Volatility, Economic News, Inflation, AAII Sentiment and More

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 Volatility, Economic News, Inflation, AAII Sentiment and More. 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 – 1 Sale in 4 Accounts

2025 Market Outlook Mid-Year Update – Webinar Replay & Slide Deck

Errata – Corrected Webinar Stock Pick Metrics

Volatility – Ups & Downs Normal; The Longer the Hold, the Less the Chance of a Poor Outcome

EPS – Solid Corporate Profit Growth in 2025 and 2026 Remains the Expectation

Econ News – Better-than-Expected Stats; Growth Still the Forecast

Inflation – CPI Disappoints, but PPI and Long-Term Expectations Improve

Valuations – Attractive Metrics for our Portfolios

Sentiment – AAII Back to a Pessimistic Stance…Contrarian Positive

Stock News – Updates on BK, JPM, C, OMC, JNJ, GS, MS, ELV, CFG, SNA & ABT

2025 Market Outlook Mid-Year Update – Webinar Replay & Slide Deck

We want to thank all who listened in live on Thursday to our 2025 Market Outlook Mid-Year Update. The link to the replay is available here:

2025 Market Outlook: Midyear Update Webinar with John Buckingham and Jason Clark

The slide deck is available here:

PowerPoint Presentation

Errata – Corrected Webinar Stock Pick Metrics

And speaking of the slide deck, your Editor offers appreciation to those intrepid viewers who pointed out a data issue in the Stock Picks slide in which the lower half of the chart had incorrect 07.15.25 prices and Target Prices. I’d like to say they were put in to ensure folks were paying attention, but this was a cut-and-paste pilot error by the one who put the table together, me!

Apologies for the blunder – we like the stocks listed, the rest of the data were correct, and an updated table based on 7.15.25 numbers appears here and in the slide deck referenced above. Readers should note that three of the companies on the top portion had Q2 results out last week, each of which is discussed below…with an updated Target Price provided.

Volatility – Ups & Downs Normal; The Longer the Hold, the Less the Chance of a Poor Outcome

In a week filled with triple-digit-point moves for the Dow Jones Industrial Average, we were again reminded how equity market volatility dissipates when eyed through a longer-term lens as the venerable benchmark ended the five days of trading just a few points below where it started.

True, the Dow was down a smidge for the week, but we never want to miss a chance to offer the reminder that the longer stocks are held the less the likelihood of loss…or even returns below that of the current 10-Year U.S. Treasury. No guarantee that the past is prologue, of course, but since 1927, the chance of Value Stocks and Dividend Payers achieving a return greater than 4.42% on an annualized basis were 60% if held for one month, 66% or so if held for three months, 68% or so if held for 12 months, 79% to 82% if held for three years and 89% to 95% if held for 10 years.

Indeed, equities have proved rewarding in the fullness of time, overcoming plenty of disconcerting events along the way,

including numerous run-of-the-mill trips south,

as well as plenty of 10% corrections,

and even 27 “official” Bear Markets.

To be sure, the long-term trend in stocks has been higher, even rising nicely over the last seven years despite tariffs,

EPS – Solid Corporate Profit Growth in 2025 and 2026 Remains the Expectation

with those gains supported by rising corporate profits over the years.

And speaking of profits, Q2 earnings reporting season got off to a good start last week with 86% of the S&P 500 members that have announced results thus far beating bottom-line expectations, and the outlook for the balance of 2025 and 2026 for EPS growth is generally solid, as the U.S. economy is expected to show OK real (inflation-adjusted) GDP growth this year and next,

with the latest estimate for Q2 real GDP growth from the Atlanta Fed standing at a healthy 2.4%.

Econ News – Better-than-Expected Stats; Growth Still the Forecast

Last week actually saw a flurry of better-than-expected economic statistics released, including gauges of manufacturing activity for July in the New York region,

and the Philadelphia area,

not to mention retail sales for June,

housing starts for June,

first-time filings for unemployment benefits in the latest week,

and the initial read on consumer sentiment for July from the University of Michigan.

Inflation – CPI Disappoints, but PPI and Long-Term Expectations Improve

Yes, the week’s set of econ numbers also saw a tick higher in the year-over-year consumer price index (CPI) for June to 2.7%, up from 2.4% in May and above the consensus forecast of 2.6%,

but the core CPI (excludes volatile food and energy prices) rose last month by an as-expected 2.9%,

and inflation at the wholesale level improved last month, rising 2.3% versus a 2.6% increase the month prior and estimates of 2.5% advance,

and longer-term inflation expectations, per the Univ. of Michigan, continued to come down.

Valuations – Attractive Metrics for our Portfolios

Obviously, anything can happen as we move forward and we are always braced for downside volatility, but we remain enthused about the long-term prospects of our broadly diversified portfolios of what we believe are undervalued stocks,

Sentiment – AAII Back to a Pessimistic Stance…Contrarian Positive

while we note that there is now a fair amount more pessimism than normal from the good folks at the American Association of Individual Investors,

with this sentiment gauge long confirming that one should be greedy when others are fearful.

Stock News – Updates on eleven stock across four 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.