Innovative Industrial Properties (IIP) (IIPR), one of the largest landlords in the U.S. cannabis industry, appears to be navigating the turbulence in the sector slightly better than the operators it leases to. On Wednesday, IIP revealed a rare dip in annual revenue, which fell to $308.5 million in 2024, down from $309.5 million in 2023. This marks the first time the company has experienced a revenue decline. While investors were neither thrilled nor overly disappointed with the results, the stock remained relatively stable, edging up less than 1% by midday Thursday.

This dip in revenue represents a shift for IIP, which had experienced rapid growth since its inception in 2016, a time when fewer states had legalized cannabis. Over the years, IIP’s revenue had surged as the legal cannabis market expanded, but it now faces the broader challenges that have plagued many U.S. cannabis operators. These companies struggle with limited access to banking services, an unfavorable tax structure, and heavy debt loads—without the protections offered by bankruptcy laws. According to Beau Whitney, chief economist at Whitney Economics, the U.S. cannabis sector is facing $6 billion in debt maturities over the next year, which could further strain operators.

Despite the industry’s struggles, IIP is insulated from some of these challenges because it is not directly involved in cannabis production, making it a non-plant-touching company. As a result, it avoids many of the legal complexities that its tenants face. IIP’s stock performance tends to outperform that of its tenants, many of which cannot list on major stock exchanges due to federal restrictions. However, IIP is not entirely immune to the turmoil affecting the cannabis market.

The company had previously disclosed a default by one of its tenants, PharmaCann, on its December and January rent payments. To resolve this, IIP reached an agreement with PharmaCann, which included a reduction in the base rent from $2.8 million to $2.6 million. Additionally, IIP reported using $5.7 million in security deposits to cover overdue rent from five different tenants in the most recent quarter. While IIP is better positioned than its tenants, it is still facing challenges as it navigates the shifting landscape of the U.S. cannabis industry.

U.S. banks are taking a heavy hit on Thursday, with the Invesco KBW Bank ETF (KBWB) falling by 3%.

This marks its worst single-day loss of 2025 so far, reflecting a broader trend of weakness within the sector. The timing couldn’t be worse for banks, which had recently become a hot investment target. Bank of America strategists noted that weekly inflows into bank stocks had reached their highest levels since the aftermath of the global financial crisis, underscoring the sector's rising popularity.

What’s particularly interesting is that, on this rough day, the KBW Bank ETF, which tracks larger banks, is underperforming its smaller counterparts in the SPDR S&P Regional Banking ETF (KRE), a trend that's unusual on days of broad market decline. This signals that the pain is disproportionately affecting the larger banks, which are typically seen as more stable during turbulent times.

Among the biggest losers, Morgan Stanley (MS) and Goldman Sachs (GS) are struggling, with shares down 1.14% and 0.48%, respectively. However, it’s JPMorgan (JPM) that has been hit hardest, with the bank showing the steepest losses in the KBW Bank Index over the past week. This slump coincides with the leak of an audio recording in which JPMorgan CEO Jamie Dimon harshly criticized work-from-home policies. The timing of this revelation has added to investor concerns, further dragging down JPMorgan's performance as the company navigates both internal and external challenges.

Walmart (WMT) shares are facing downward pressure following a lackluster earnings forecast for its current fiscal year.

Management projected adjusted earnings per share to land between $2.50 and $2.60, falling short of analysts' expectations of $2.77. This disappointing guidance has sent ripples across the broader market, sparking concerns about the overall health of the U.S. economy. Notably, even sectors like banking have felt some impact, as investors grow wary of consumer spending and economic stability.

However, there’s a key factor that could soften the blow of this underwhelming outlook: Walmart has a history of surpassing its initial guidance. Over the past two years, the retail giant has consistently outperformed its first earnings projections. In both fiscal 2024 and 2025, Walmart’s actual earnings exceeded its initial guidance by an average of 10%. This track record of underpromising and overdelivering could suggest that the company's current forecast is more conservative than it appears.

If Walmart were to meet the same 10% beat this time around, adjusted earnings per share would reach approximately $2.805—slightly above Wall Street’s current estimate. This could help ease investor concerns if the retailer follows its usual pattern of surpassing expectations. While the initial outlook may seem disappointing, Walmart’s historical performance suggests that its actual results may end up exceeding projections, providing a potential upside for investors.

High egg prices could lead to a shift in the breakfast offerings of many restaurants, and Shake Shack (SHAK) CEO Rob Lynch believes competitors might soon swap eggs for more chicken and beef.

Speaking to analysts on Thursday, Lynch responded to a question about the broader effects of tariffs and inflation, noting that Shake Shack’s menu doesn’t heavily rely on eggs. While the chain does source most of its ingredients domestically, it doesn’t have much exposure to eggs compared to other restaurants that feature egg-based items more prominently.

Lynch explained that as egg prices rise, other restaurant chains with larger breakfast menus may look to adjust by increasing their use of chicken or beef to replace the high-cost egg items. He suggested that this shift in product offerings could have a ripple effect, potentially impacting Shake Shack as well. “We don’t have a big breakfast business, so we don’t have the exposure to eggs,” Lynch said. “But if other restaurant companies start using more chicken or beef to complement or substitute for eggs, it could affect domestic pricing across the industry as consumption patterns change.”

This kind of menu adjustment wouldn’t be unprecedented. The fast-food industry has already seen similar changes in the past. For instance, as beef prices rose above those of chicken, many chains pivoted to offering more chicken-based products. McDonald’s, for example, now sells more chicken than beef, reflecting broader shifts in consumer demand and pricing pressures. As the restaurant industry adapts to fluctuating ingredient costs, Shake Shack’s relatively low reliance on eggs could give it some cushion, but the wider impact of these market shifts is something to watch closely.

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