Major stock indices entered the second half of the year with US stocks (blue) and non-US stocks (green) up roughly 10%, while bonds (red) and gold (pink) have struggled so far this year.
After a nice rebound from the March decline (due to the war in Iran), stocks seem to be taking a breather in July. Uncertainty around the restart of hostilities in the Middle East and concerns over valuations of big tech company stocks are beginning to weigh heavily on the minds of investors this month, causing a pause in the rally.
But when we look beyond the current market jitters, we see that July has been delivering good economic and earnings (corporate profit) news. Most importantly, US consumer prices fell in June by 0.4%, the largest single-month decrease since April 2020. Led by a decline in energy prices, the annual rate of inflation fell from 4.2% in May to 3.5% last month.
“It suggests the worst is over, we’re past the peak and inflation should moderate,” said Mark Zandi, chief economist at Moody’s. I hope he’s right.
Additionally, 2nd quarter earnings reports have been coming in for S&P 500 companies, and the results so far have been very good. Analysts are projecting year-over-year earnings growth of 23.6% for the 2nd quarter, but initial reports suggest that earnings growth will likely exceed 29%.
https://insight.factset.com/sp-500-likely-to-report-earnings-growth-above-29-for-q2
Historically speaking, actual reported earnings (dark bars) almost always outperform analyst estimates (light bars). Estimated corporate earnings for the remainder of the year are also very strong.
Q3 2026 (Projected): 26.6%
Q4 2026 (Projected): 24.3%
Source: FactSet
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
Harmon Financial Advisors, Inc. is an independent, fee-based financial planning firm and an independent Registered Investment Advisor. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. and Harmon Financial Advisors, Inc. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Harmon Financial Advisors, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information in this commercial email has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Harmon Financial Advisors, Inc. and not necessarily those of RJFS or Raymond James.
There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Investments & Wealth Institute™ (The Institute) is the owner of the certification marks “CIMA” and “Certified Investment Management Analyst.” Use of CIMA and/or Certified Investment Management Analyst signifies that the user has successfully completed The Institute’s initial and ongoing credentialing requirements for investment management professionals.
