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Yahoo
2 days ago
- Business
- Yahoo
Factories, Data Centers Will Get A Boost From The 'One Big, Beautiful Bill'
The manufacturing sector is set to get a big boost from President Donald Trump's 'One Big, Beautiful Bill,' which is likely to spur new waves of investment, especially in sectors like AI and biotechnology. The sprawling budget bill introduces a series of tax deductions and credits for businesses, especially those that invest in research and development (R&D), AI buildouts, and domestic factory construction. 'Likely beneficiaries of the law include industrial machinery manufacturers, heating and ventilation system providers, pharmaceutical innovators, semiconductor companies and major technology firms,' wrote Matt Hochstetler, equity portfolio manager at Capital Group. Bigger Up-Front Tax Breaks to Create Cash Flow One of the bill's main provisions benefiting manufacturing is a change to how quickly companies can claim tax breaks on investments in equipment, facilities, and production lines. The bill now lets companies deduct 100% of their investment in 'qualified production property' in the year it's paid for instead of spreading the deduction over several years. 'This measure could become a powerful tailwind for free cash flow and spur fresh waves of investment across multiple sectors, assuming overall debt levels don't drive interest rates too high,' Hochstetler wrote. Because both the factory itself and the machinery inside can be deducted immediately, some analysts said this could incentivize companies to build more of their supply chains in the U.S. 'This 'reshoring super-deduction' dramatically lowers the after-tax cost of domestic investment. This should encourage the onshoring of supply chains and manufacturing capacity and create more jobs for Americans,' wrote Brownstone Research Senior Analyst Nick Rokke. AI Will Be A Big Winner The bill offers immediate deductions for investments made into research and development, including retroactively from 2022. The bill also boosts the tax credit for semiconductor production to 35% from 25% previously. Together, these changes could provide a boon for AI production in the U.S., especially amid a surge in data center construction by companies like Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Meta Platforms (META). 'With new data center costs reaching into the tens of billions of dollars, the short-term tax savings are enormous,' Rokke wrote. 'This change alone frees up billions in cash flow for the hyperscalers. And that cash will almost certainly be reinvested into even more compute infrastructure.' Smaller Factories Get a Leg Up Another provision that could benefit manufacturers is the restoration of deductions based on earnings before interest, taxes, depreciation, and amortization, or EBITDA. The Association of Manufacturing Technology (AMT) said this would allow for greater deductibility of interest expenses related to financing investments, acquisitions and expansions. The group also pointed to higher expensing limits for small businesses, which it said would allow for larger equipment purchases. 'This change dramatically increases the ability of small manufacturers to invest upfront in critical assets, leveling the playing field against larger competitors,' wrote Amber Thomas, AMT vice president of advocacy. An increase in the estate tax exemption is another benefit for small business owners, AMT pointed out. That provision could help family-owned manufacturing businesses pass on ownership without facing burdensome taxes. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
14-07-2025
- Business
- Yahoo
Anti-Bitcoin Vanguard Might Be the Largest Institutional Holder of MSTR Stock
Vanguard, the $10 trillion asset manager known in crypto circles for blocking client access to bitcoin ETFs, has emerged as the largest institutional shareholder of Strategy (MSTR), a company whose business model is built around buying and holding bitcoin. According to Bloomberg, Vanguard now owns more than 20 million shares of MSTR — over 8% of the company — surpassing Capital Group as the top institutional holder. The stake is worth about $9.26 billion. "God has a sense of humor," said Bloomberg analyst Eric Balchunas, who has also written The Bolge Effect. "Vanguard chose this life. When you have an index fund, you have to own all the stocks, for better or worse, and that includes stocks that you may not like or approve of personally." "Institutional dementia," said a somewhat less diplomatic Matthew Sigel, head of digital asset research at VanEck. 'Indexing into $9 billion of what you openly mock isn't strategy,' he wrote in a post on X. Vanguard's exposure comes from passively managed index funds, not a deliberate bet on bitcoin or Strategy's strategy. MSTR is included in several of Vanguard's funds, such as the Total Stock Market Index Fund (VITSX), the Vanguard Extended Market Index Fund (VIEIX) and the Vanguard Growth ETF (VUG). These funds mirror the composition of broad stock indices and automatically include companies like Strategy when they meet certain criteria. Strategy, led by executive chairman Michael Saylor, has converted itself into a bitcoin holding vehicle, acquiring more than 600,000 BTC worth now about $72 billion since 2020. The company's shares have become a proxy for bitcoin exposure, especially in the years before the U.S. approved spot bitcoin ETFs. Still, Vanguard remains opposed to the asset class. The firm has refused to offer clients access to bitcoin ETFs, even as competitors like BlackRock launched the wildly successful iShares Bitcoin Trust (IBIT), which became the fastest ETF to manage over $80 billion in assets. Even the arrival of supposedly crypto-friendly CEO Salim Ramji in May last year hasn't shifted the firm's position. 'I think it's important for firms to have consistency in terms of what they stand for and the products and services they offer,' Ramji said after his appointment.
Yahoo
02-07-2025
- Business
- Yahoo
What To Expect From the Stock Market in the Second Half of 2025
Stocks closed out the first half of 2025 trading at record highs after recovering from an April drop. Analysts generally expect the S&P 500 to remain rangebound this year, with high valuations limiting upside potential and economic resilience limiting downside risk. But international, Big Tech, and AI stocks could continue to outperform as investors increase exposure to corners of the market seen as relatively undervalued or fast-growing and investors, the first half of 2025 was a rollercoaster ride that ended happily. Market watchers think the rest of the year could look much the same. Stocks underwent one of their worst sell-offs in decades after President Donald Trump announced his 'Liberation Day' tariffs on April 2. That was followed a week later by one of their best days in decades when Trump paused those tariffs. In the end, the S&P 500 rose more than 10% over the second quarter, finishing the first half of the year at a record high. The rebound was aided by easing economic uncertainty. A preliminary trade deal with the U.K. and de-escalation with China boosted optimism that tariff rates will ultimately settle below their "Liberation Day" levels. Despite mounting fears of a growth slowdown and resurgent inflation, data throughout the second quarter suggested the labor market was resilient and tariffs were having only a modest impact on inflation. Taken together, investors now see reasons to hope that the Federal Reserve will resume interest rate cuts in the second half, which could further lift shares. Several banks have lifted their year-end S&P 500 targets in recent weeks, with many restoring estimates they slashed after "Liberation Day." The path ahead for stocks could turn largely on questions about trade. The clock is ticking for the White House to strike bilateral trade deals by July 9, when the 90-day tariff pause ends. Trump has hinted he's open to extending the deadline, which could keep businesses and Wall Street in an uncertain position for some time. "I expect stock markets to be noisy in the coming months, because many companies are frozen in place until they have more clarity on where global trade is headed," said Cheryl Frank, portfolio manager at Capital Group. Still, Frank said, noise and headline-driven volatility, like April's tariff rout, can create buying opportunities. "In periods of disruption, markets have tended to punish good companies as well as bad," she said. "A lot of companies will appear to be on sale." Historically high valuations may keep a lid on the S&P 500's gains in the second half, according to some market watchers. The S&P 500's price-to-earnings ratio rebounded sharply off April's lows and was recently near a cycle high. At the same time, earnings estimates have declined this year, though only to a degree that reflects expectations for a moderate slowdown. 'This tells me that markets are no longer priced for an adverse outcome,' wrote Jurrien Timmer, director of global macro at Fidelity's Global Asset Allocation Division. 'This matters, because the sunnier the market's expectations, the harder it is to beat them.' Higher valuations for stocks "will remain a psychological hurdle for some investors,' which could limit the market's upside potential, wrote JPMorgan analysts Dubravko Lakos-Bujas and Bhupinder Singh in a recent research note. High valuations themselves are rarely a reason stocks decline, say Lakos-Bujas and Singh; instead, they wrote, they set prices up to fall faster and further when things go awry. If stocks slip in the coming months, it will most likely be because the economy slows, according to Lakos-Bujas and Singh. Hard data like employment and consumer spending could deteriorate as the effects of tariffs, immigration crackdowns, and federal spending cuts take their toll. U.S. stocks have had a strong start to the year. International ones have done even better. Where's an investor to turn? The MSCI World ex. USA Index, which tracks large and mid-cap stocks in 22 non-American developed markets, more than tripled the S&P 500's 5.5% return through June. Yet despite their outperformance, international stocks remain inexpensive on a price-to-earnings basis compared to their U.S. counterparts. 'Attractive valuations may persuade investors to reallocate money away from the U.S. in their portfolios,' according to strategists at Charles Schwab. That could sap the U.S. market of some upside potential. Global stocks may also be helped by recent policy changes. Trump's insistence that allies rely less on U.S. security guarantees has led most European countries to boost defense and infrastructure spending. Japan late last year approved a 9% increase in defense spending. 'This move should spur more economic activity in those regions and potentially narrow the gap in global growth,' possibly drawing more interest from domestic and international investors, said Bernstein analysts. The Magnificent Seven stocks had a rough start to the year. They were first hammered by concerns about overspending on AI infrastructure and then by tariff fears. The Bloomberg Magnificent 7 Total Return Index inched up just 0.3% this year through June, while only three of the seven stocks finished the first half in the green. However, market watchers remain bullish on Big Tech, whose healthy balance sheets and cash flows should help them weather extreme uncertainty. 'We are Overweight Tech on the back of tariff de-escalation, along with the Big Beautiful Bill's support for investment spending and high-end consumption,' wrote JPMorgan analysts. Within Tech, the firm favors semiconductors, the Mag 7, and stocks tied to AI themes, including data center buildouts, power providers, and cybersecurity. There's room for retail investors to up their exposure to the Mag 7, according to Charles Schwab analysts Liz Ann Sonders and Kevin Gordon. The group's share of retail investor inflows has declined to multi-year lows this year, according to Sonders and Gordon's assessment of data from Vanda Research. 'It doesn't suggest the mega caps are under-owned entirely," they said. "But we wouldn't be surprised to see them make an attempt at reasserting their dominance in the second half." Read the original article on Investopedia 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
01-07-2025
- Business
- Yahoo
Global dividend funds attract inflows on rate-cut hopes and market jitters
By Patturaja Murugaboopathy (Reuters) -Global funds that invest in dividend-paying stocks are drawing strong flows this year, following two years of tepid investor demand, as investors seek assets with a stable income while they navigate geopolitical and economic tensions. Higher dividend-yielding stocks have become popular as the technology sector, which was last year's standout performer, lags behind dividend-heavy sectors such as utilities and energy in 2025. Global dividend-focused exchange-traded funds attracted $23.7 billion in inflows in the first half of 2025, the most in three years, according to Lipper data from LSEG. "Consistent dividend growth signals a company's managers are disciplined at capital allocation and confident about future business prospects," said Steve Watson, an equity portfolio manager at Capital Group. "With tariff negotiations likely to linger for months, dividend growers could provide portfolios with a measure of stability when markets become volatile." Sector-wise, energy led the way with a global dividend yield of 4.75%, followed by real estate at 3.7%, utilities at 3.3%, and financials at 3%, according to LSEG data. By region, Europe had the highest dividend yield of 3%, while Asia-Pacific's dividend yield was 2.6% and the U.S. lagged with an average dividend yield of 1.4%. "With policymakers widely expected to trim rates later in the year, the bond side of the ledger could see coupons ratchet lower, while a broad swath of companies still have room to hold or even lift their dividends," said Chad Harmer, chief investment officer at Harmer Wealth Management. "If that script plays out, the income gap should tilt further in equities' favour." The iShares International Select Dividend ETF has gained nearly 26% this year, while the Xtrackers MSCI EAFE High Dividend Yield Equity ETF and the Schwab International Dividend Equity ETF are up around 18% each. In comparison, the MSCI World Index has returned 8.5% year-to-date.
Yahoo
01-07-2025
- Business
- Yahoo
Global dividend funds attract inflows on rate-cut hopes and market jitters
By Patturaja Murugaboopathy (Reuters) -Global funds that invest in dividend-paying stocks are drawing strong flows this year, following two years of tepid investor demand, as investors seek assets with a stable income while they navigate geopolitical and economic tensions. Higher dividend-yielding stocks have become popular as the technology sector, which was last year's standout performer, lags behind dividend-heavy sectors such as utilities and energy in 2025. Global dividend-focused exchange-traded funds attracted $23.7 billion in inflows in the first half of 2025, the most in three years, according to Lipper data from LSEG. "Consistent dividend growth signals a company's managers are disciplined at capital allocation and confident about future business prospects," said Steve Watson, an equity portfolio manager at Capital Group. "With tariff negotiations likely to linger for months, dividend growers could provide portfolios with a measure of stability when markets become volatile." Sector-wise, energy led the way with a global dividend yield of 4.75%, followed by real estate at 3.7%, utilities at 3.3%, and financials at 3%, according to LSEG data. By region, Europe had the highest dividend yield of 3%, while Asia-Pacific's dividend yield was 2.6% and the U.S. lagged with an average dividend yield of 1.4%. "With policymakers widely expected to trim rates later in the year, the bond side of the ledger could see coupons ratchet lower, while a broad swath of companies still have room to hold or even lift their dividends," said Chad Harmer, chief investment officer at Harmer Wealth Management. "If that script plays out, the income gap should tilt further in equities' favour." The iShares International Select Dividend ETF has gained nearly 26% this year, while the Xtrackers MSCI EAFE High Dividend Yield Equity ETF and the Schwab International Dividend Equity ETF are up around 18% each. In comparison, the MSCI World Index has returned 8.5% year-to-date. 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
