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September 2025

Sep 25
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What Life Insurance Can You Borrow From?

By Life Insurance

September is “Life Insurance Awareness Month,” and we wanted to answer this common question: “What life insurance can you borrow from?” Since life insurance policies come in so many forms, let’s start with the type you can’t borrow from. The most common form of life insurance is called “term life.” Term is the simplest form of life insurance and most common because it contains only a “death benefit” which is paid to a beneficiary upon the insured person’s death.

You cannot borrow from a term life policy because it’s strictly used to provide financial protection in the form of a death benefit, or cash for a loved one in the event of an insured’s passing. Term life insurance guarantees a certain death benefi­t payout if the insured dies during a speci­fied period, such as 1, 2, 10, 15, or 30 years, and then the policy ends. Often premiums for term insurance are level for a certain number of years but some policies may go up as the insured gets older.

Life Insurance Policies You Can Borrow From

Permanent life insurance policies can be borrowed from, because in addition to a death benefit, there is a cash value portion of the policy which you contribute to as part of your premium cost, and the cash portion can grow through time.

Permanent means permanent as opposed to term; the policies don’t end at a certain point of time, they continue for as long as you live and pay the premiums. The cash value in a life insurance policy can be borrowed during your lifetime—you can borrow the cash to fund college costs, start a new business, pay for retirement expenses, and more—sometimes with significant tax advantages as long as the policy remains in force.

Will I Owe Interest On Amounts I Borrow From a Life Policy?

If you borrow part of your cash value, you will borrow the money tax-free in most cases, but you will be charged a fixed or fluctuating interest rate on the outstanding balance of any loan depending on your policy’s terms. You will have to carefully assess or consult with your financial advisor to make sure your policy stays in good standing if you borrow from it.

Some policies continue to credit interest to the total cash-value portion of your account even if you have borrowed money from it, treating the cash value portion as though all the money were still there. In some cases, with some policies, this equals or exceeds the interest you will be charged. You will want to make yourself aware of all policy terms and conditions before making any decisions about borrowing from an insurance policy; this is where good advice can help.

Permanent Types Of Insurance You Can Borrow From

The major types of permanent insurance policies which can build cash value are whole life, universal life, and variable life.

  • Whole Life

Whole life insurance policies are permanent policies with fairly simple terms. They have ­fixed premiums that don’t go up, and cash value accumulation guaranteed by the financial strength of the insurance company providing the policy.

  • Universal Life

Universal life insurance gives consumers flexibility in the premium payments, death benefi­t amounts, and the savings or cash-value elements of their policies, which is why it’s sometimes called adjustable life insurance. There are different types, including one of the more popular forms, called indexed universal life (IUL). With IUL policies, the cash value is benchmarked to the performance of an index or indices, such as the S&P 500 for potential growth. While an IUL policy’s cash value growth is tied to the performance of the selected index or indexes, the money is not actually invested in the market, it is a contract with the insurance company which determines how crediting works based on the index/indices’ performance. Therefore, your principal is protected from stock market risk, but it can grow based on stock market growth as outlined by your particular policy’s terms.

  • Variable Life

With variable life insurance, the cash-value portion of a variable policy is actually invested in the market in what are called “subaccounts;” therefore, there is the potential for loss of principal based on stock market losses. With variable life, you will actually invest and receive prospectuses to review so that you can determine whether or not the subaccount or subaccounts you choose fit with your overall risk strategy. Often variable life policies have higher fees than other types of policies due to the investment management of subaccounts.

If I Borrow Money, What Happens to the Policy After I Die?

Many permanent life insurance policies can be purchased on a “joint survivorship” basis. There are two types: first-to-die, which pays out to the surviving spouse after the first dies; and second-to-die, or survivorship, which pays a death benefit to the heirs after both spouses are gone.

Whether joint survivorship or not, if you borrow cash value from a policy, the amount borrowed is deducted from the total death benefit paid to your named beneficiaries in addition to any remaining fees or interest owed. If you don’t borrow money, the cash value is added to the death benefit.

What Else You Should Know About Life Insurance

  • The death benefit paid to your beneficiaries is usually tax-free and bypasses probate, provided the policy’s beneficiary is an individual rather than a trust.
  • Life insurance is considered part of a comprehensive financial plan, and can be used in various ways for estate planning or leaving a tax-advantaged legacy to your loved ones.
  • Most life insurance policies require a medical exam, and in cases of ill health, your policy may be denied or the policy costs may be higher. As long as you continue to pay all premiums, your policy cannot be canceled if your health status changes in the future.
  • Some policies have provisions for chronic, critical, terminal illness, or long-term care benefits that can be used in lieu of, or in addition to, the death benefit.

 

Each life policy from each different insurance carrier has different features, and the various product choices can be confusing for a consumer to navigate. Additionally, new types of policies are being introduced to the market all the time which may offer better terms. It is very important to work with a qualified advisor to find the policy that might be best suited for you to meet your family’s needs. Call us to learn more about life insurance! You can reach BayTrust Financial in Tampa at 813.820.0069.

 

This article is for general information purposes only and is not to be relied upon for financial advice. In every case, you should seek the advice of qualified tax, financial and legal professionals to ensure that a life policy is advisable based on your unique circumstances.

Guarantees are provided by insurance companies and are reliant upon the financial strength and claims-paying ability of each individual insurance carrier issuing a life insurance contract.

Life insurance requires medical underwriting; therefore, not everyone will be able to purchase a life insurance policy. Life insurance policies can be complex, and it is recommended that you work with a professional to examine policy terms.

Sources:

https://www.iii.org/article/what-are-different-types-permanent-life-insurance-policies

https://www.investopedia.com/articles/pf/07/whole_universal.asp

 

Sep 24
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Mitch Zacks – Weekly Market Commentary: The Fed Cuts Rates, But Remember What Really Moves Markets

By Weekly Market Commentary

The Federal Reserve cut rates by 25 basis points last week, a widely expected move that I would argue was priced into markets weeks, if not months, ago. Readers should expect the media and Fed prognosticators to spend the next several weeks debating the size and frequency of future cuts.

From an investment perspective, however, there are far better ways to spend your time.

I’d start by parsing the economic backdrop against which the Fed made its move. Last week brought a pair of reports that I would label as “stagflation-light.” Consumer prices in August accelerated slightly faster than expected, with core CPI rising 3.1% year-over-year. At the same time, labor market figures showed more weakness than previously thought. A major revision reduced payroll gains by nearly a million jobs from prior estimates, and August’s unemployment rate ticked up to 4.3%. Payroll growth slowed to a trickle, with June even registering a net job loss after revisions. A headline in the Wall Street Journal this week summed it up: “More Americans are Stuck with the Jobs They Can Get, Not the Ones They Want.”1

Taken together, the view from 30,000 feet suggests that while the job market isn’t collapsing, the days of “goldilocks” balance, low inflation, and strong job growth, are clearly behind us.

This combination does not amount to stagflation in the 1970s sense, however, with runaway inflation and high unemployment. Instead, it looks more like stagnation: a slow patch where growth cools, inflation runs a bit hotter than policymakers would like, and businesses hesitate to make longer-term investments. Consumer spending is still positive, and business outlays on areas, like intellectual property and AI infrastructure, remain robust. This results in a picture of an economy experiencing ‘muddle-through’ growth—not great, but not dismal either.

Against this backdrop, the Fed’s quarter-point cut looks less like the start of an aggressive easing cycle and more like a recalibration. Policymakers appear to be acknowledging that tariff-related inflation pressures are likely a one-time shock rather than the start of a lasting upward spiral. At the same time, they are signaling an awareness that labor market weakness is mounting. The Fed’s updated projections will show just how seriously they are weighing those risks. But whether this cut turns into a series of cuts will ultimately depend on the data in the coming months.

For investors, the key point to come back to, in my view, is that monetary policy is not the main driver of stock prices. Earnings remain the heartbeat of equity markets, and here, the outlook is broadly supportive. With the Q2 reporting season effectively in the rearview mirror, S&P 500 earnings are on track to have risen +12.1% from a year earlier on +6.1% revenue growth. Looking ahead, Q3 earnings for the index are expected to climb another +5.1% on +5.9% higher revenues. Importantly, estimates have been revised upward in recent weeks, as seen in the chart below.

To be fair, the earnings picture remains top-heavy. Strip out Tech’s contribution in the coming quarter, and S&P 500 earnings growth would be closer to +2.1%. This unevenness raises the odds that actual results could disappoint relative to rising expectations, particularly in sectors under pressure like Medical, Transportation, and Basic Materials.

Still, the overall revisions trend is positive, which is not what you would expect if the economy were tipping into recession. Yes, the economy is slowing, and yes, tariffs are creating headwinds. But corporate America is still finding ways to grow, and earnings power is intact.

Bottom Line for Investors

Shifting the focus away from the Fed decision is not meant to totally diminish its significance. A lower policy rate can help steepen the yield curve and reduce some financing pressures, particularly in interest-rate-sensitive areas like housing or credit creation. But it would be a stretch to argue that one quarter-point cut will meaningfully change the economic cycle or override the market’s longer-term trend. The decision was telegraphed well in advance and priced in by investors weeks ago. That means the announcement itself carries little surprise power for markets.

More important is the economic backdrop, which I would characterize more as stagnation than stagflation. While policy uncertainty and weaker job growth may keep volatility elevated in the near term, corporate earnings remain the critical driver for markets, and the outlook for Q3 is encouraging at this moment.

1 Reuters. September 12, 2025. https://advisor.zacksim.com/e/376582/r-than-stagflation-2025-09-12-/5tl1m1/1320635682/h/Sk9R3dptH8K4_UDgkXGz6C-jhr5TPu_NGuh–53dZmw

2 Zacks.com. September 10, 2025. https://advisor.zacksim.com/e/376582/nings-expectations-good-or-bad/5tl1m4/1320635682/h/Sk9R3dptH8K4_UDgkXGz6C-jhr5TPu_NGuh–53dZmw

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.

Sep 16
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Mitch Zacks – Weekly Market Commentary: Bond Yields are Rising Globally.  Should Investors Be Concerned?

By Weekly Market Commentary

Bond markets aren’t known for volatility and tend to be viewed as a relatively boring, relatively stable component of capital markets. Stories over the past couple of weeks have suggested otherwise.

We’ve seen quite a bit of coverage concerning rising long-term government bond yields across the world. Notably, the 30-year U.S. Treasury brushed 5%, U.K. gilt yields reached their highest levels since 1998, and French yields hit multidecade peaks. Commentary about potential debt crises, inflation spirals, or even potential bailouts (France) followed shortly thereafter.

The spoiler alert here is that long duration bond yields have fallen back since, as has the media coverage about a potential crisis. But the unfolding of this story is worth a closer look, as it offers insights and takeaways for investors to keep in mind going forward.1

Take the U.S. narrative as an example. Some reports tied higher 30-year Treasury yields to fears about America’s fiscal trajectory, pointing out that interest costs on our country’s debt have ballooned and now exceed defense spending. In the U.K., coverage pointed to public finance concerns and a currency under pressure. France got its turn when a finance minister’s offhand comment about the IMF was spun into bailout speculation. And finally, Germany’s rising yields were tied to the cost and timing of its fiscal stimulus.

The key point for investors to notice is that each country’s rising yields came with their own unique explanation, but the broader story seemed to be missed completely. That is, that long duration yields were moving in tandem across developed markets. Even countries showing fiscal restraint, like Italy, saw their 30-year yield jump recently. The Netherlands, where debt is less than 50% of GDP, has experienced one of the biggest moves of all. Clearly, this isn’t about one country’s fiscal or inflation outlook.

So, what could have been a factor driving global bond yields higher? There’s no single answer, in my view, but there could be a few factors at play. Debt issuance has picked up after the summer lull, increasing supply. Seasonal patterns matter as well. September has historically been a weak month for long bonds, with global long-dated government debt posting a median loss of about 2% over the past decade. Finally, sentiment almost always plays a role. After years of near-zero interest rates and heavy central bank buying, investors have grown more sensitive to small shifts in expectations about growth, inflation, or policy. Long-term yields are where those expectations get expressed.

This is not to say that tariffs, inflation, or deficits are irrelevant. Tariff-driven price pressures have shown up modestly in recent inflation readings, and governments everywhere are contending with higher refinancing costs after borrowing heavily during the pandemic. But these are longer-term drags, not sudden shocks. The fact that yields are rising together across continents suggests the driver isn’t one country’s fiscal math, but rather a broad repricing of long-term debt globally. In short, something to keep an eye on but not panic over.

Perspective also helps. Looking at a 5-year chart of the U.S. 30-year Treasury bond yield shows a line moving steeply, up and to the right. But that’s only because yields were closer to 1.5% in 2020, which interest rates were at historic lows in the wake of the pandemic. Zooming out even further, it’s plain to see that today’s levels are low relative to previous decades.

In fact, there may be positives here. With central banks cutting short-term rates and long yields drifting higher, yield curves are steepening, particularly outside the U.S. A steeper curve is a classic marker of healthier credit conditions, since it improves incentives for banks to lend. Rather than a warning sign, it may be an early indication that growth momentum is building, even if tariff and policy uncertainty continue to cloud the outlook.

Bottom Line for Investors

The ‘relatively stable, relatively boring’ expectation for bond markets can make sudden upticks uncomfortable, and it can also give rise to worrisome media narratives. But volatility in bond markets is normal. A few dozen basis points up or down doesn’t necessarily mark a crisis, and it’s not always necessary or constructive to require an explanation. Sometimes it’s just global markets adjusting and sentiment shifting.

As mentioned, the uptick in long-duration bond yields could even be construed as a positive for equity markets. A steepening yield curve often signals improving credit conditions, which could provide a growth tailwind looking ahead.

1 Wall Street Journal. September 3, 2025. https://advisor.zacksim.com/e/376582/4-mod-wsj-furtherreading-pos-1/5tjz78/1314640372/h/MDfe-Ly6O6wtwVUdxjVMFG6_yeynFRXXvQzRkm38BtY

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.

Sep 10
Love0

Mitch Zacks – Weekly Market Commentary: Earnings Strength Confirms Resilience, But Leadership Remains Narrow

By Weekly Market Commentary

The Q2 2025 earnings season is wrapping up, with just a handful of companies left to report. The results provide a clear message: American corporations found ways to power ahead, despite a challenging backdrop of tariffs, policy uncertainty, and shifting global demand.

As I write, total Q2 2025 earnings are on track to rise by +12.1% from a year earlier on +6.1% higher revenues. Long time readers of my column know how much weight I place on strong earnings results. But the real market-moving feature of this earnings season was not just the strong results. It was about how much they exceeded expectations.1

Take a look at the chart below. You can see that 80.3% of S&P 500 companies exceeded earnings per share (EPS) estimates, which is nicely above the five-year average of 77.9%. The percentage of companies that beat revenue estimates also stands out as well above the five-year average and previous years’ results.2

The one sentence takeaway: businesses are still spending, consumers are still buying, and markets have responded accordingly.

This is not a cause for being ‘pound the table bullish,’ however. As I’ve written in recent columns, the feedback loop on tariffs and other policy changes is not immediate. Companies front-ran many tariffs and have worked through inventory, without having to pass on too many costs to consumers or see a big impact on margins. But this can’t continue indefinitely.

If tariffs persist at current levels, or rise further, more companies will likely need to raise prices, which could eventually weigh on demand. Business investment data also point to the same caution. While equipment spending looked solid in Q2, investment in structures fell -10.3%, and R&D registered its third consecutive decline. Both trends hint at executives becoming more selective about long-term projects until they see a clearer policy direction.

Leadership in the market also remains narrow. Technology firms continue to drive much of the growth story. In Q2, Tech sector earnings grew at a double-digit pace, propelled by demand for data centers, chips, and software tied to AI. The “Magnificent 7” stocks in particular have been standout performers, with earnings up +26.4% year-over-year on +15.5% higher revenues. While this leadership has lifted indexes, it has also concentrated risk. Excluding the Tech sector, Q3 earnings for the rest of the S&P 500 are expected to rise just +2.1%, compared with +5% overall. That discrepancy highlights how much weight a small group of companies continues to carry.

There are reasons to be cautious, but on balance, the economy continues to look ‘steady state’ to me. For Q3, S&P 500 earnings are projected to grow +5% from last year on +6% revenue growth. Notably, estimates have ticked higher since the start of July, which is a reversal from recent years when estimates tended to drift lower as the quarter progressed. The growth engine continues to run hottest in a few specific places like Tech, so we’ll need to see if that strength continues to broaden. It’s a reminder that investors should be mindful of concentration and avoid extrapolating recent gains as if they were uniform across the market. It’s important to be selective.

Bottom Line for Investors

Second-quarter earnings confirmed what markets have been signaling for months: resilience is still the operative word for the U.S. economy and corporate profits. Upward revisions to Q3 estimates and continued consumer spending are encouraging signs that growth hasn’t run out of steam. But it would be a mistake to assume the rally will be a straight line higher from here. The earnings picture remains top-heavy, and companies may not be able to shield consumers from higher tariff costs indefinitely.

Overall, I think the backdrop remains bullish, supported by healthy profits, fiscal tailwinds, and a still-strong labor market. Staying invested is the right approach, but balancing exposure beyond the biggest winners can help ensure portfolios remain positioned for whatever the next phase of this expansion delivers.

1 Wall Street Journal. April 28, 2025. https://advisor.zacksim.com/e/376582/onomy-trendingnow-article-pos5/5tj7by/1310520493/h/gMfhEJJWnxSoKzUFqNyuFAcg2GLIuStlz5bnUo-tzGk

2 Zacks.com August 27, 2025. https://advisor.zacksim.com/e/376582/q2-retail-earnings-good-or-bad/5tj7c2/1310520493/h/gMfhEJJWnxSoKzUFqNyuFAcg2GLIuStlz5bnUo-tzGk

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.

Sep 03
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Mitch Zacks – Weekly Market Commentary: Why a September Rate Cut Likely Won’t Impact Markets Much

By Weekly Market Commentary

The financial media and many in the investor community are eyeing the Fed’s September meeting with bated breath. I’m already looking past it.

At this stage, markets are pricing in a 100% probability of a 25-basis-point cut, with a very small chance of a larger 50-point move. As I’ve written many times before, markets move on surprises, not widely known information. When it comes to the upcoming Fed decision, the surprise factor is essentially nil. The Fed has been telegraphing its thinking pretty clearly for weeks.1

Rate cuts make for dramatic headlines, but in practice, they rarely alter the trend already in motion. When the Fed started cutting rates in January 2001 (nearly a year into the dot-com bust), stocks fell another 40% before finally bottoming in 2002. When the Fed cut rates in September 2007, the S&P 500 peaked just a few weeks later. The Global Financial Crisis followed. On both occasions, the cuts were real-time responses to worsening conditions, not tools that fundamentally changed the direction of the cycle.

Some may offer the counter-argument that Fed cuts in 1974 and 1990 were followed by powerful and lasting stock market rallies. But in those years, the Fed began cutting just months after bear markets had already bottomed. I would argue that stocks rebounded not because of the policy shift, but because the cuts happened to coincide with the early months of a new bull market. The rally was driven by positive forward-looking economic fundamentals and the anticipation of an earnings rebound, not by the central bank.

I want to be fair here, however, in acknowledging that rate cut cycles tend to be good for stocks on a forward-looking basis. On average, the S&P 500 has done reasonably well after initial cuts: about 7% forward returns over six months and roughly 12% over 12 months. But investors should not take these averages to mean that the rate cuts are the catalysts for strong returns. The cuts themselves aren’t the deciding factor—the economic and earnings cycles are. Rate cuts help, but they don’t drive.

We saw the opposite play out in 2022. For months, Fed officials downplayed the need to raise rates as inflation accelerated. Remember the “inflation is transitory” narrative? When the Fed reversed course in March and began aggressive hikes, the sudden shift was a surprise, jolting investor sentiment. It wasn’t the hikes themselves that drove the bear market—it was the abrupt change in expectations, i.e. the negative surprise. We don’t have that today.

In the current environment, we largely see a resilient U.S. economy, even as some signs of slowing are starting to show. In this economic environment, a 25-basis-point cut may steepen the yield curve slightly and marginally encourage lending. But the U.S. economy and credit creation have been holding up just fine with rates at current levels, where they’ve been since December 2022. I don’t think a widely telegraphed 25 basis point cut is going to make a major difference.

None of this is to say the direction of rates doesn’t matter. Over the long term, easier monetary policy can support growth at the margin, especially if it steepens the curve and helps banks lend. But investors should remember: The Fed is more often a follower than a leader. Cuts typically reflect conditions already visible in the data, not catalysts that create new ones.

Bottom Line for Investors

September’s rate cut will be a headline-grabber, but its pricing power on stocks is likely to be minimal, in my view. Markets already know it’s coming, and history shows Fed cuts don’t alter the prevailing trend. Investors should focus less on the drama of Fed decision day and more on the fundamentals—corporate earnings, consumer resilience, and global growth drivers. Those, not a single quarter-point move, are what shape long-term market returns.

1 Black Rock. April 25, 2025. https://advisor.zacksim.com/e/376582/tential-portfolio-implications/5thcyf/1303156704/h/QWWdKPoIzENSL0MPL39x8wdrkrkgan-gzxDrYJ_IcEM
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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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