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July 2025

Jul 22
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Mitch Zacks – Weekly Market Commentary: How the One Big Beautiful Bill Act (OBBBA) Affects Investors

By Weekly Market Commentary

Digging into the One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA) has been signed into law, which makes now a good time to review how the law financially affects individuals, families, and businesses. Depending on where you look, you can find sweeping praise or stern criticism of the law’s provisions. I’ll offer no such viewpoint here.1

My goal instead is to give readers straightforward, objective commentary on how the bill impacts household and corporate finances, which by extension can provide clues regarding potential investment implications.

I’d like to start with what has not changed. Despite some speculation during the legislative process, the OBBBA doesn’t raise corporate tax rates or alter capital gains tax rates. There is also no “millionaire’s surcharge,” no wealth tax, and no financial transaction tax, proposals that circulated in early drafts but didn’t make it into the final version. For many investors and business owners, the absence of these changes means that planning strategies from recent years remain intact.

Now let’s jump into what the law means for individuals, families, and businesses.

Key Provisions for Individuals and Families:

A major feature of the OBBBA is that it makes the 2017 Tax Cuts and Jobs Act individual tax rates permanent. This includes:

  • Lower marginal tax brackets
  • The expanded standard deduction was locked in, and will now be adjusted for inflation starting in 2026. In that year, the standard deduction for single filers will rise to $16,550, while married couples filing jointly will be able to deduct $33,100. For 2025, single filers will see a temporary $1,000 increase in the standard deduction while joint filers will receive $2,000.
  • The repeal of personal exemptions
  • Higher thresholds for the alternative minimum tax (AMT)
  • For individuals who own small businesses, OBBBA also made permanent the 20% deduction for qualified business income (QBI) from pass-through entities like S corps and partnerships.

Several new deductions were also added, but many come with income phaseouts or sunset provisions. Here are the key deductions I think will impact most readers:

  • The state and local tax (SALT) deduction cap rises from $10,000 to $40,000 from 2025 to 2029, but it phases out above $500,000 of modified adjusted gross income (MAGI) and reverts to $10,000 in 2030.
  • A new $6,000 per-person deduction for seniors (age 65+) begins in 2025 and runs through 2028. It begins to phase out at $75,000 of income for singles and $150,000 for married couples.
  • A deduction of up to $25,000 for tips and $12,500 for overtime pay is available—but again, both are subject to income phaseouts and expire in 2028.

These new deduction provisions offer targeted relief and are allowed even if the standard deduction is taken, which helps widen their reach. However, they do not reduce adjusted gross income (AGI), meaning they won’t lower exposure to the 3.8% net investment income tax or Medicare IRMAA surcharges.

Key Provisions for Businesses

OBBBA reinstates and makes permanent 100% bonus depreciation for qualified property placed in service after January 19, 2025. It also adds a new category, Qualified Production Property, for U.S.-based manufacturers and refiners. Importantly, both bonus depreciation and the expanded standard deduction will now be adjusted for inflation starting in 2026, offering longer-term planning consistency for businesses.

Other key changes for business owners include:

  • Increased Section 179 expensing limits (now $2.5 million), which allows businesses to write off the full cost of eligible assets in the year they’re placed in service, rather than depreciating them over time. For business owners making large capital investments—this can deliver meaningful tax savings and improve after-tax cash flow in the near term. In other words, good for earnings.
  • Retroactive R&D expensing for 2022 and 2023
  • More lenient business interest deductibility under Section 163(j), which effectively raises the ceiling on deductible interest expense, especially for capital-intensive industries. Companies that invest heavily in equipment, facilities, or R&D often have large depreciation expenses. Excluding those from the interest deduction formula means more of their borrowing costs can be written off, making financing growth more attractive.

Bottom Line for Investors

There’s a lot to unpack here, and I did not broach the issue of deficits and the trajectory of U.S. debt, both of which could impact interest rates over time. That said, many of the new provisions expire before the end of the decade, and future Congresses will almost certainly debate the economic and fiscal impact in future years.

In the meantime, investors should view this through the lens of being substantial fiscal stimulus, which also comes as the Federal Reserve appears poised to ease monetary policy to bring the benchmark fed funds rate back to the neutral level. When you have fiscal stimulus and monetary stimulus in the same year, it’s difficult to make a case against owning equities.

1 Congress. https://advisor.zacksim.com/e/376582/9th-congress-house-bill-1-text/5tb18c/1271604313/h/b5NI_ZnFcoKsqat2VL03uwfStfhhtVEi0vJOs9LloWc

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties.  Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell. The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Dow Jones Industrial Average measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. An investor cannot directly invest in an index.  The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Bloomberg Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The ICE Exchange-Listed Fixed & Adjustable Rate Preferred Securities Index is a modified market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, depositary preferred securities, perpetual subordinated debt and certain securities issued by banks and other financial institutions that are eligible for capital treatment with respect to such instruments akin to that received for issuance of straight preferred stock. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The MSCI ACWI ex U.S. Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 2000 Index is a well-known, unmanaged index of the prices of 2000 small-cap company common stocks, selected by Russell. The Russell 2000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The S&P Mid Cap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The S&P 500 Pure Value index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme. An investor cannot directly invest in an index.  The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Jul 17
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The Pursuit of Financial Freedom In Retirement

By Financial Planning, Retirement Planning

Financial freedom in retirement means more than just having enough money, it means having choices. Putting a comprehensive retirement plan in place can not only help you take control of your finances, but also address how you will spend your time by defining your desired lifestyle and delineating strategies for your future as you get older. With confidence as your goal, the true reward of financial independence may not be found in an account balance, but in the ability to shape your days around what matters most to you in retirement.

Unfortunately, many retirees find themselves feeling “stuck” because of poor planning. Whether it’s running short on savings, carrying lingering debt, or facing unexpected healthcare costs, take a look at these steps designed to help reduce uncertainty and guide you towards financial freedom.

Set Your Foundation

Financial freedom in retirement starts with a clear vision. That begins with defining what freedom looks like to you and getting specific about the goals that will get you there.

For some, financial independence may mean early retirement or a debt-free lifestyle. For others, it’s the ability to travel or support family. Maybe it’s all the above. Start by outlining both your short- and long-term goals. What does your ideal lifestyle look like at different stages of retirement? Use measurable benchmarks such as savings targets, debt reduction timelines, and milestone ages, to create a structure you can track.

Build a Budget

Now that you’ve defined your ideal retirement lifestyle, the next step is understanding how much income you’ll need to support it. Creating a realistic budget can give you the framework to manage your money with purpose.

Start by tracking your income, expenses, debts, and investments. Work with a financial advisor to map out your income sources—such as Social Security, pensions, and retirement investments—and to plan for required minimum distributions (RMDs). Your budget should prioritize your essential living expenses while also making space for the things that bring fulfillment. Whether it’s a weekend getaway or a new set of golf clubs, a budget can give you the freedom to spend without guilt. The goal of budgeting isn’t to restrict your lifestyle—it’s to make sure your spending aligns with your priorities.

Ditch the Debt

Even in retirement, financial freedom can be compromised by lingering debt. While many retirees enter this chapter debt-free, others may still be carrying balances. If that’s you, it’s never too late to take control.

Start by focusing on high-interest debt first, as it tends to be the most damaging to your financial stability. Consider strategies like the snowball method (tackling the smallest debts first for quick wins) or the avalanche method (prioritizing the highest interest rates to help save money over time).

Downsize the Stress

Not everyone will need to consider this step—after all, everyone’s definition of financial freedom is based on their own goals. But for some, learning to live below your means can be a move toward greater freedom in retirement. This doesn’t mean sacrificing the things that matter most, but more so being intentional with your resources so you can align your lifestyle with your financial reality.

Start by evaluating whether your current home, spending habits, or overall lifestyle still make sense for this stage of life. Could downsizing your home reduce your expenses and free up cash flow? Could simplifying your lifestyle reduce stress and create more time for the things you love? Downsizing doesn’t mean downgrading. In fact, it can often create more freedom. Fewer expenses, less maintenance, and a smaller footprint can translate into more time and flexibility.

Prioritize Your Health

You can’t plan for everything, but you can prepare for a lot. Taking care of your health in advance is an important step in protecting your financial freedom in retirement. Planning for medical needs before they become urgent can help you avoid major financial setbacks down the road.

Start by building healthcare and potential long-term care costs into your retirement budget. From prescriptions, dental work, and even assisted living or in-home care, these expenses can add up quickly if you’re unprepared. But don’t just budget—prioritize your wellness. Regular checkups, preventive screenings, and healthy habits can help catch issues early. Think of it as protecting your most valuable asset: you. You’ve worked hard to reach financial freedom—now, make sure you’re able to enjoy it.

 

Whether you’re reviewing your current retirement plan, speaking with a trusted advisor, or simply taking time to define what financial freedom truly looks like for you, the most important step is to start. The goal isn’t just to stop working, it’s to build a life you don’t want to retire from. Are you ready to take that next step? Let’s do it together! Contact us today to explore how we can help you in your pursuit to financial freedom. You can reach BayTrust Financial in Tampa at 813.820.0069.

 

Sources

https://www.investopedia.com/articles/personal-finance/112015/these-10-habits-will-help-you-reach-financial-freedom.asp

https://www.tfnbtx.com/7-steps-to-take-to-achieve-financial-freedom-for-2025/

https://finance.yahoo.com/personal-finance/banking/article/what-is-financial-independence-130044125.html

https://www.forbes.com/sites/enochomololu/2024/01/20/7-steps-to-achieve-financial-freedom-and-retire-early/

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

Jul 16
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Mitch Zacks – July 2025 Market Strategy Report

By Market Strategy Report

What to Expect from This Report

The pause in trade war tensions has officially passed. As we enter July, the Trump administration has reignited its global tariff strategy, setting new deadlines for dozens of countries to strike new trade deals. Markets have responded with a mix of resilience and caution, as investors weigh the near-term economic risks against an otherwise stable backdrop in jobs and consumer spending.

Earlier in the month, the One Big Beautiful Bill Act passed both chambers of Congress, and it makes permanent several Trump-era tax cuts, raises defense spending, and introduces stricter eligibility requirements for social programs. We’ll review some of the key details of the bill in this report, as well as previewing what to expect from Q2 2025 earnings—starting with banks.

The Trade War is Back On.

Here’s Where Everything Stands The market’s summer break from tariff uncertainty is officially over. On July 7, the Trump administration delayed the imposition of steep reciprocal tariffs by three more weeks to August 1, following an earlier 90- day pause. But the next day, President Trump announced sweeping new measures: a 50% tariff on copper and a 200% tariff on pharmaceutical imports. These announcements reignited concerns that a full-blown trade war could soon resume.1

The reciprocal tariff strategy, first floated on April 2, targets more than 80 countries and would replace the existing 10% baseline tariff on most U.S. imports with much higher, country-specific rates—some as high as 125%. These measures were briefly enacted in April before being paused. Trump has framed the August 1 deadline as firm, stating: “No extensions will be granted.”

On July 7, letters were sent to more than a dozen countries warning of looming tariffs unless new trade agreements are finalized. These letters included tariffs ranging from 25% to 40%, with Japan and South Korea among the nations facing new 25% duties, particularly on automobile exports. Another round of letters was sent on July 9, and Commerce Secretary Howard Lutnick has indicated 15 to 20 more countries will soon be added.

Later that day (after the market closed), President Trump unveiled a 50% tariff on Brazilian goods starting August 1, the steepest yet. In a personal letter to Brazil’s president, Trump criticized the country’s treatment of former president Jair Bolsonaro and accused Brazil of undermining free elections.

Additional sector-specific tariffs are either already in effect or on the horizon. As of June 4, steel and aluminum imports face 50% tariffs (up from 25%), although the U.K. is exempt. Vehicle imports were hit with 25% duties on April 3, and a similar rate was applied to auto parts starting May 3. Pharmaceutical companies will be given up to 18 months to reshore supply chains before their 200% tariff kicks in. Trump has also hinted at possible tariffs on semiconductors, citing national security concerns under Section 232 of the Trade Expansion Act of 1962.

In parallel, we’ve also seen an additional 10% tariffs threatened on countries aligned with the BRICS bloc— Brazil, Russia, India, China, and South Africa—arguing that their trading practices disadvantage the U.S. The administration has also suggested that the EU could be next in line to receive tariff letters, particularly in light of European regulatory actions against U.S. tech companies.

Despite the sweeping scope and rhetoric, financial markets have remained relatively composed. Many investors appear to believe the real economic fallout will be muted, at least in the short term. Labor markets, consumer spending, and corporate earnings have all remained resilient despite ongoing trade tensions. Still, we think it’s possible that prolonged tariff uncertainty could pressure growth and reaccelerate inflation in the months ahead. Investors should stay alert: the next phase of the trade war is no longer a hypothetical— it’s arriving now.

Breaking Down Provisions in the One Big Beautiful Bill Act

A massive piece of legislation has been signed into law. The bill, which passed after a tie-breaking vote in the Senate and late-night wrangling in the House, aims to extend Trump-era tax cuts, significantly boost military and immigration enforcement spending, and apply cuts to social safety net programs.2

The bill’s centerpiece is a permanent extension of the 2017 Tax Cuts and Jobs Act, including higher standard deductions and targeted breaks for retirees and tip earners. But to fund those tax cuts, the bill introduces deep changes to Medicaid, including more frequent re-enrollment requirements, stricter work rules, and reduced provider tax rates.

The legislation also expands the child tax credit, raises the deduction cap for state and local taxes (SALT) from $10,000 to $40,000 for five years, and introduces a phased tax break for overtime and tip income. On the revenue side, the bill lifts the federal debt ceiling by $5 trillion, while also phasing out clean energy tax credits and imposing new restrictions on companies with foreign ties.

Defense and border spending also receive a major boost, with $150 billion earmarked for military projects and $100 billion for Immigration and Customs Enforcement (ICE), doubling migrant detention capacity and expanding enforcement.

Taken together, the bill reflects the administration’s dual focus on tax relief and national security, while ushering in sweeping changes to healthcare and social benefits. Though markets have not yet fully priced in the long-term fiscal implications, the bill’s passage is likely to influence consumer behavior, corporate investment, and political risk premiums starting in the second half of the year.

Q2 Earnings Season Begins: Bank Results in Focus Amid Stabilizing Estimates

The second-quarter earnings season is now underway, with early results from Costco and AutoZone already in and big banks like JPMorgan, Citigroup, and Wells Fargo set to report July 15. Market expectations have come down sharply since the start of Q2, but the pace of estimate cuts has slowed in recent weeks, suggesting sentiment may be bottoming.

S&P 500 earnings for Q2 are projected to rise +5.0% year-over-year on +4.0% higher revenues. That marks a slowdown from Q1’s +12% growth, but a solid showing nonetheless. Three sectors are expected to post double-digit earnings growth: Aerospace (+15.2%), Tech (+12.1%), and Consumer Discretionary (+106.1%). Seven sectors, including Energy (-25.7%), Autos (-31.2%), and Construction (-14.7%), are expected to post declines.

The Finance sector is a key area of focus. While JPMorgan, Citigroup, and Wells Fargo all passed the Fed’s latest stress tests and may increase dividends and buybacks, their Q2 earnings are expected to decline year-over-year. Weak loan growth and tepid investment banking activity continue to weigh on results.

However, the Zacks Finance sector overall is expected to post +8.2% earnings growth on +3.9% revenue, lifted by strength elsewhere in the group.

Expectations for 2025 Q2

The start of Q2 coincided with heightened tariff uncertainty following the punitive April 2nd tariff announcements. While the onset of the announced levies was eventually delayed by three months, the issue has understandably weighed heavily on estimates for the current and upcoming quarters, particularly in the first few weeks following the April 2nd announcement.3

The expectation at present is for Q2 earnings for the S&P 500 index to increase by +5.0% from the same period last year on +4.0% higher revenues. The chart below shows how Q2 earnings growth expectations have evolved since the start of the year.

While it is not unusual for estimates to be adjusted lower, the magnitude and breadth of Q2 estimate cuts are greater than we have seen in the comparable periods of other recent quarters. Since the start of the quarter, estimates have come down for 13 of the 16 Zacks sectors, with the biggest declines for the Transportation, Autos, Energy, Construction, and Basic Materials sectors. The only sectors experiencing favorable revisions in this period are Aerospace, Utilities, and Consumer Discretionary.

Estimates for the two largest earnings contributors to the index – Tech & Finance – have also declined since the quarter began. Tech sector earnings are expected to be up +12.1% in Q2 on +10.9% higher revenues. While these earnings growth expectations are materially below where they stood at the start of April, the revisions trend appears to have notably stabilized lately, as we have been flagging in recent weeks. You can see this in the sector’s revisions trend in the chart below.

This stabilizing turn in the Tech sector’s revisions trend can be seen in expectations for full-year 2025 as well, as the chart below shows.

The two charts above show that estimates for the Tech sector have stabilized and are no longer under the type of downward pressure experienced earlier in the quarter. The Tech sector is much more than just any other sector, as it alone accounts for almost a third of all S&P 500 earnings.

The Earnings Big Picture

The chart below shows expectations for 2025 Q2 in terms of what was achieved in the preceding four periods and what is currently expected for the next three quarters.

The chart below shows the overall earnings picture for the S&P 500 index on an annual basis.

The market’s rebound from the post-tariffs April lows has been very impressive, likely suggesting that market participants don’t see the tariff uncertainty as presenting a significant threat. We find ourselves a bit skeptical of this sanguine view. Whatever the final level of tariffs turns out to be, it will have an impact on the earnings picture.

Bottom Line for Investors

July marks a reacceleration of policy volatility, both on the trade and fiscal front. While the market has largely looked past the latest tariff threats and the partisan wrangling over the budget bill, the underlying economic effects may take months to surface.

Earnings, for now, remain a pillar of support. The pace of estimate cuts has slowed, and certain sectors—most notably Tech and Aerospace—are showing strong growth. But with trade deadlines looming, more trade deficits on the horizon, and core inflation still sticky, it’s important for investors to stay nimble.

Investors should continue to emphasize diversified exposure and keep a close eye on how policy decisions translate into real economic impact. Volatility may stay contained for now, but the second half of 2025 is shaping up to be a critical period for testing the market’s durability.

DISCLAIMER

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly bluechip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell. The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Dow Jones Industrial Average measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 2000 Index is a well-known, unmanaged index of the prices of 2000 small-cap company common stocks, selected by Russell. The Russell 2000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual Market Strategy Report 10 MARKET STRATEGY REPORT INVESTMENT MANAGEMENT performance obtained by a specific investor.

The S&P Mid Cap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The S&P GSCI is the first major investable commodity index. It is one of the most widely recognized benchmarks that is broad-based and production weighted to represent the global commodity market beta. The index is designed to be investable by including the most liquid commodity futures, and provides diversification with low correlations to other asset classes. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 1000 Value Index is a well-known, unmanaged index of the prices of 1000 large-company value common stocks selected by Russell. The Russell 1000 Value Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Nikkei Stock Average, the Nikkei 225 is used around the globe as the premier index of Japanese stocks. More than 60 years have passed since the commencement of its calculation, which represents the history of Japanese economy after the World War II. Because of the prominent nature of the index, many financial products linked to the Nikkei 225 have been created are traded worldwide while the index has been sufficiently used as the indicator of the movement of Japanese stock markets. The Nikkei 225 is a price-weighted equity index, which consists of 225 stocks in the 1st section of the Tokyo Stock Exchange. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The CBOE Volatility Index (VIX) is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500 Index call and put options. On a global basis, it is one of the most recognized measures of volatility — widely reported by financial media and closely followed by a variety of market participants as a daily market indicator. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

Jul 14
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Mitch Zacks – Weekly Market Commentary: A Healthy Signal in the Recent Market Rally

By Weekly Market Commentary

A Healthy Signal in the Recent Market Rally

Stocks’ “v-shaped” bounce off the April lows has been strong, steep, and convincing. But it also has a characteristic I would classify as healthy—it’s been broad.

Market watchers and readers of my column are familiar with the years-long theme of mega-cap Technology stocks driving a lion’s share of the gains in the S&P 500 index. While this general theme remains relevant in the current market environment, we’ve also seen participation widen substantially in the past several weeks to include sectors like Financials, Industrials, and Utilities.

Technical data confirms this trend. The number of S&P 500 stocks trading above their 50-day moving average has surged to levels not seen since last fall, and advance-decline ratios, which count the number of stocks rising versus those that are falling have notched new highs.1

Historically, this kind of broadening has been a positive sign. Broader participation means more leadership, more diversification, and I would argue more investor confidence that gains aren’t part of a momentum trade (like enthusiasm for AI or meme stocks).

What’s been encouraging to me is that investors appear to be taking more interest in areas of the market with relatively attractive valuations. Mega-cap tech names often trade well above 30 times forward earnings, which is not the setup in a sector like Financials. What we’re seeing now is that capital is rotating from ‘expensive’ areas of the market to ‘cheaper’ sectors and regions, which I see as a good thing. Readers know what I think about broad diversification.

To be fair, there are also some unhealthy qualities to be found in this market rally. Some pockets of the market, particularly among unprofitable companies and what have been deemed ‘meme stocks,’ have staged very powerful rebounds. Indeed, certain stocks that were hit hardest earlier this year have seen triple-digit percentage gains since April, fueling headlines about a resurgence in speculative trading. These moves may remind some of the GameStop / AMC craze, and it’s clear that a segment of retail investors is once again leaning into risk. But these cases are the exception, not the engine driving the overall market rally. Their sharp recoveries largely reflect how steep their prior declines were, and they don’t signal a broad market shift toward speculation, in my view.

The broader rally has been driven by sector rotation, valuation-based rebalancing, and renewed interest in previously lagging industries. Unlike during past bouts of exuberance, we’re not seeing indiscriminate buying or stretched valuations across the board. Breadth has improved across fundamentally sound names in Financials, Industrials, and other cyclical sectors, suggesting a more balanced and sustainable move higher. If anything, the presence of skepticism about speculative activity may indicate that sentiment remains grounded, not euphoric.

The entire story also has the backdrop of resilient economic data, which strengthens the case that this is a healthy market rally. We continue to see modest inflation, solid job growth, and a consumer who may be a touch pessimistic but continues to spend anyway. In my view, there’s a reasonable case that this market has room to run, with expanding breadth being a support to that argument.

Bottom Line for Investors

For investors, expanding market breadth should be a testament to the value of owning a broadly diversified portfolio. In environments where participation widens, opportunities tend to emerge in corners of the market that have been overlooked or underappreciated. A diversified portfolio doesn’t need to chase the leader, as leadership shifts, you’re already positioned to participate.

Looking ahead, one area worth watching closely is small-cap stocks. While they’ve lagged in the current rally, that underperformance could represent latent potential rather than persistent weakness. If economic conditions remain stable and monetary policy eases further, small-caps—particularly those with strong balance sheets—could catch up in a hurry. Historically, when market breadth improves meaningfully, small- and mid-cap stocks often follow with some of the strongest relative gains.

1 Wall Street Journal. June 28, 2025. https://advisor.zacksim.com/e/376582/link-desktopwebshare-permalink/5t9b1n/1265478991/h/ZSGyjPRySxukaLNY5EFTNCvEYSGwS9kWz-HDQKbQQkI

DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties.  Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell. The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Dow Jones Industrial Average measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. An investor cannot directly invest in an index.  The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Bloomberg Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The ICE Exchange-Listed Fixed & Adjustable Rate Preferred Securities Index is a modified market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, depositary preferred securities, perpetual subordinated debt and certain securities issued by banks and other financial institutions that are eligible for capital treatment with respect to such instruments akin to that received for issuance of straight preferred stock. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The MSCI ACWI ex U.S. Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 2000 Index is a well-known, unmanaged index of the prices of 2000 small-cap company common stocks, selected by Russell. The Russell 2000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The S&P Mid Cap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The S&P 500 Pure Value index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme. An investor cannot directly invest in an index.  The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Jul 09
Love0

Mitch Zacks – Weekly Market Commentary: How Stocks Managed to Rally Through the Noise in the Second Quarter

By Weekly Market Commentary

How Stocks Managed to Rally Through the Noise in the Second Quarter

In the three months ending June 30th, U.S. and global stocks did what they’ve done many times before: they climbed a wall of worry.

If we start this story in April, we know that the market’s uneasiness was triggered in response to the shock of tariffs and accompanying fears of a global trade war/economic slowdown. In short order, the S&P 500 plunged into correction territory and dragged investor sentiment down with it. Headlines were awash with predictions of prolonged economic pain, and many investors became extremely skeptical.

Yet as I write, the S&P 500 index has crossed back into record territory, having posted its best quarterly performance in over a year.

Did all the uncertainty over trade and economic growth dissipate in these past three months, creating all the right conditions needed for a powerful market rally? Absolutely not! If anything, uncertainty and negativity are as high today as they were three months ago.1

But that’s just the thing—markets don’t need perfect conditions to move higher. In fact, one of the most consistent traits of bull markets is that they advance when expectations are low and the news is simply “less bad” than feared. That’s what we’ve seen again this quarter.

With the backdrop of somewhat extreme investor pessimism on trade and economic growth, consider the catalysts. First, better-than-expected corporate earnings. After slashing full-year profit forecasts in Q1, many companies delivered solid results and issued relatively upbeat guidance. Zacks analysts expect S&P 500 earnings to rise this year, and even more so next year. The growth outlook hasn’t vanished; it’s just been recalibrated. Read: less bad than feared.

Second, the economy continues to show resilience. Inflation has not returned in the way that many feared, the labor market remains stable, and consumers appear to be holding up. Though risks like delayed tariff impacts, a slower global manufacturing cycle, and persistent geopolitical uncertainty remain, those risks haven’t yet translated into fundamental damage. Read: less bad than feared.

You can see the pattern here. For markets, oftentimes the absence of bad news is as powerful as the presence of good news. It doesn’t take perfection to move higher. It only takes outcomes that are modestly better than expected. With delayed reciprocal tariffs and broad-based economic resilience, that’s precisely what we got in Q2.

Stocks climbing the “wall of worry” is a theme I revisit often in my columns because it’s a pattern that recurs so frequently. It makes sense as to why: investing is emotional for many, and with media narratives often grasping at bad news, it does not take much to shift expectations lower than they should be. That opens the door for any type of stabilization, or even just a pause in bad news to spark a relief rally.

In volatile markets, investors tend to wait for clarity before committing or re-committing capital. But that’s often a costly mistake. You’d be hard-pressed to find historical examples of markets waiting for full visibility or green shoots before rallying. The opposite tends to be true. This quarter’s rebound is a case in point: despite lingering questions about tariffs, inflation, and global growth, stocks surged off the April lows. Investors waiting for an all-clear likely missed the recovery.

Bottom Line for Investors

One of stocks’ hallmark characteristics is that they love to climb walls of worry, fueled not by perfect news but by news that’s not as bad as feared. The second quarter of 2025 reminded us of this pattern. Sentiment turned sharply negative in April, only for the market to rebound strongly as fundamentals held steady and policy fears began to ease.

For long-term investors, the takeaway is simple: don’t wait for certainty. Markets move ahead of headlines, not after them, and all they need is a gap between perception and reality.

Markets don’t wait for perfect conditions to move higher—they advance when reality is better than feared. Understanding these signals can help you stay ahead, even in uncertain times.

1 Wall Street Journal. June 30, 2025. https://advisor.zacksim.com/e/376582/2905785-mod-finance-lead-story/5t8fn5/1261463401/h/lvWAPJZe1Mw2dSMaXEIPB_IrVd50nquW6TUvkf8HotA

2 Zacks. June 27, 2025. https://advisor.zacksim.com/e/376582/head-to-the-q2-earnings-season/5t8fn8/1261463401/h/lvWAPJZe1Mw2dSMaXEIPB_IrVd50nquW6TUvkf8HotA

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

The Russell 1000 Growth Index is a well-known, unmanaged index of the prices of 1000 large-company growth common stocks selected by Russell. The Russell 1000 Growth Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

Nasdaq Composite Index is the market capitalization-weighted index of over 3,300 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Dow Jones Industrial Average measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Bloomberg Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The ICE Exchange-Listed Fixed & Adjustable Rate Preferred Securities Index is a modified market capitalization weighted index composed of preferred stock and securities that are functionally equivalent to preferred stock including, but not limited to, depositary preferred securities, perpetual subordinated debt and certain securities issued by banks and other financial institutions that are eligible for capital treatment with respect to such instruments akin to that received for issuance of straight preferred stock. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The MSCI ACWI ex U.S. Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The Russell 2000 Index is a well-known, unmanaged index of the prices of 2000 small-cap company common stocks, selected by Russell. The Russell 2000 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The S&P Mid Cap 400 provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The S&P 500 Pure Value index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

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