Economy, Valuations, Volatility 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 the Economy, Valuations, Volatility 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

Newsletter Trades – Trimmed INTC and LITE

Week – Sour Ending, Despite Progress on Trade, Strong Earnings & Fed Rate Cut

Economy – A Dearth of Numbers but Solid GDP Still the Forecast

Valuations – Reasonable Metrics for our Portfolios

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

Wall of Worry – Lots of Cash on the Sidelines; Sentiment Far from Euphoric

Stock News – Updates on WHR, UPS, AMT, PYPL, GBX, SW, CAT, STX, GLW, MSFT, GOOG, CAH, FSLR & AAPL

Week – Sour Ending, Despite Progress on Trade, Strong Earnings & Fed Rate Cut

While the month ended on a sour note for the average stock last week, with the S&P 500 Equal Weight Index and the Russell 2000 Small Cap index skidding 1.75% and 1.35%, respectively, we were pleased that our broadly diversified portfolios held up much better and that we managed to get through the seasonally weak September-October time span with solid gains this time around.

Though the government shutdown continued, which history shows has NOT been a headwind over time for stocks,

Economy – A Dearth of Numbers but Solid GDP Still the Forecast

we might have expected better returns during the Halloween week as numerous deals on tariffs (also not an issue that should cause a long-term investor to want to sell equities) were reached on President Trump’s trip to Asia, including with China,

third quarter report cards from Corporate America continued to come in better than expected, with solid growth in profits expected in Q4 and in 2026,

and the Federal Open Market Committee opted to lower the target range for the Fed Funds rate by a quarter-point to a range of 3.75% to 4.0%.

However, even as Jerome H. Powell & Co. opted to discontinue the sale of securities from the central bank’s balance sheet, ending quantitative tightening on December 1,

and history shows that stocks perform better, on average, with lower interest rates,

and the futures market is still betting on a series of rate cuts over the next 12 months,

the Fed turned out to be a negative catalyst last week when the Chair said at his Press Conference on Wednesday…

In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a forgone conclusion—far from it. Policy is not on a preset course.

Still, Mr. Powell’s economic assessment included, “Data available prior to the shutdown show that growth in economic activity may be on a somewhat firmer trajectory than expected, primarily reflecting stronger consumer spending,”

and the current estimate from the Atlanta Fed for Q3 real (inflation-adjusted) U.S. GDP growth stood at a robust 3.9%.

Valuations – Reasonable Metrics for our Portfolios

Given that years of evidence show that stock prices generally track earnings over time, a growing economy should be a positive backdrop,

while we continue to like the reasonable valuation metrics and relatively generous dividend yields on our broadly diversified portfolios of what we believe are undervalued stocks,

and returns on the kinds of stocks we have long favored have not been excessive over the last two decades,

we see no reason to believe that equities won’t continue to prove rewarding over the next half-century, as has been the case since the launch of The Prudent Speculator more than 48 years ago.

True, we must always remain braced for downside moves as they occur every year,

and we can’t forget that Bear Markets are something with which investors long have had to contend,

but patience is a terrific risk-mitigation tool,.

Wall of Worry – Lots of Cash on the Sidelines; Sentiment Far from Euphoric

We also think there is plenty of dry powder out there to push equities higher, given the record amount of cash parked in money market funds,

and we still do not see the type of euphoria on Main Street one might expect with stocks near all-time highs,

though 48 years of statistics prove only that investors should be greedy when others are fearful…and not the other way around!

Stock News – Updates on fourteen stocks across eleven 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.