Cramer's Lightning Round: Papa John's is a 'wait and see situation'
Arm: "You're in good shape. That's Rene Haas...He is a partner of Nvidia."
Papa John's: "I think it's a wait and see situation with Penegor...at Papa John's. So, I'm not going there yet. I'm not saying yes."
Click here to download Jim Cramer's Guide to Investing at no cost to help you build long-term wealth and invest smarter.Disclaimer The CNBC Investing Club holds shares of Nvidia.
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Forbes
an hour ago
- Forbes
How Lam Research Stock Gets To $200
The Lam Research Corporation logo appears on a smartphone screen in this illustration photo in Reno, ... More United States, on December 17, 2024. (Photo by Jaque Silva/NurPhoto via Getty Images) Lam Research (NASDAQ: LRCX), a prominent supplier of equipment for chip fabrication, is poised to gain from the increasing capital expenditures driven by the burgeoning generative artificial intelligence industry. While AI leader Nvidia (NASDAQ: NVDA) grabs attention with its stock price soaring more than 3 times over the last two years and its valuation approaching $4 trillion, less known companies like Lam play an essential role in the manufacturing of the AI chips that Nvidia markets. These stocks may provide a more stable value with significant potential for upside. The data is persuasive. According to SEMI, capital expenditure on advanced chip-making equipment is expected to nearly double from 2023 to 2028, and global capex spending is anticipated to exceed $100 billion in 2025 alone. Lam, which focuses on deposition and etching equipment—two of the foremost processes in chip production—may be well-positioned to seize a substantial portion of this investment. The company's primary clients include industry titans like TSMC, Samsung, and Intel, establishing it as a key player in both the logic and memory sectors of the chip market. Although traditionally dominant in memory chips, Lam is broadening its footprint in advanced logic chips and packaging technologies—fields that are witnessing increasing demand as chip design complexity escalates. AI tasks require not just advanced processing power but also high-bandwidth memory (HBM) and intricate stacking architectures. For instance, the fabrication of HBM chips is three times more wafer-intensive than standard DRAM because of lower bit density and the requirement for 3D stacking. This results in a direct increase in demand for tools manufactured by companies like Lam. How Lam Stock Can Reach $200 Whereas chip designers such as Nvidia have experienced skyrocketing valuations, Lam's stock has lagged. Shares have decreased by approximately 9% over the past 12 months and presently trade at around 24 times forward earnings, while Nvidia trades at about 35 times. Indeed, the valuation disparity is partly attributable to Lam's reliance on China, which represented 31% of revenues in the March quarter. Ongoing U.S. export restrictions have impacted this segment, likely restricting Lam's capacity to capitalize on the substantial Chinese market. According to consensus estimates, Lam's revenues are projected to grow by around 22% in FY25, although growth is expected to cool to roughly 2% in FY'26, in part due to these China-related challenges, with earnings also expected to remain flat. Nonetheless, if heightened demand related to AI, combined with a possible relaxation of chip equipment export restrictions to China, leads to sustained revenue growth at FY'25 rates of about 22% annually over the next three years, Lam's revenue could increase by around 1.8 times. Even if profit margins stay near current levels of 27% (as recorded over the first nine months of FY25), and if the valuation multiple rises to about 30 times (up from 24 times currently, a 1.25 times growth), the stock could potentially double from the current price of approximately $97 to over $200 per share. Several scenarios could lead to this outcome. Last week, the U.S. and China established a trade framework that encompasses rare earth exports and a potential relaxation of technology restrictions. If this easing of tensions applies to chip equipment exports, companies like Lam might gain renewed access to a vital growth market, further enhancing revenues. Furthermore, the process of chip manufacturing is becoming increasingly capital-intensive, meaning that a larger portion of the chip's expense is now equipment-related—a distinct advantage for companies like Lam. Additionally, advanced packaging methods, such as stacking and connecting multiple chips, which are already being used for AI tasks, should boost the demand for Lam's high-end machinery. Risks Also Exist Certainly, Lam faces significant risks. Beyond the China issue, the memory chip arena, where Lam has historically excelled, is encountering pricing pressures. Flash memory prices have been declining due to decreased demand from consumer markets and capex in this sector has been subdued as key players reduce production. Additionally, geopolitical tensions, macroeconomic uncertainty, and U.S. tariffs could further obscure Lam's short-term growth prospects. Although Lam is a highly specialized company with robust intellectual property, it may not enjoy the same protective barrier as a firm like ASML, which essentially has a monopoly over its trade of extreme ultraviolet lithography. On the other hand, Lam faces numerous competitors, such as Applied Materials and Tokyo Electron, which also provide similar services. That said, the long-term upcycle appears to be secure. The global semiconductor market is forecasted to surpass $1 trillion in annual revenue by 2030, rising from approximately $624 billion in 2024 according to the Wall Street Journal. As chip manufacturers adopt next-generation technologies to enable AI, the demand for sophisticated manufacturing tools is likely to remain high, directly benefiting Lam. While investing in a single stock like LRCX entails risk, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stock benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), delivering robust returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks offered an adaptive means to maximize the advantages of favorable market conditions while curbing losses when markets decline, as outlined in RV Portfolio performance metrics.
Yahoo
an hour ago
- Yahoo
This portfolio manager's secret for finding the next Nvidia
Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite AI powering a resilient bull market, savvy investors can still spot breakout opportunities hiding in plain this episode of Stocks in Translation, Zor Capital Portfolio Manager Joe Fahmy joins Yahoo Finance Senior Reporter Allie Canal and Producer Sydnee Fried to discuss the current market and what to watch for in the tech sector. Fahmy also provides insight on the signals he uses to find stocks - like Nvidia (NVDA) - that could be the next breakout star. Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service. This post was written by Lauren Pokedoff Welcome to Stocks and Translation, Yahoo Finance's video podcast that cuts through the market mayhem, the noisy numbers, and the hyperbole to give you the information you need to make the right trade for your portfolio. I'm your host, Alec Canal in for Jared Blickery, and with me today is the lovely Sydney Freed, AKA the voice of the people. Kindly like, subscribe, and comment on stocks and translation on Spotify, Apple Music, Amazon, or to kick things off today, our word and focus of the day is tech. What is going on with the rise of AI and how should you position your portfolio? And this episode is brought to you by the number 7 in honor of what else, the mag 7. So to get into all of this today, we're welcoming in Zor Capital portfolio manager Joe Fahmy. Welcome to the show, Joe. I mean, there's so about great day too. We are trading at or near record highs. What's your bird's eye view of what's going on in markets right now? Um, I feel that we're in a bull market that started late 2022, 2023, and it's driven by AI. So I'm kind of a historian geek and I've just studied history, bull markets are fueled by inventions and innovations that revolutionize our lives. So you go back to the twenties railroads that got us from New York to LA faster than walking there. So whether it's uh airlines, whether it's television, um, internet, just, you know, the smartphones, um, all of them, what they all have in common is increasing productivity. So AI is the new invention leading this bull market because it's obviously increasing productivity and I think this can go on for another couple of years. Butif we're at or near record highs and it's like all about AI, how do you actually make money in the market because I I know like it could go up a lot, but I thought you're supposed to buy when the markets are down. So when everything is, you know, golden, how do you like make more money than the next person? Well, hopefully that you justan opportunity with the tariff scare to get in a little bit lower and hopefully people have been in for a while. But one thing I've learned from, um, almost 30 years of doing this, I'm 108 years old and in case you're wondering. What's your skin a day over 85. Thank you. Um, one thing I've learned from doing this for a while is moves in the market go on way longer than we can expect. So in other words, just when you think things can't go higher, they usually do and justWhen you have nasty bear market corrections, just when you think they can't go lower, they usually do. So my point is, I'm not afraid to buy a little bit at at highs. And I'mcurious too. I've been speaking with some analysts about this. Do you think heading into this year, we had maybe a positioning problem where people thought they were too overexposed to tech, so they were moving to defensive plays, they had a lot of cash on the sidelines, and that's part of the reason why we're seeing this move higher in the tech trade. Yeah, and, and also the tariffs, look, the headline scared a lot of people. There are a lot of, if you look at the statistics, a lot of institutions are underinvested right now. That's why when you have the Iran scare over the weekend, everyone's like, oh, the market's gonna crash, but beneath the surface institutions have to get in when things are are dropping. So there are a lot of institutions right now that are offsides, and I think that's what's keeping this bid to the markets. And I'm curious too if history is any indication, we look back at 2022, right, where the recession that was supposed to happen never came. So our markets may be thinking, well, if the market's going to continue to be resilient, the economy can withstand all these changes, maybe we just stay and see what happens because right now the hard data is pretty solid. Yeah, the data is great. I always say if you're worried about a recession, just leave your house. I mean, just look around. You can't get into some restaurants. The airports are busy. I look at booking, which is the old price line. It's an indicator of travel, not just airfare and hotels, but cruise lines, all this. If that's near a new high, that's a sign to me that things are OK. Now, of course, you're gonna have the way and slowdowns along the way, but overall the economy is still strong. What do you like in the tech right now? Are there specific names, you have for people? Um, I mean, I'm, I do like a lot of the AI plays that, uh, we recently had a growth scare, but Microsoft and Meta's recent earnings, they said nope, full steam still spending money and you know capex expenditure. They're still putting a lot of money into AI so it's not just AI, but I'm noticing some space names with a lot of the great themes, but that's like another 2-3 years down the road. Some retail, not just, um, apparel, but restaurants I've seen like Texas Roadhouse and Shake Shack and Dutch Brothers some of these are near new highs, not just that, but energy as as well as a play off of the, the demand for the energy grid for AI and data centers. So there's a lot of sectors. And you're alluding to the fact that we've seen this broadening out of this market and within tech in particular, we always talk about Nvidia. We're trading your records. Do you think this is still an undervalued stock at these levels? Well, I think it's made a big move and it made, you know, call it fromSlit adjusted whatever 10 to 140 and and when stocks and the markets make big moves they kind of need to digest a little bit just like after a big Thanksgiving meal you kind of need to lay sideways on the couch for a little while, sometimes longer, but my point is it made a big move. It gets to be overcrowded and a year ago June it was 140 something and now it's you know, just cracking through 140, 150. So it made a big move. It's consolidating and I still still has more upside. So you recommend buying because I'm, I'm always curious like for people who are more passive investors buying the actual stock is the way to go or simply investing in an ETF, a chip ETF or just something to the, what do you think? It depends on your personal preference. It's always, I always say do what works for don't want single stock risks, so SMH is one of the main semi- ETFs. 21% of it's Nvidia, and then you get 10% broadcom and um Taiwan semi. So that gives you great exposure to that trade. If you don't want single stock risk, then use an ETF or the cus for like as you alluded to, or if you want single stock risk, you can, you can take a long, you know.I always just say manage risks. So even though I might be bullish and optimistic on things, when things, you know, turn against you, you have to always have some sort of a risk management, uh, in, in place. And if Jared was here, he would tell you I sit next to him and I ask him every day, is now a good time to buy a video? What are the technicals showing you? Because it's one of those trades where you do have FOMO if you're not in the market and you talked about the AI productivity boom. Do you think that's being underpriced at the current moment? I think that there are people way smarter than me, and I know that's a large sample size, but there are people way smarter than me saying that this is bigger than the internet. Um, like Mark Andreessen, for example, in 2010 or 2011, he wrote a piece called Why Software's Eating the World and he was dead now he wrote a piece a couple of years ago about AI how it's gonna change our lives and there's so many smart venture capitalists and smart minds that are talking about this is going to be like there's still a long ways down the road so I think that's it's still a lot left to this move. I'm curious as a portfolio manager how you find the next big stock. I know that's like, that's what everyone wants to know. And if we all knew it, we'd all be rich, but like, what is the next Nvidia or what are the indicators that you look for in a stock similar, so in the chip space that makes you think that's going to be the next breakout star. Question, I, I study, as I said, I'm kind of a market nerd where historically what causes a stock to go up is earnings and sales growth. It's almost like a simple concept, but people don't for you people forget like if you are growing your business, you start a small business and you go from a million in sales to 10 million in sales. Guess what? your small business is worth more. So it's the same concept. So if a company historically they looked at before as McDonald's and Microsoft and Home Depot and what caused all of these huge moves was earnings and sales growth. So I'm looking for something now that has very, very strong earnings and sales growth because as long as the markets cooperating for the most part, that'll help their stock appreciate. And we need strong fundamentals in the economy in order to support that earnings growth. So from your clients, what arebiggest concerns, do they talk to you a lot about the tariff uncertainties, inflation uncertainties? Do they have a lot of excess cash on the sidelines that they're waiting to deploy until later this summer when potentially we can get a little bit more clarity on the state of the economy? Yeah, some people, I mean, look, I, I keep the news on because you need to know what's going on in the world, but it's a lot of its fear and it's not that I'm complacent. I just try to encourage them, think, you know, with some of these names longer term, you're gonna have corrections along the way, butAs I always say, you don't turn on the Weather Channel when it's 75 and sunny outside. You turn it on when a blizzard or tornado or hurricanes coming. So my point is the news is designed for the most part to scare us for ratings. So I take it all with a grain of salt. How do you then know when a news headline hits an event happens and you need to adjust your portfolio versus ignore? Well, we saw that with the Middle East, right? We have this reaction and then stocks stocks closed in the green on Monday. That's the line. It's not the news, it's the market's reaction to the news. So when things really started to break down in 2020 where we weren't sure if COVID was gonna be a big deal if it's gonna spread where when it really starts to break down, that's the market's reaction to the news when it breaks certain technicals where the institutions normally support and they're like we're getting out of when you have to heed the warning there. But in the case of the recent Middle East crisis so far, the news has been miserable, but the market's resilient. So that's an example of the market's holding support. So how do youtrain your mind then to be that investor that doesn't get scared, that stays in it when it's tough, because the mental toughness element of it is scary, the If you're a trader, you, you have, I don't know, you have a few choices. You turn off the news except for you guys because you can keep you guys that'sactually a thing right now that people are talking about that you're better off not looking at the news and just staying, yeah, or to use your expression mental toughness. That's another option is say, OK, I can keep social media on, I can keep the news on and and take it all with a grain of your other option is bla blame your parents for raising a wimp. I've seen a lot ofaggressive dip, especially on the part of retail traders that when the market goes down to view it as more of an opportunity rather than a scary moment where you're going to be losing a lot of money and not focus on the red in your line. The market's the only place where when things go on sale, people run, otherwise people usually go for sales and stuff. It just all depends on your time frame. Um, with the indexes and the ETFs over every 1020, 30 year period, they go up. They're designed to go up because they take out the weaker stocks and put in the stronger ones. But with individual stocks, you do have to be a little bit more careful don't always come back. So it just depends on your time frame and, you know, your strategy. This might be an odd thing to ask, but are there any pullbacks you are anticipating in the next few months, any events that investors should watch out for that could cause a pullback? Iwouldn't be surprised this summer to see a pullback. August and September again, being a historian, August and September traditionally two of the weaker months of the year. So a lot of people go away. Hampton's stuff. So you, you tend to see a lot of institutions might might sell and just take some time off in the summer. I mean, we have Jackson Hole in August, maybe have a cut in September. How much of a catalyst, it's the you're asking are awesome. I know it's just impossible to answer because if you tell someone whose dollar cost averaging an it doesn't matter, but if someone's actively managing a portfolio and things have been strong over the past month or two, then maybe going into July you could take a little bit off the table. But again, it's just all it's just a case by casebasis. When we saw the uh May go away that didn't really that didn't work out too well, but Joe, let's take it right there. We will need to take a short break, but we'll be right back with Joe and more stocks in translation back to Stocks in Translation. We're here with Capital portfolio manager Joe Fahmy, and we were just talking about how we need to evaluate different risks within this market right now, whether it be from the economy, whether it be from the Fed, and you were saying that it depends on your time horizon. So how does that differ when you're a long-term investor versus maybe when you're nearing retirement? Um, well, they say as you get closer to retirement, reduce a little bit more of your equity exposure and maybe more into fixed income, and I, it's not, you know, depends on your risk, but the good thing now is for the longest time it was, you know, 0, 0% interest rate policy. So if you, if you you retired and you had money in the bank from the financial crisis up until 2021, you might get like 7 cents interest on your money for the month, but now that you can get 4 4.5% on the 10 year and on on certain CDs in the bank, so as you get closer to can have a little bit more in cash because at least you're getting some interest off of that. Doyou have a recommended asset allocation? I know that's broad and it differs for people with longer runways, but I don't know, let's call it an earlier investor, 20s, 30s, and then maybe a middle age, 40s,50s. I think if you're younger, all stocks, they say it's supposed to be 100. Take your age minus 100 minus your age, and that's the percentage to be in stocks as a guideline. So if you're 30, you should be stocks, but I think if you're 30 you should be 100% equities. So no bonds. I just, if you're that's, that's young, you know, so no, I, I asked because with the drawdown, I I was thinking about my own portfolio and like, do I need any hedges for volatility something like gold. Uh, I really genuinely was thinking to myself, do youneed and I'm the opposite because I feel like I have no hedges and I just.I, I, I, I don't, I don't think I have any right now. My, my, so my defensive play is gold. So my point is, do I need them? If you'rein the S&P with 11 sectors when the market drops, you're gonna have one of those sectors of utilities. So there is a defensive component to that because once I mean 500 stocks is a lot of diversification and a lot of them, most of their revenues do come internationally, so you do have international exposure. You do know, some, um, you know, technically fixed income through the dividends and so forth. So again, I have, it's a little bit different where I might be positioned a little bit more as a growth manager towards being a little bit more aggressive, if you're younger, I'm, I say, hey, stick with, you know, the spy or the cus longer term and you'rehedging yourself to what you were just saying. You have so much exposure to differenttypes of or I do and raise a little bit of cash at times when when I feel like, OK, it's been a good run. Nothing wrong with cashing a little bit because even though I think this market's going to go on for two or three years, it's not gonna go straight up. Even if you compare it to 95 to 99, which was an incredible boom with the 97, there was a uh Japanese um currency crisis and 98 was a Russian debt crisis with long term capital. And so there were scares along the way during that amazing run. So the analogy is there's going to be just recently the tariff scare was almost a 20% correction. So there's gonna be hiccups along the way. You basically answered this, but I just want to hear it again. You consider investing in all of the different sectors a level right? Because when I think about that, I think stocks, bonds, gold, gold, international fixed income and all. Everyone has, you know, a traditional, um, financial advisor is going to asset allocate that for you. I'm not traditional, I guess. I don't like to blend in with everybody, so we don't want to be boring, I don't want to be boring. I mean, I think with the, they say 20 stocks is perfect diversification. So when you have 500 almost over diversification, but it gives you exposure to a lot of sectors. What about FOMO chasing, chasing these buzzwords all the time and it feels like with applications like Robin Hood, retail traders, just getting into the game a little bit more. What's your perspective there? FOMO's cured with discipline. That's my perspective. So I just, it's one word acceptance. I I can't look, there's gonna be some hot quantum computing names that go up to 300%. There's gonna be some hot nuclear names. I've seen them already in the markets, but.I see some of them, but you can't chase everything. You just have to say, OK, I gotta accept. I just can't own everything, and that's part of the discipline. And trust me, I learned the hard way because I used to do that, but then all of a sudden you own 50 names and you're and then the market corrects and you're like, what do I even have in my portfolio? I don't even know what these companies are. I just chased them because someone on social media was talking about them. So you, you need to have the chocolate cake's gonna be there. You gotta have some discipline, you know, you have to try to control yourself once in a while. Something you in your notes, you said there's a lot of bullish activity in the major tech names, um, for options. What do you think of options forA passive investor, is that, should that be a non-existent thing? How do you even start takes out their notebook. Yeah, I'm dying to know if I need options. Well, it depends. I follow unusual options activity because a lot of the big institutions use it to um build positions and stocks and so people, uh, a common strategies covered calls where you own the stock and you write, if you think like I gave the example of Nvidia makes a big run and it's been consolidating or even Tesla made a big run in consolidating. Some people write covered calls against that. That's just something I would either look into and I don't wanna say it's dangerous, but it, it involves risk like everything so you have yourself on it, but you useit as an indicator of what some of the bigger institutions are doing. Ifollow what they're doing because whether it's someone like a Bill Ackman or even Carl Icahn when he got into his Netflix position, he, they do it all through options, big blocks of options in the money options. Some of the activist investors do that as well, so.I, because liquidity is an issue, so if you want to buy 200,000 or a million shares, you could just buy 2000 contracts and then and then they automatically execute that for you. So I like to trav to watch what they're trafficking in because it gives clues. That's smart, and I wanna switch gears to a segment we like to call And this is what the market may be misunderstanding, and I want you to explain why the Netscape web browser release is similar or different from the chat GPTrelease. So that's the comparison I'm using is that this bull market that let's say it's going to be 2023 to hopefully 2027 or longer is similar to the internet, uh, 95 to 99, andRight around 949995. It was actually chart from Bespoke Investments, which I found very fascinating because the crack invention of the time was Netscape browser at the time and, and, and Chat GPT came out in late 2022. So,It's amazing how the NASDAQ and releases of both of those products has literally tracked almost identical. So I almost compare it to the, you know, the crazy invention of the time then and now that a lot of people are scaling up and using it. They did, they're tracking each other very similarly. Haveyou been surprised at the mass adoption of Chappy GPT at this point? Fastest application to 100 million users, 2 months, faster than.I mean, the list is endless of, you know, whether it's Facebook, Instagram, or 2 months for even TikTok faster than all of that stuff. So, uh, they're estimating maybe even a billion active users. So yeah, it is there an element of it that's a little scary? Well, you just have to say thank you at the end so it doesn't come after you and destroy your computer or your life somehow. Just be polite with with AI.I want to end on a personal note. I want to know how one becomes a portfolio manager in the first place and start studying markets. Um, I, I think everyone has a passion that they're interested in. Some people I know are amazing chefs where they just start cooking and then it just becomes a passion. It's just something, you know.I, I love the markets and as I've been putting out content and been grateful you guys have been able to let me, you know, contribute and other stuff through my blogs like I think it's just as you put out stuff if people reach out and they say, hey, we're interested we like what you're saying we're interested in you managing money and that's when I became an adviser and um so I think it's it's a different way of doing things, but if people like what you have to say and your content, then they end up reaching out and then decided to make a business out of it. So yeah, you too. Where you talking about? and it's in Vegas. I'm out there um I have a lot of clients out there so I'm I'mI do film and it's music people, but I don't want to make it all business as I was telling you earlier. I talk markets all day, which I don't mind, but I've been lucky to know some people, music, sports, um, you know, finance and so forth. So it's fascinating to me and I'm enjoying it. Is thereanything you find challenging about it? You know it is time flies when you're having fun and all that. So if it's a conversation I'm enjoying, the time flies. If it's, oh no, fear would be I just don't know what to ask next. And then I look up and I'm like, how do I get through the next 45 minutes of this. So speaking of flying, unfortunately we are out of time here. We're winding things down at Stocks and Translation, but make sure to check out our other episodes on the Yahoo Finance site and mobile app. We're also on all your favorite podcast platforms, so be sure to like, leave a comment, and subscribe wherever you get your podcasts. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 hours ago
- Yahoo
Stocks kick off July with surprising twist
Stocks kick off July with surprising twist originally appeared on TheStreet. It's been all about technology lately. After stocks found their footing in early April when President Donald Trump paused most reciprocal tariffs, clearing the way for trade deals, technology stocks have surged. The SPDR Technology ETF () gained 23% from April 9 through the end of the second quarter, handily out-pacing other sectors and the S&P 500, which returned 10.5% over the same period. 💵💰💰💵 The tech stock stars during the rally have been familiar names. For instance, AI darlings Nvidia and Palantir have skyrocketed a jaw-dropping 46% and 62%, respectively, after gaining 171% and 340% in 2024. The move has been impressive, but stocks don't rise or fall in a straight line forever. The third quarter has kicked off with a surprising list of stocks taking the baton from technology—at least for now. The rise in these down-and-outers could be fleeting, but after lagging technology stocks for a while, the recent action may make them intriguing, especially given technology stock valuations are arguably stratospheric. The stock market rally followed a massive sell-off that was fast and steep enough to cause most investor sentiment measures to flash deeply 'oversold.' Plenty of risks were behind the drop, including sticky inflation, growing joblessness, and uncertainty over how newly enacted tariffs may impact household and business combination of a weakening economy and cash-strapped consumers led many to think stagflation or recession is in the cards. The risk of such an economic reckoning isn't off the table. But the stock market is forward-looking, and investors appear to think most of the risk was priced into stocks at the early April lows. The trade deals announced so far with the UK and China aren't overly comprehensive, but they provide a blueprint that suggests tariffs might stay at current levels, providing much-needed clarity. If so, inflation caused by tariffs may be – dare I say it… transitory. A slight increase in inflation because of tariffs could prove manageable as long as it doesn't derail the likelihood of a friendly Fed. After cutting the Fed Funds Rate by 1% last year to stimulate the job market, the Fed has remained on the sidelines this year, awaiting clarity on how import taxes will impact inflation. However, most, including the Fed itself, expect rate cuts at some point this year. The Fed's dot-plot in June suggested its monetary policy will send interest rates a half-point lower by the end of 2025. () reduce rates by 1% () , while Morgan Stanley projects seven rate cuts. The prospect of lower rates driving economic growth, corporate revenue, and profit has reignited investors' animal spirits. Investors have also begun to model in potentially higher forward earnings estimates in the wake of a significant drop in the US Dollar. This helps financial results for companies that get sizable revenue from overseas, such as technology stocks. As a result, the S&P 500's forward price-to-earnings ratio has increased to nearly 22, an arguably rich valuation given historical returns tend to be middling once the stock market's P/E ratio exceeds 20. A return of optimism has caused some signals to flash overbought, suggesting that the stock rally may pause. For example, the S&P 500's relative strength index eclipsed 70 last week, a level that can foretell weakness. While concerning, not all stocks have to fall to work off that overbought condition. More Experts: Legendary fund manager sends blunt 9-word message on stock market tumble Major analyst unveils surprising gold price forecast for 2026 Jim Cramer sends strong message on Nvidia stock at all-time highs Many stocks have lagged technology stocks since April, and they may hold up or gain ground if high-flyers backfill some of their recent gains. We may already be seeing early signs of that happening. 'Underneath the surface, there's massive rotation underway,' wrote Bespoke in a note to clients. 'Q2's biggest winners are getting pummeled, while Q2's losers are soaring.' Bespoke crunched data on the Russell 2000, breaking stocks into ten baskets based on performance in the second quarter. On July 1, the stocks that were in the worst-performing basket last quarter jumped 3.3%, according to Bespoke. The best performers? Well, those stocks dropped an average of 2.3%. The 5.6% relative outperformance of the worst to best performers is pretty intriguing, but one day doesn't equal a trend. It's possible that much of the gains by the worst performers are tied to the calendar flip, as money managers waited until July 1 to lock in profits on some of their best performers and rebalance weights toward the laggards. "Tuesday felt like a lot of big upsets in the market as the 'seeded' players (the index movers) got rocked and the down-and-outers emerged," wrote veteran technical analyst Helene Meisler on TheStreet Pro. "Can the rally last this time? I think it has more than a day in it." Meisler thinks the rotation to the laggards may continue, but don't get too excited. We similarly saw the down-and-out stocks jump about one month ago, and they still wound up underperforming by the end of the month. Overall, Meisler thinks rotation may only help these stocks for a few weeks. She recommends that investors keep an eye on how the equal-weighted S&P 500 () performs relative to the more closely watched market-cap weighted S&P 500 () , which everyone uses as their benchmark, for kick off July with surprising twist first appeared on TheStreet on Jul 2, 2025 This story was originally reported by TheStreet on Jul 2, 2025, where it first appeared. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
