Economy, Sentiment, Federal Reserve and more Stock News

The Prudent Speculator Weekly Commentary is expertly curated every week as a valuable resource for stock market news, investing tips, business insights, and economic trends as it relates to value stock investing. In this week’s Market Commentary, we discuss Sentiment, Economy, Federal Reserve and more Stock News. We also include a short preview of our specific stock picks for the week, the entire list is available only to our community of loyal subscribers.

Executive Summary

Week – Rally Continues

Sentiment – Lots of Money on the Sidelines; Main Street Still Bearish

Wall of Worry – Headlines, Government Shutdown, Tariffs, Inflation & Equity Returns

Volatility – Stocks Go Up and Down, but Long-Term Trend Is Up

Earnings – Corporate Profits Grow Over Time

Economy – Mixed Numbers but Solid GDP Still the Forecast

Fed – Several Rate Cuts Still in the Cards

Valuations – Reasonable Metrics for our Portfolios

Stock News – Updates on ELV, GM, LMT, OMC, COF, LRCX, IBM, HAS, INTC, DLR, DECK, NEM & WKC

Week – Rally Continues

After another terrific week for the equity markets, despite the calendar showing that we continue to reside in the seasonally weak September-October time span,

we are again reminded that terrific long-term rewards accrue to those who keep the faith during the inevitable downside volatility that is always a part of the equity investing landscape.

Sentiment – Lots of Money on the Sidelines; Main Street Still Bearish

Of course, many tend to forget that the only problem with market timing is getting the timing right, as there has been a mountain of cash sitting on the sidelines,

while the good folks at the American Association of Individual Investors (AAII) have been Bearish for much of 2025, including the last two weeks,

adding more ammunition to the argument that the AAII Sentiment Survey is a solid contra-indicator.

Wall of Worry – Headlines, Government Shutdown, Tariffs, Inflation & Equity Returns

Obviously, there is plenty about which to be concerned these days, but such as always been the case, yet all previous scary headlines have been overcome in the fullness of time.

As Mark Twain said, “History doesn’t repeat itself, but it often rhymes,” so it is always helpful to study how stocks have performed during prior events that may be causing consternation today, such as Government Shutdowns,

Trump Tariff Skirmishes,

or Inflationary Periods.

Volatility – Stocks Go Up and Down, but Long-Term Trend Is Up

Through it all, has despite trips to the downside every year,

and 27 Bear Markets over the last century, the long-term trend in stocks has been up,

Earnings – Corporate Profits Grow Over Time

as equity prices generally have risen as corporate profits have climbed.

Certainly, the outlook for earnings is critical and at present EPS are projected to show good growth over the balance of 2025 and into 2026, with the latest results for Q3 coming in thus far even better than usual.

Economy – Mixed Numbers but Solid GDP Still the Forecast

Of course, there is no assurance that earnings will continue to grow, and we note that the final read for October on Consumer Sentiment from the Univ. of Michigan was weaker than expected,

but existing home sales for September matched estimates and improved over August,

and both the S&P Global U.S. Manufacturing Index for October,

and the Service Index modestly topped forecasts.

With Washington closed for business, the usual steam of economic statistics has slowed to a trickle, but the latest estimate for real (inflation-adjusted) Q3 U.S. GDP growth from the Atlanta Fed stood at a robust 3.9%,

and the Federal Reserve appears poised to cut interest rates again this week,

as inflation at the consumer level via the CPI of 3.0% for September was a touch below the 3.1% consensus forecast,

as was the Core CPI, which excludes the volatile food and energy segments.

Fed – Several Rate Cuts Still in the Cards

History suggests that a more accommodative Fed that is lowering its target for the Fed Funds rate is a positive for stocks,

Valuations – Reasonable Metrics for our Portfolios

and we continue to like the reasonable valuation metrics and generous dividend yields for our broadly diversified portfolios of what we believe are undervalued stocks.

Yes, we must always be braced for downside volatility, but we offer the friendly reminder that patience is a great risk mitigation tool,

while Value stocks, like those that we have long championed, have not had excessive returns over the last two decades.

Stock News – Updates on thirteen stocks across nine different sectors

Keeping in mind that all stocks are rated as a “Buy” until such time as they are a “Sell,” a listing of all current recommendations is available for download via the following link: https://theprudentspeculator.com/dashboard/. We also offer the reminder that any sales we make for our newsletter strategies are announced via our Sales Alerts. Jason Clark, Chris Quigley and Zack Tart take a look at earnings reports and other market-moving news of note out last week for more than a few of our recommendations.