new clothes. During a call with analysts, Schottenstein shared his thoughts on the consumer and said the biggest thing affecting shoppers is uncertainty.

“They have the fear of the unknown, not just tariffs, not just inflation. They see the government cutting people off. They don’t know how that’s going to affect them. They see programs being cut, they don’t know how that’s gonna affect them,” said Schottenstein. “They just don’t know how it’s gonna affect them … they get very conservative.”