Fed Week The Federal Reserve meets this week, with a much-anticipated decision on interest rates coming on Wednesday. Last week, the Dow Jones Industrial Average rose 0.5%, the S&P 500 0.3%, and the Nasdaq 0.1%. Year to date, the Dow is up almost 13%, the S&P 500 almost 17%, and the Nasdaq just over 22%. On the earnings calendar, Toll Brothers reports on Monday; AutoZone and Campbell's on Tuesday; Oracle and Adobe on Wednesday; and Broadcom, Costco, Ciena, and Lululemon on Thursday. Some 97% of S&P 500 companies have reported as of November 28, with earnings for the quarter up 15% from the prior-year quarter. That follows 13% growth in 2Q EPS and 14% growth in 1Q EPS, according to LSEG I/B/E/S. For this quarter, Information Technology is the leading sector, up 30%, and Energy is at the bottom, down 2%. On the economic calendar, the delayed October JOLT (Job Openings and Labor Turnover) report will be published on Tuesday and the Federal Reserve will release its headline-grabbing interest-rate decision on Wednesday (with remarks from Chairman Jerome Powell to follow0. The market is pricing in an 87% chance that the Fed will lower its benchmark funds rate by 25 basis points. In addition, government-issued reports are starting to trickle back in. The key November jobs report will be published next week on December 16. The issuer, the Bureau of Labor Statistics, will skip the release of the October jobs report due to the government shutdown. Turning to other data, we are currently using the Chicago Fed Labor Market Indicator as a proxy for the government-issued unemployment rate, with the final forecast for November at 4.44%. Elsewhere, the Atlanta Fed GDPNow measure calls for GDP of 3.5% in the third quarter, down from the forecast last week. The Cleveland Fed Inflation Nowcast forecasts a 3.0% rate for CPI in November and 2.9% in December. Mortgage rates continue to decline, with the average 30-year fixed-rate mortgage now at 6.19%, according to FreddieMac. Gas prices were down seven cents last week and average $2.99 per gallon for regular gas. After this week's Federal Open Market Committee meeting (the last in 2025), the Fed next meets on January 28. The odds for another 25-basis-point rate cut at that meeting (assuming this week's cut is as expected) are at 25%, according to the CME FedWatch rate tool. Taking a deeper dive into performance, U.S. stocks are lagging global stocks. A leading industrialized global stock market index (ETF EFA) has surged 27% year to date, while the leading emerging market ETF (EEM) has gained 31%. U.S. growth stocks, with a year-to-date gain of 18% (ETF IWF) have taken the edge over value stocks (ETF IWD), which have booked an advance of 14%. In other asset classes for the year to date, AGG bonds are up 3%, gold is up 63%, crude oil is down 15%, and Bitcoin is off 4%. The U.S. dollar is down 8%, tracking DXY. The VIX Volatility Index settled Friday at 15.4, down from a high of 26 in late November. Looking at leading and lagging sectors so far in 2025, Communication Services, (+34%) and Information Technology (+24%) are the top performers, followed by Utilities (+18%), and Industrials (+19%), all outperforming the broader market. Healthcare (+14%) and Financials (+10%) are close behind. Defensive sectors like Materials (+6%), Energy, (+5%), Consumer Discretionary (+5%), Consumer Staples (+3%), and Real Estate (+3%) are at the bottom of the performance list.

BJ's Wholesale Club Holdings owns BJ's Wholesale Club, which operates a chain of warehouse clubs in the Eastern U.S. BJ's positions itself between traditional grocery stores and warehouses like Sam's Club and Costco. It offers a wider range of items and smaller pack sizes than Costco and Sam's. The company posted total revenue of $20 billion in FY25, which ended on February 1, 2025. As of 1H26, income from membership fees represented 2.4% of total revenue and 58% of operating income. The company sells name-brand merchandise and food to members, who are small business owners and consumers. Based in Westborough, Massachusetts, the company also offers specialty services, including tire installation, optical services, and photo developing. At the end of fiscal 3Q26, the company operated 256 BJ's clubs and 192 gas stations in 21 states. More than half of the clubs are in four states: New York, Florida, Massachusetts, and New Jersey. About 23% of FY25 sales were generated in the New York City metro area (down from 25% in FY21 and FY20). Clubs range from 43,000 to 177,000 square feet. BJ's sells a relatively narrow assortment of approximately 7,000 SKUs, which it has discussed trimming to about 6,000 to improve inventory turnover. Groceries represented 71% of the company's FY25 net sales (70% in FY24, 67% in FY23, 71% in FY22); general merchandise and services accounted for 11% in FY25, 11% in FY24, 12% in FY23, and 14% in FY22. Gasoline rose to 21% in FY23 from 15% in FY22 and 9% in FY21. Gas was 19% of sales in FY24 and 18% in FY25. A predecessor company, BJ's Wholesale Club, traded as a public company until it was acquired on September 30, 2011, by an investor group led by Leonard Green & Partners and CVC Capital. On July 2, 2018, the company again went public as BJ's Wholesale Club Holdings on the NYSE. CVC and Leonard Green held no shares when the company published its FY21 annual report. The company's fiscal year ends on the Saturday closest to January 31. The convention at Argus, Bloomberg, and other data service providers is to number the fiscal year based on the calendar year in which it ends. BJ's current fiscal will end on January 31, 2026. We thus call the current year FY26 while the company calls it FY25. The year we call FY25 had 52 weeks. The year ended February 3, 2024, had 53 weeks.

BJ’s Wholesale serves as one of the few warehouse club chains in the United States. Its 250 warehouses are primarily located along the East Coast, most prominently in the New England area. Similar to its warehouse club peers, BJ’s charges annual membership fees and keeps costs down by operating a “no-frills” store environment. The company limits the use of distribution centers where possible and stores inventory on pallets directly on the sales floor, often in bulk quantities. The company also offers a limited assortment of 7,000 stock-keeping units at its warehouses to achieve greater procurement scale on select items. About 80% of BJ’s net sales come from grocery items and general merchandise, with the remaining 20% stemming from gasoline and other ancillary services.

BJ’s Wholesale serves as one of the few warehouse club chains in the United States. Its 250 warehouses are primarily located along the East Coast, most prominently in the New England area. Similar to its warehouse club peers, BJ’s charges annual membership fees and keeps costs down by operating a “no-frills” store environment. The company limits the use of distribution centers where possible and stores inventory on pallets directly on the sales floor, often in bulk quantities. The company also offers a limited assortment of 7,000 stock-keeping units at its warehouses to achieve greater procurement scale on select items. About 80% of BJ’s net sales come from grocery items and general merchandise, with the remaining 20% stemming from gasoline and other ancillary services.