Verizon (VZ) shares are facing a significant drop, down more than 6% after the company issued a cautious outlook for Q1 sales. The warning came during comments made by Chief Revenue Officer Frank Boulben at the Deutsche Bank Telecom Conference, where he highlighted the intense competition in the industry as a key challenge. According to Boulben, this competitive pressure is making the upcoming quarter particularly difficult. He noted, "We continue to have a disciplined approach. When we see less demand, we pull out of promotion. When we see demand picking up, like in March, we come back with a new promotion. So, it’s been a challenging quarter from a competitive intensity standpoint."

In an 8-K filing following Boulben's remarks, Verizon provided further details on its outlook for the quarter.

The company cautioned that its postpaid phone net additions—new monthly subscriptions minus customer losses—would likely be lower than expected, with a slight increase in churn compared to the previous year. Verizon anticipates 3-5 basis points of additional churn due to recent pricing adjustments, along with flat to declining postpaid phone gross additions.

The update signals a tough road ahead for Verizon as it navigates the highly competitive wireless landscape. While the company is adapting its promotional strategies based on demand fluctuations, it’s clear that the competitive environment is putting significant pressure on its customer acquisition and retention efforts.

In the midst of these challenges, Verizon has also been pursuing a major acquisition to bolster its growth. In September, the company announced a $20 billion deal to acquire Frontier Communications, which will bring an additional 2.2 million fiber subscribers into Verizon’s fold. The deal is expected to close by the end of the year, but with its current struggles in Q1, Verizon will need to ensure that this acquisition delivers the promised benefits to offset its short-term hurdles.

In the midst of the market sell-off, there's an interesting twist: the traditional safe stocks are now getting hit harder than the momentum stocks that have driven much of the recent volatility.

As the S&P 500 slides and President Trump escalates tariffs on Canada, the usual havens for cautious investors—those stable, low-volatility stocks—are seeing larger losses than expected. This shift in market dynamics signals a notable change in investor behavior as the fever around momentum stocks starts to cool.

The iShares MSCI USA Min Vol Factor ETF (USMV), which tracks stocks known for their lower volatility, is down 0.9% as of 11:20 a.m. ET. In contrast, the iShares MSCI USA Momentum Factor ETF (MTUM), which focuses on companies with the strongest recent performance, is seeing a modest uptick. If this trend continues, it would mark the first time that lower-volatility stocks have underperformed momentum stocks on a down day for the S&P 500 since the market began its retreat from record highs.

Looking at the performance over the past few weeks, the disparity between these two ETFs is stark. As of yesterday’s close, the relative performance gap between MTUM and USMV is the worst it has been since these funds were launched in 2013. This suggests that, at least for now, investors are moving away from the perceived "safe" options in favor of the more volatile momentum plays, despite the broader market weakness.

For example, traditionally safe stocks like Verizon, General Mills, and McDonald's have all seen steeper declines than the S&P 500 recently. Meanwhile, riskier names like Reddit, AppLovin, and Robinhood have been bouncing back, albeit with significant volatility. This shift is a clear sign of the changing sentiment in the market, where investor focus seems to be moving toward riskier, high-growth stocks instead of steady blue-chip performers.

This unusual stretch of momentum stocks outperforming lower-volatility stocks is reminiscent of late 2021, a period marked by similar market dynamics. Back then, investors were rattled by the Omicron variant and a surge in policy uncertainty, leading to a rally in bonds and a move toward low-volatility stocks. However, just as it did in late 2021, the momentum trade may be reasserting itself as fears about policy changes, growth projections, and even AI concerns continue to dominate the conversation.

Stocks Slide Deeper as Trump Escalates Tariff Threats

A fresh escalation in tariff rhetoric from President Trump sent shockwaves through the stock market on Tuesday, deepening losses and bringing the S&P 500 closer to a technical correction. With this latest downturn, the benchmark index is now hovering just under a 10% decline from its most recent high, a level often seen as a signal of a market in correction territory.

It’s important to note that while a 10% drop signals a correction, it doesn’t necessarily mean a bear market is on the horizon. The 10% threshold is somewhat arbitrary in the world of Wall Street, serving as a way to categorize a sell-off that is more significant than a typical market dip but not as severe as a full-fledged bear market. Still, this sharp pullback is enough to raise concerns among investors, especially with the heightened uncertainty around trade policy.

The market's recent struggles highlight just how much the tariff threats are impacting investor sentiment. With tensions escalating once again between the U.S. and its trading partners, particularly China, the threat of more tariffs has created a volatile environment. This uncertainty, paired with fears of economic slowdowns, is pushing many stocks lower as investors reassess their outlook for the global economy in the face of growing trade conflicts.

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