Market Overview - The Nasdaq reached a record closing high as the second-quarter earnings season begins, with President Trump announcing a 30% tariff on Mexico and the EU, prompting negotiations before the August 1 deadline [1][2] - The S&P 500 is expected to see 4.7% earnings growth on 4% higher revenues for Q2, indicating a slowdown compared to previous quarters [3] Earnings Reports - JPMorgan Chase reported Q2 earnings of $4.96 per share, exceeding estimates by 9.98%, with revenues of $44.91 billion also surpassing expectations [9] - Nvidia's stock rose approximately 4% after announcing plans to resume sales of restricted H20 GPUs to China, with government assurances of license approvals [11][12] Historical Context - The S&P 500 experienced a significant rally, advancing over 25% from April lows, a feat accomplished only five times since 1957, with historical data suggesting double-digit gains in the following year [7] - The first half of the year was marked by volatility due to trade tensions, but market performance improved as trade-talk progress became clearer [5][6]

Core Viewpoint - Huntington Ingalls Industries (HII) is positioned as the exclusive designer and builder of nuclear-powered aircraft carriers in the U.S., showcasing strong order growth and a robust backlog, making it an attractive investment opportunity in the aerospace-defense industry [1]. Growth Outlook & Financial Performance - The Zacks Consensus Estimate for HII's 2025 earnings per share (EPS) has increased by 1.2% to $14.42 [2] - The total revenue estimate for HII in 2025 is $11.91 billion, reflecting a year-over-year growth of 3.3% [2] - HII's earnings growth rate over the next three to five years is projected at 11.3%, with an average earnings surprise of 4.20% over the past four quarters [2] Market Position & Operations - HII is the sole designer and manufacturer of nuclear-powered aircraft carriers in the U.S., accounting for over 70% of the active Navy fleet [3][7] - In Q1 2025, HII launched DDG 129, christened LPD 30, and began fabricating LPD 32, with plans to complete sea trials for DDG 1000 and deliver DDG 128 and LHA 8 in 2026 [3] Backlog and Order Growth - HII secured new contract awards worth nearly $2.1 billion in Q1 2025, increasing its total backlog to $48.05 billion as of March 31, 2025, indicating strong future revenue potential [4][7] Shareholder Returns - HII has been enhancing shareholder value through dividends, currently offering a quarterly dividend of $1.35 per share, leading to an annualized dividend of $5.40 and a dividend yield of 2.09% [5] Financial Ratios - HII's return on equity (ROE) stands at 12.26%, surpassing the industry average of 10.73%, indicating effective fund utilization [6] - The company's total debt to capital ratio is 40.15%, better than the industry's average of 52.08%, with a times interest earned (TIE) ratio of 7.3, suggesting strong capability to meet interest obligations [8] Stock Performance - HII shares have increased by 12.8% over the past month, outperforming the industry's growth of 6.5% during the same period [9]

Joining us right now for his take on the markets is Mike Wilson. He's chief investment officer and chief US equity strategist for Morgan Stanley. And Mike, it's great to see you. Morning. Before we talk more broadly, can you just comment on on Nvidia, what that means maybe for tech for tech companies at large? Yeah, I think this is back to the the issue we've been dealing with is like what's going to be sanctioned, what's not going to be sanctioned. I mean the 232 like what's going to be carved out. So this ...

Investment Rating - The report upgrades the S&P 500 valuation and return forecasts, expecting a rise of 10% to 6900 over the next 12 months, with a forward P/E multiple of 22x [3][4]. Core Insights - The S&P 500 forward P/E of 22x ranks in the 97th percentile since 1980, but is deemed appropriate given the current macroeconomic conditions, including declining interest rates and elevated corporate profitability [3][11][12]. - Earnings growth is projected at 7% for both 2025 and 2026, with EPS estimates of $262 and $280 respectively, although there are two-way risks around these forecasts [6][24]. - The report highlights narrow market breadth, with the median S&P 500 constituent 11% below its high, indicating potential for a momentum reversal in the equity market [30][34]. - Sector allocation recommendations include a mix of secular growth (Software & Services, Media & Entertainment), cyclical (Materials), and defensive (Utilities, Real Estate) industries, with a focus on AI-related technology stocks [41][44]. Summary by Sections Valuation and Earnings Forecasts - The S&P 500 is expected to reach 6900 in 12 months, with return forecasts of +2%, +5%, and +10% over 3, 6, and 12 months respectively [4][47]. - The forward P/E multiple has been increased to 22x, with EPS growth of 7% anticipated for 2025 and 2026 [6][49]. Market Conditions - Current macroeconomic conditions support the elevated P/E multiple, with expectations of earlier Fed easing and lower bond yields [12][16]. - The report notes that investor positioning is neutral, suggesting that current market multiples do not reflect investor exuberance [17][20]. Sector Preferences - There is no clear consensus on sector preferences among clients, but AI-related technology stocks are generally favored despite valuation concerns [41][44]. - The recommendation to invest in Alternative Asset Managers within the Financials sector has been positively received [41]. Market Breadth and Momentum - The S&P 500's recent record high contrasts with the median constituent being significantly below its peak, indicating narrow market breadth [30][34]. - A potential momentum rotation is anticipated, although it is expected to be short-lived rather than indicative of a new long-term trend [40].

Financial Sector Overview - The financial sector will be highlighted with Q2 results from major domestic banks on July 15, including JPMorgan, Citigroup, and Wells Fargo [1] - Several finance stocks have a Zacks Rank 2 (Buy) and are worth considering beyond the three major banks [1] Major Regional Banks - The Zacks Banks-Major Regional Industry is in the top 5% of over 240 Zacks industries, with State Street and The Bank of New York Mellon as notable performers [2] - Both State Street and New York Mellon are expected to achieve double-digit EPS growth in fiscal 2025 and FY26, with anticipated Q2 earnings growth of 10% and 15% respectively [3] Operational Efficiency and Sales Growth - State Street and New York Mellon are expected to maintain industry-leading operational efficiency, having recently reached new 52-week highs and offering dividend yields over 2% [4] BlackRock's Performance - BlackRock, the world's largest asset manager, is projected to report a 12% year-over-year sales increase to $5.38 billion for Q2, with EPS expected to rise 5% to $10.86 [5] - BlackRock's annual earnings are expected to grow by 5% this year and by another 12% in fiscal 2026, reaching $51.75 per share, alongside an 11% sales growth in FY25 and a projected 15% increase in FY26 to $26.16 billion [6] Dividend and Stock Performance - BlackRock's stock is near a 52-week high of over $1,100, offering a 1.89% annual dividend yield, equating to $20.84 per share, with a payout ratio of 46% indicating potential for future dividend increases [9][10] Summary of Earnings Estimates - Ahead of their Q2 reports, State Street, The Bank of New York Mellon, and BlackRock stocks are positioned for potential gains, supported by positive earnings estimate revisions for FY25 and FY26 [11]

Interest Rate Outlook - Wells Fargo anticipates one rate cut in 2025 and one in 2026, suggesting a neutral rate around 100 basis points above inflation [3] - Piper Sandler suggests the economy needs rate cuts to broaden fundamental breadth beyond the largest companies and wealthiest consumers [7][13] - The market is already at all-time highs, priced for only a couple of cuts [4] Economic Indicators and Analysis - The economy is bifurcated, with housing and small caps showing weakness, while S&P 500 profits are at new highs [6][7] - US PMIs remain broadly in contraction territory [6] - Unemployment at 41%, and Q2 GDP tracking around 25% do not indicate an immediate need for Fed rate cuts [9] - Positive year-over-year earnings growth suggests no imminent recession or material slowdown [10] Earnings Growth - Consensus is tracking 5% to 6% earnings growth for Q2, potentially reaching 7% to 9% with beats, following Q1's 15% earnings growth [11] Market Performance - NASDAQ is at an all-time high, with Nvidia's market cap exceeding $4 trillion [1] - The market exhibits narrowness, with concerns about smaller companies and lower-income consumers being left behind [8][13]

Investment Rating - The report raises the S&P 500 return forecasts to +3% (6400), +6% (6600), and +11% (6900) for the next 3, 6, and 12 months respectively, indicating a positive outlook for the index [2][3]. Core Insights - The report attributes the revised forecasts to earlier and deeper Fed easing, lower bond yields, and the fundamental strength of large stocks, leading to a revised forward P/E forecast of 22x [2][8]. - EPS growth forecasts are maintained at +7% for both 2025 and 2026, but there are risks to these estimates due to the shifting tariff landscape [12][23]. - The report anticipates a broadening of the market rally in the coming months, despite current narrow market breadth, which is one of the lowest in decades [17][23]. Summary by Sections S&P 500 Forecasts - The S&P 500 return forecasts have been raised to +3% (6400), +6% (6600), and +11% (6900) for the next 3, 6, and 12 months respectively, up from previous targets of 5900, 6100, and 6500 [2][3]. - The report indicates that the new year-end S&P 500 forecast ranks at the upper end of strategist estimates [3]. Earnings and Valuation - The forward P/E forecast has been revised to 22x from 20.4x, supported by improved economic conditions and investor sentiment [8][12]. - EPS growth forecasts remain at +7% for both 2025 and 2026, with the report noting potential risks due to tariffs and inflation [12][23]. Market Dynamics - The report highlights a narrow market breadth, with the median S&P 500 constituent over 10% below its 52-week high, suggesting a potential for a "catch up" among laggards [17][23]. - The report expects that as the Fed resumes its cutting cycle, the market will likely see further upside, supported by neutral investor positioning [23][29]. Investment Recommendations - Three key investment strategies are recommended: 1. Balanced sector allocation with overweights in Software & Services, Materials, Utilities, Media & Entertainment, and Real Estate [38]. 2. Focus on Alternative Asset Managers, which have lagged despite an improving capital markets backdrop [45]. 3. Target companies with high floating rate debt, which are expected to benefit from lower bond yields [52].

Group 1: Recent Performance - Paypal (PYPL) closed at $75.03, reflecting a -1.51% change from the previous day, which is less than the S&P 500's daily loss of 0.07% [1] - Over the past month, Paypal's shares have appreciated by 3.58%, outperforming the Business Services sector's loss of 2.31% but lagging behind the S&P 500's gain of 3.94% [1] Group 2: Upcoming Earnings - Paypal's earnings report is scheduled for July 29, 2025, with analysts expecting earnings of $1.29 per share, indicating year-over-year growth of 8.4% [2] - The consensus estimate projects revenue of $8.09 billion, reflecting a 2.55% rise from the same quarter last year [2] Group 3: Fiscal Year Projections - For the entire fiscal year, earnings are projected at $5.08 per share and revenue at $32.73 billion, representing changes of +9.25% and +2.92% from the prior year, respectively [3] - Recent revisions to analyst forecasts for Paypal are important as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3] Group 4: Valuation Metrics - Paypal has a Forward P/E ratio of 14.99, indicating a discount compared to its industry's Forward P/E of 17.12 [5] - The PEG ratio for Paypal is currently 1.24, while the Financial Transaction Services industry average is 1.32 [6] Group 5: Industry Ranking - The Financial Transaction Services industry, part of the Business Services sector, has a Zacks Industry Rank of 33, placing it in the top 14% of over 250 industries [6] - The Zacks Rank system, which measures the strength of individual industry groups, shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Are stocks primed for a second half surge or a disappointing six months ahead. Let's ask Trivariat founder and CEO Adam Parker, New Edge Wealth's Cameron Dawson, and Payne Capital Management's Courtney Garcia. Adam and Court are CNBC contributors.Welcome one, welcome all. All right, so we're reminded today, well, the tariff stuff's still out there. I mean, the market's not reacting all that terribly, is it.No, not really. I I mean if you go through the details I don't even know if anybody understands the di ...

Group 1: Company Overview - Landstar System, Inc. (LSTR) is currently facing multiple headwinds, making it an unimpressive investment option [1] - The company is experiencing reduced demand for freight services and increased truck capacity, leading to low shipment volumes and rates [1][8] - The truck transportation segment, a key area for LSTR, is underperforming, contributing to weak revenue outlooks [1][8] Group 2: Economic and Industry Challenges - High inflation continues to negatively impact consumer sentiment and growth expectations, affecting trucking companies' profitability [2] - The trucking industry is battling a persistent driver shortage, complicating recruitment efforts as older drivers retire [3] - LSTR's stock has declined by 21.1% year-to-date, underperforming the transportation-truck industry's overall decline of 18% [3][8] Group 3: Earnings Estimates and Performance - The Zacks Consensus Estimate for LSTR's second-quarter 2025 earnings has been revised downward by 14.8% in the past 60 days, indicating a lack of confidence from brokers [7] - Earnings expectations for LSTR suggest a decline of 22.3% year-over-year for the second quarter of 2025 and an 11.3% decline for the full year [11] - LSTR has a weak earnings surprise history, lagging the Zacks Consensus Estimate in three of the last four quarters with an average miss of 3.34% [10] Group 4: Industry Ranking - The industry to which LSTR belongs has a Zacks Industry Rank of 244 out of 248 groups, placing it in the bottom 1% of Zacks industries [12] - The performance of the industry group significantly influences stock price movements, indicating that LSTR's prospects are tied to the overall industry performance [12]