Dear Valued Clients,
As we enter the second half of 2025, investors are contending with a market defined by mixed signals. Corporate earnings remain strong, valuations have eased modestly, and early signs of AI-driven productivity gains are emerging. At the same time, inflation remains above target and tariff pressures are mounting.
While second-quarter GDP was revised higher, the data remains clouded by frontloaded imports and tariff-related distortions. Though we see no immediate signs of a sharp economic downturn, the path forward is complex. Markets have proven resilient, but unresolved risks demand discipline and a long-term perspective—not complacency or a chase for short-term gains.
Resilience in the Numbers
One of the most consistent signals of strength has come from corporate earnings—where results have not only held up but broadly exceeded expectations.
With most companies now having reported Q2 results, 78% of companies beat EPS estimates and 75% exceeded revenue forecasts. Earnings are now tracking 8% year-over-year, a clear beat over the 4.8% forecast. Stronger-than-expected results in financials, technology, and industrials have supported these gains. Still, the gap between companies is wide. Earnings for the Magnificent Seven are projected to rise 16.7 % in 2025, while the rest of the index is expected to grow just 6.2%—highlighting the ongoing concentration of earnings power in a few megacap stocks.
Solid earnings and the spring market pullback have helped ease valuations. The S&P 500 forward price-to-earnings ratio now stands at 22.8 times, down from 23.6 last quarter and below its peak of 26.5 one year ago. Still, it remains well above the five-year average of 19.9 and the ten-year average of 18.4, signaling that stocks are far from cheap.
GDP amongst Inflation and Tariff Risk
But even as earnings remain strong and valuations cool slightly, macroeconomic headwinds persist. Headline CPI rose 2.7% year-over-year in June, with core CPI inching up to 2.9%. The Core PCE deflator, the Fed’s preferred gauge, held steady at 2.7% in June, a sign that disinflation has stalled…
To continue reading, please download the full Moran Monthly Digest here.
Moran Monthly Digest: July 2025
Dear Valued Clients,
As we enter the second half of 2025, investors are contending with a market defined by mixed signals. Corporate earnings remain strong, valuations have eased modestly, and early signs of AI-driven productivity gains are emerging. At the same time, inflation remains above target and tariff pressures are mounting.
While second-quarter GDP was revised higher, the data remains clouded by frontloaded imports and tariff-related distortions. Though we see no immediate signs of a sharp economic downturn, the path forward is complex. Markets have proven resilient, but unresolved risks demand discipline and a long-term perspective—not complacency or a chase for short-term gains.
Resilience in the Numbers
One of the most consistent signals of strength has come from corporate earnings—where results have not only held up but broadly exceeded expectations.
With most companies now having reported Q2 results, 78% of companies beat EPS estimates and 75% exceeded revenue forecasts. Earnings are now tracking 8% year-over-year, a clear beat over the 4.8% forecast. Stronger-than-expected results in financials, technology, and industrials have supported these gains. Still, the gap between companies is wide. Earnings for the Magnificent Seven are projected to rise 16.7 % in 2025, while the rest of the index is expected to grow just 6.2%—highlighting the ongoing concentration of earnings power in a few megacap stocks.
Solid earnings and the spring market pullback have helped ease valuations. The S&P 500 forward price-to-earnings ratio now stands at 22.8 times, down from 23.6 last quarter and below its peak of 26.5 one year ago. Still, it remains well above the five-year average of 19.9 and the ten-year average of 18.4, signaling that stocks are far from cheap.
GDP amongst Inflation and Tariff Risk
But even as earnings remain strong and valuations cool slightly, macroeconomic headwinds persist. Headline CPI rose 2.7% year-over-year in June, with core CPI inching up to 2.9%. The Core PCE deflator, the Fed’s preferred gauge, held steady at 2.7% in June, a sign that disinflation has stalled…
To continue reading, please download the full Moran Monthly Digest here.
This commentary is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The views expressed are those of the author(s) as of the date of publication and are subject to change without notice. Past performance is not indicative of future results.
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