Wall Street has high standards for what counts as success.

For example, by nearly any measure, Disney is a home-run of a company.

I’ve watched Disney movies my whole life. So have most people. Few brands can match its global reach and track record.

But shares of Disney tanked about 10% Tuesday after its streaming numbers fell short of analysts’ expectations.

When it comes to earnings, it’s not enough to be a beloved household name, nor is making a lot of cash.

To please shareholders, companies must make more money than anyone expects — and even that isn’t always enough.

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The start of a bullish political cycle

In the stock market, optimists sit on the side of history.

That’s particularly true during summer months, and even more so during presidential election years, according to Bank of America. 

In a research note shared Tuesday, the firm cautioned investors against following the Wall Street adage, “sell in May and go away.”

Dating back to 1928, the S&P 500 tends to perform well during the June-to-August stretch:  

• The index is positive 65% of the time, with a 3.2% average return

• During election year, the index is up 75% of the time, with a 7.3% average return

Bank of America also pointed to a slate of bullish technical patterns, such as a growing number of stocks hitting 52-week highs.

To be sure, numbers can tell different stories depending how you slice them.  

Bret Kenwell, an investment analyst with eToro, highlighted that over the last five decades, the S&P 500 has averaged better returns between November and April, compared to May through October. 

“My personal view is, it’s less ‘sell in May’ and more ‘adjust in May,’” Kenwell told me. 

That pattern isn’t unique to American equities. 

The same trend emerges across 15 other stock markets, 12 of which are outside the US, Kenwell said, which suggests there’s more at play here than political cycles. 

In any case, we’re only one week into May and bulls have already come out in force.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are on pace for their strongest start to a month all year. 

Markets have largely changed course on a shifting policy narrative. Investors took a hit in April when the odds for Federal Reserve rate cuts evaporated. 

The rebound in stocks this month, in turn, has coincided with improving prospects for those cuts, in addition to broadly upbeat earnings. 

For now, the optimists are having their moment. It’s what usually happens when you zoom out. 

But that’s not to say the bears won’t come back. The S&P 500 has averaged three 5% corrections a year since 1974, so another dip or two could be around the corner.

“Given the number of unknowns still floating around the market, it’s hard to rule out potentially lower prices,” Kenwell said. 

“If that does occur and we get an 8% to 10% correction from the highs, It’s likely an opportunity for investors as the S&P 500 retests its prior bull-market high from January 2022.”

*At a glance:

Elsewhere:

• JPMorgan unveiled its “IndexGPT.” The bank is creating thematic investment baskets using the help of OpenAI’s large language model. Cutting edge AI on Wall Street isn’t new, but this still feels different. (Bloomberg)

• Disney stock tumbled 10% Tuesday. The company said it’s nearly there with a profitable streaming business, but that wasn’t enough to please Wall Street. Until last week, Disney had climbed 29% in 2024. (WSJ)

• Election risks are showing up in currency markets. Foreign exchange traders are already seeing elevated volatility around the November election date. China’s yuan specifically is showing pronounced options betting. (Bloomberg)

Rapid-fire:

• Crude prices fell as Russia signaled it may increase oil output (MarketWatch)

• Lyft reported a 21% jump in bookings to start the year (Bloomberg)

• Former NFL star Rob Gronkowski to pay $1.9 million to settle crypto investor suit (CoinDesk)

• Six reasons the bull market has room to run (Carson Group)

• Billionaire Stanley Druckenmiller trimmed his Nvidia stake (Business Insider)

• Reddit stock rallied after its first earnings report since its IPO (Bloomberg)

Last thing:

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