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Headlines are Loud, Earnings are Louder: Strong Fundamentals During Uncertain Times

Tue, 12 May 2026 20:21:23 GMT

Headlines are Loud, Earnings are Louder: Strong Fundamentals During Uncertain Times

Earnings are exceeding expectations at one of the strongest rates in years, signaling broad resilience across corporate America.
Growth is not concentrated in one area; most sectors are expanding revenues and profits at a solid pace.
The key question now is sustainability, as markets look for companies to carry this momentum through a more uncertain global backdrop.

Despite the geopolitical uncertainty of the ongoing conflict in Iran, US companies continue to grow their earnings at impressive rates. Almost 90% of companies in the S&P 500 have reported their results for the first quarter of 2026, and 84% of them have beaten expectations through May 8th [1] . That’s higher than the 5-year and 10-year averages and the strongest quarter in nearly five years.

Estimates for year-over-year earnings growth continue moving higher, with FactSet tracking 27.5% growth for the quarter. That’s almost double what was expected at the end of March and a level that hasn’t been seen since 2021 when the economy was bouncing back from the pandemic. These results suggest the economy is thriving across many different areas.

Strength Across Sectors

As evidence of broad-based strength of the market, seven of eleven sectors are on pace to grow earnings by double digits, while only one sector, Healthcare is expected to see earnings fall on a year-over-year basis. Information Technology, Communication Services, Consumer Discretionary, and Materials are leading the way, with all four sectors growing earnings by at least 40% this quarter.

S&P 500 Q1 2026 Year-over-Year Earnings Growth

Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast or guarantee of future results. Source: Kestra Investment with data from FactSet. Data as of May 8, 2026.

It’s not just earnings that are driving the excellent run. Net profit margin for the quarter is 14.7%, which would be the highest the index has posted since FactSet began tracking the measure in 2009. The 11.3% revenue growth rate is higher than both the 5-year and 10-year averages and would be the highest rate the index has seen since Q2 2022. All 11 sectors are growing their revenues year-over-year, with Information Technology, Communication Services, and Utilities leading the way.

This strong pace is expected to continue through 2026 with full-year 2026 earnings growth rate for the S&P 500 is expected to reach 21%.

S&P 500 Quarterly Year-over-Year Earnings Growth: 2025 actuals and 2026 estimates

Estimates for 2026 earnings are from FactSet’s Earnings Insight. * - blended earnings growth rate based on a combination of reported earnings numbers with 90% of companies reporting and projections for the remaining companies. Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index . This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast or guarantee of futures result. Source: Kestra Investment Management with data from FactSet. Index: S&P 500. Data as of May 8, 2026.

Energy is a sector to watch moving forward. While the price of oil has risen dramatically because of geopolitical tensions and the closure of the Strait of Hormuz, Energy sector earnings have not yet benefited. While the sector posted just 1% year-over-year growth in earnings, Energy stocks have rallied in anticipation of higher earnings later in the year as price increases flow through to profits.

The Bottom Line

Strong earnings, expanding margins, and broad participation across sectors point to an economy that continues to grow, even as headlines might suggest otherwise. Markets often follow earnings over time, so the key question from here is whether companies can sustain this level of performance as costs, interest rates, and geopolitics evolve. That’s what we’ll be watching next.

Invest wisely, live richly

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

Money with Murphy – AI’s Second Act

Tue, 05 May 2026 22:01:34 GMT

Money with Murphy – AI’s Second Act

With $1 trillion pouring into AI infrastructure, investors are wondering whether we are in a bubble and how long this boom can last. In this week’s Money with Murphy , Kara uses past technological revolutions across railroads, electricity, and fiber optics to explain why the biggest winners may shift from the builders of the infrastructure to the early adopters.

Private Credit: Between Pressure and Performance

Wed, 29 Apr 2026 19:24:59 GMT

Markets in a Minute: Private Credit: Between Pressure and Performance

The private credit space has grown enormously over the last decade, luring investors with juicy yields and borrowers with bespoke terms. More recently, however, several credit issues have caused concern and sent some investors rushing for the exits. Are these alarming headlines signs of more to come? Or are investors overreacting? In this week’s Markets in a Minute, we help separate fact from fiction in the private credit markets.

Key Takeaways:

Private credit is growing up, not coming apart. As the asset class scales and attracts more retail capital, liquidity limits, valuation practices, and risk controls are being tested.
Investor frustration appears more driven by liquidity limitations than deteriorating underlying credit.
Underlying credit fundamentals appear stable. Key indicators remain broadly consistent with historical norms supported by senior‑secured positioning and sponsor capital.

What Is Private Credit?

Historically, when companies needed to borrow, they turned to banks or the public bond market. But after the Global Financial Crisis, banks became more constrained and private lenders stepped into the gap, particularly for mid-sized companies that might be too large for small banks yet too small for public markets. These mid-market companies were particularly drawn to the faster execution and more-customized terms that private lenders can offer.

Since then, private credit has grown from a niche corner of non‑bank lending into a core pillar of global finance. In the U.S. alone, estimates put private credit assets between $1.5 trillion and $1.7 trillion today, according to Russell Investments , representing roughly three‑quarters of the global market, with projections pushing the sector beyond $3 trillion by 2028. That kind of growth naturally attracts capital—and scrutiny.

In those years, private credit has delivered attractive returns. Investors were rewarded with higher yields than what could be found in public bonds and their portfolios were shielded from day-to-day market volatility (private credit investments are typically valued once a quarter whereas most bonds are priced at least daily).

Over time, borrower demand and investor appetite reinforced one another. Private credit stopped behaving like an alternative and began operating as core financing infrastructure.

What’s the Concern with Private Credit?

Three separate but related issues prompted the recent concern with private credit: borrower bankruptcies, the rising use of payments in kind and liquidity limitations.

Late last year, some credit issues surfaced, including the high-profile bankruptcies of First Brands Group and Tricolor Holdings, two companies that were widely represented in private credit portfolios.

In addition, many private credit borrowers began paying not in cash, but “in kind.” This phenomenon known as “PIK” or “payment in kind” allows a borrower to avoid paying interest and for the money owed to increase. Allowing companies to use PIK from the outset of a loan can give the borrower time to grow. Sometimes, though, borrowers can request to use PIK after a loan has already been made and that amendment can be seen as a sign of credit weakness.

By late 2025, roughly 11 percent of private loans used some form of PIK, with a growing share tied to borrower‑requested amendments. The trend at least partly reflects companies adjusting to a higher‑rate environment after a decade of cheap capital, rather than a systemic break in credit quality.

Importantly, rising PIK usage has not translated into a deterioration in realized credit outcomes. Non‑accrual rates remain near historical norms, roughly 1.5 to 2 percent, and realized losses continue to run below 1 percent annually, supported by senior‑secured structures and active sponsor involvement.

As high-profile bankruptcies made their way to headlines and PIK usage rose, some investors got spooked, attempting to withdraw their money and prompting a few funds to institute redemption gates. Just as investors were worried, they weren’t able to redeem their investments.

For instance, Blue Owl became the focal point of private‑credit concerns when investors sought to redeem about $5.4 billion—roughly 22% of its flagship Credit Income Corp. and 41% of a tech‑focused fund—in Q1 2026; in response, the firm enforced the standard 5%‑per‑quarter redemption cap, leaving the vast majority of withdrawal requests unmet.

To be clear, these funds behaved as they were designed. By their very nature, private loans don’t trade on an exchange like bonds or stocks, which means it can take time to find buyers of those loans. The redemption gates that most funds have are designed to manage the pace of exits in a way that preserves portfolio integrity rather than accommodate immediate liquidity demands. In fact, it is partly these redemption gates that enables private credit funds to offer higher rates of return.

What Should Investors Take Away?

Private credit has matured into a market that now absorbs the full weight of cycles, headlines, and scrutiny. That transition is not a flaw; it is the consequence of scale.

Risk is rising, but it is observable and structured. Liquidity limits are intentional. Credit fundamentals reflect adjustment, not collapse. Sentiment continues to move faster than underlying loan performance.

The defining feature of the current environment is coexistence. Risk and opportunity are rising together, sharpening the distinction between platforms with the discipline to price and manage uncertainty and those without.

This recent experience serves as an important reminder. Investors must do their due diligence and understand exactly what they own.

Finding Higher Ground: Cautiously Optimistic For 2026

Wed, 22 Apr 2026 16:54:49 GMT

Finding Higher Ground: Cautiously Optimistic For 2026

Key Takeaways

The start of the Iran conflict and related oil shock drove the S&P 500 index to its first quarterly loss since early 2025. But some corners of the market fared better than others.
The conflict-driven surge in oil prices has created new inflationary pressures and dampened expectations for rate cuts this year. The broad U.S. bond market was flat in the first quarter amid new headwinds for fixed income.
The U.S. economy entered the latest Middle East crisis on pretty solid ground, which bodes well for its ability to withstand the shock, with some important caveats.

After finishing strong in 2025, the broad U.S. equities market got off to a rocky start this year. Stocks initially traded higher during the first quarter, but the onset of the Iran conflict in late February and resulting global spike in oil prices clouded the economic picture and triggered a broad selloff.

When the dust settled, the S&P 500 posted its first quarterly loss in a year (-4.3%). Does a difficult first quarter portend a down year? Not necessarily. In this week’s Markets in a Minute, we unpack first quarter performance and touch on some reasons to be cautiously optimistic about the balance of the year.

Pockets of Resilience

As usual, even in a down quarter, some corners of the market held up better than others. Six out of 11 S&P 500 sectors actually had positive returns for the quarter, although Energy was the clear winner.

Even before the start of the Iran conflict, energy stocks had been gaining ground, lifted by solid earnings growth tied to data-center demand and the broad sector rotation that began in late 2025. In fact, in a few areas of the market, the conflict only accelerated a trend that was already underway.

For the past several years, the market’s gains were largely driven by a small group of megacap technology stocks. Last fall, however, the landscape began to shift. Investors started looking beyond big tech for returns, resulting in more broad-based (and ultimately healthier ) market performance. Sectors such as Energy, Industrials, and Materials have been clear beneficiaries from the recent rotation.

S&P 500 Sector Performance (Oct. 2025-March 2026)

_{Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index.

This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results.

Source: Kestra Investment Management with data from FactSet. Index Proxies: S&P 500 sector indexes. Data as of March 31, 2026.}

Bonds Tread Water, Inflation Pressure Returns

The Iran conflict has also had ripple effects across asset classes, including the bond market. At the start of the year, the Federal Reserve was widely expected to cut its benchmark interest rate twice in 2026, which would have provided a tailwind for bonds and the broader economy. But the conflict-driven spike in oil prices led to the monthly Consumer Price Index posting its largest annual increase since May 2024 in its latest release.

Renewed concerns about inflation have dimmed the prospects for rate cuts this year and created a conundrum for the central bank. When inflation heats up, the Fed typically responds by raising rates, acting as a brake on the economy and tamping down prices. But doing so could exacerbate current softness in the labor market, which has been fluctuating between monthly job losses and gains for the past year.

On top of all this, headline-grabbing concerns about the private credit market have contributed to investor unease around fixed income. The collective headwinds have caused credit spreads to widen somewhat this year, putting a damper on fixed-income activity.

Global Market Returns, % – Q1 2026

_{Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index.

Note: views are from a U.S. dollar perspective. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. Source: Kestra Investment Management with data from FactSet. Index proxies: Bloomberg U.S. AGG Bond Index, ICE BofA U.S. Corporate, ICE BofA U.S. High Yield, Bloomberg Municipal Bond, S&P 500, MSCI EM, MSCI World ex-U.S., Dow Jones U.S. Select REIT, and Bloomberg Commodity Index. Data as of March 31, 2026.}

An Economic Tipping Point?

Over the last few years, the U.S. economy has remained remarkably resilient in the face of external shocks stemming from tariffs, geopolitical uncertainty and growing concerns about the sustainability of capital expenditures for artificial intelligence (AI), among other stressors. Could the Iran conflict mark a tipping point?

The answer remains to be seen, but there are reasons to believe the conflict’s economic damage will be fairly limited. Perhaps most importantly, the U.S. economy was on pretty solid footing before the conflict began, and nearly two months into the crisis, certain key indicators are still flashing green.

Corporate earnings, for instance, have grown by double digits for five consecutive quarters, and early reports suggest that this year’s first quarter could shape up to be the strongest earnings season in roughly five years. As of early April, S&P 500 companies were expected to report a blended (year-over-year) earnings growth rate of 13.2% for the first quarter, according to FactSet.

Manufacturing has been another bright spot this year. Manufacturing activity contracted for much of last year but has rebounded over the last few months, supported by new orders and production, according to the Institute for Supply Management’s monthly purchasing managers index .

There’s no denying that high oil prices — which act as a tax, limiting how much consumers can spend on other items — are a drag on economic growth. But we believe that the amount of time that prices remain elevated will ultimately matter more than how high they climb on any given day.

It’s also worth noting that lofty oil prices tend to have an uneven impact on consumer groups and global markets. Pain at the pump has hit lower- and middle-income households harder than those with deeper pockets. Meanwhile, regions that are heavily dependent on oil imports (namely East and South Asia and parts of Europe) have felt the sting of high prices more acutely than the United States and other markets that produce more at home.

History Lessons and Political Pressures

The conflict has already taken a tragic a human toll that shouldn’t be overlooked. At the same time, history offers some valuable context as to how markets tend to respond in the wake of major geopolitical shocks. Across decades of market data, U.S. equities have performed well in the year after major geopolitical events, with the notable exception of World War II. The S&P 500’s median return 12 months after 44 different political shocks since 1940 has been nearly 10%, according to our analysis.

This particular conflict may also prove relatively short-lived. The majority of Americans oppose the conflict, which has been costly for the government as well as households squeezed by high gas prices. Its unpopularity puts pressure on President Trump to find a politically palatable way out sooner rather than later. With the midterms coming up in November, some of that pressure may come from members of his own party.

The Bottom Line

The first quarter underscored the importance of looking past short-term noise and staying focused on the fundamentals, which remain pretty strong. Recall that the first quarter of 2025 ended on a down note, but the market subsequently rallied and finished the year up nearly 17%.

We’ve already seen the market rebound sharply in April on signs of de-escalation in the Iran conflict and earnings strength. But the situation is highly fluid and will continue to loom large until a more-durable peace takes hold.

Invest wisely and live richly

Money with Murphy: Q1 2026 Market Review: Adjusting to Volatility

Wed, 15 Apr 2026 18:31:53 GMT

Money with Murphy: Q1 2026 Market Review: Adjusting to Volatility

Markets entered the new year on solid footing but quickly had to deal with the escalation of conflict in Iran. Oil prices surged, volatility picked up, and the investment landscape was reshaped. In this week’s Money with Murphy, Kara explains the key takeaways from the quarter and reasons to remain optimistic about the market beneath the noise.

Money with Murphy – Higher Gas Prices on the K-Shaped Economy

Wed, 08 Apr 2026 15:48:03 GMT

Money with Murphy – Higher Gas Prices on the K-Shaped Economy

Rising oil prices that stem from the Iran conflict are putting pressure on households, but not everyone is feeling it in the same way. In this week’s Money with Murphy, Kara explains how today’s energy shock is amplifying the so-called “K-Shaped Economy” and the divergent economic realities it creates for different people.

The Iran Conflict, Geopolitics, and Oil – What Matters for Investors

Mon, 06 Apr 2026 16:53:56 GMT

Markets in a Minute: The Iran Conflict, Geopolitics, and Oil - What Matters for Investors

As the United States enters its second month of conflict against Iran, market volatility has intensified and oil prices have spiked. To help sort through the noise, we invited Ryan Bohl, Senior Middle East and North African Analyst at RANE Network for an in-depth analysis of the conflict. What follows are some of the most important takeaways from that conversation. You can access the full event here.

Key Takeaways

The conflict in Iran will likely take longer to wind down than the U.S. administration initially hoped:

The Iranian regime is much more resilient than Venezuela
Iran’s goal in this conflict is simply to outlast the bombings and, in that sense, so far, they have been successful, though weakened
Most likely outcome: another 1-3 months of conflict

While military strikes and blocked trade routes have strained oil markets, the conflict has not permanently damaged oil production
Markets have often proved resilient in the face of geopolitical shocks

Why This Conflict is Different

With a relatively rich resource base and resilient military and political structure, Iran could be defined as a “middle power,” making it much better equipped to withstand pressure from the U.S. than a country such as Venezuela. As such, it will likely be difficult for the United States military to force radical political change through aerial attacks alone.

Just as important is separating the signal from the noise. Real signals of escalation or cooling of tensions stem from actions, and not rhetoric. The number of troops being deployed, the level of infrastructure damage, and efforts from regional actors matter far more than political messaging.

From Geopolitics to Markets

Geopolitical conflicts hit consumers and markets the hardest through energy prices. This conflict is no exception, with the near closure of the Strait of Hormuz cutting off nearly 20% of the world’s oil flows. While the U.S. exports more oil than it imports, the disruption to the flow of traffic through the Strait carries meaningful economic consequences.

A critical distinction was discussed between disruption and destruction. Temporary disruptions like shipping delays or temporary blockades, such as what we have today, tend to be resolved relatively quickly. However, outright destruction leads to a much different outcome. If pipelines, refineries, or other facilities are permanently damaged, it can take years to repair. In that case, even if a ceasefire is agreed upon, the economic impacts of destruction to oil infrastructure will be felt long after active fighting stops.

Shorter Fighting, Longer Instability

While predicting the exact timeline of any conflict is challenging, Ryan shared that his base case was for active fighting to remain relatively short, but instability to persist for longer. He believes a ceasefire or significant reduction in hostilities could happen within the next three months due to the influence of political and economic constraints.

Even if wide-ranging military operations slow down, though, Iran has strong incentives to maintain low-level disruption and prevent a quick return to pre-war conditions. A swift resumption of oil flows through the Strait of Hormuz would negate Iran’s goal of making conflicts economically painful for their adversaries.

Political Constraints as the Off-Ramp

The domestic political environment may matter more than battle outcomes in determining how and when this conflict ultimately winds down. An open-ended military campaign against a middle power is expensive. As the costs tied to this conflict continue to escalate, political tolerance within the U.S. for remaining in battle will start to deteriorate.

Lawmakers will be focused on several inflection points: funding needed to continue the conflict, continued financial market stability, and voter sensitivity to higher energy prices. The need to authorize additional war spending could act as a constraint and encourage de-escalation even if key pieces of the original goals remain unfulfilled.

What History Suggests for Investors

Military conflicts understandably create volatility and tension for investors. But history offers a helpful guide. Across decades of market data, U.S. equities have performed well in the year after major geopolitical events. The S&P 500’s median return 12 months after 47 different political shocks has been 9.8%, ranging from Germany’s invasion of France in 1940 to the United States bombing of Iran’s nuclear facilities last year. Markets have often shown the ability to adapt.

While the environment may remain volatile in the short term, diversification across asset classes and long-term discipline remain the most effective principles for navigating uncertain environments.

Bottom Line

The Iran conflict is the latest signal of a broader shift to a more fragmented, multipolar global landscape. History proves that investors that adapt to uncertainty and remain diversified have been well positioned to weather similar periods of geopolitical tensions in the past.

Invest wisely and live richly,

Kara

Money with Murphy: Managing Market Volatility During Iran Conflict

Thu, 26 Mar 2026 20:33:50 GMT

Money with Murphy: Managing Market Volatility During Iran Conflict

The Iran conflict has led to a spike in market volatility, especially in the oil markets where consumers are feeling the pain at the pump. In this week’s Money with Murphy, Kara shares why the United States is uniquely positioned to weather the oil shock and the surprisingly resilient performance of the market in the aftermath of global conflicts.

Market Tensions and an IPO Comeback: What to Expect and Why it Matters

Wed, 18 Mar 2026 18:56:17 GMT

Market Tensions and an IPO Comeback: What to Expect and Why it Matters

Will this be the year the initial public offering (IPO) market finally gets its mojo back? After sinking in 2022, more companies have been indicating an interest in going public, encouraged by improving market conditions and renewed investor appetite for growth.

That said, the backdrop isn’t without complications. Recent market volatility tied to rising oil prices and escalating tensions in the Middle East is a reminder that the IPO window can open (and close) quickly. As such, expectations for a rebound in IPO activity come with an important caveat: timing will matter.

In this week’s Markets in a Minute, we explore the outlook for IPOs, the implications for investors and risks to the forecast.

Unicorns Take Flight

An estimated 200 to 230 companies could go public this year, potentially raising $40 to $60 billion, according to research from Renaissance Capital. That would bring activity closer to the 20-year average of roughly 250 IPOs annually. By comparison, just 71 companies went public in 2022, raising about $8 billion.

Other forecasts for this year are also bullish. Goldman Sachs , for instance, expects total IPO proceeds to quadruple to a record $160 billion. Software and healthcare companies are expected to account for the largest share of IPOs by number. However, offerings by a relatively small group of late-stage technology and artificial intelligence (AI) firms are likely to generate the lion’s share of total proceeds, according to the investment bank.

Among the highly valued, privately held billion-dollar companies (or so-called unicorns) expected to go public this year are Elon Musk’s SpaceX, artificial intelligence firm Anthropic, and ChatGPT maker OpenAI Group. By some accounts, SpaceX’s IPO could be the largest ever, potentially raising $30 billion, which would surpass the record set by Saudi Aramco in 2019.

^{U.S. IPO Activity: Volume and Total Proceeds (2000 to 2025)}

^{Past performance is not a reliable indicator of current or future results.

Source: Kestra Investment with data from the SEC. 2025 data is annualized based on the first three quarters of the number of U.S. IPOs and total proceeds.}

^{The Upside of More IPOs}

^{Why should investors cheer the return of a robust level of IPO activity?}

^{For starters, IPO activity is a barometer of market health. When companies are confident enough to go public and investors respond favorably to their offerings, the dynamic signals confidence in the broader economy and, more specifically, the growth prospects of firms turning to the public markets for capital.}

^{For investors, the anticipated wave of IPOs could also present some unique opportunities, including the chance to buy into relatively mature companies that have been off limits to the average retail investor.}

^{Historically, companies went public when they were still fairly young because they needed access to lower-cost capital to hire, build factories and otherwise fund their growth. In recent years, however, companies have tended to stay} ^{private for longer because many have been able to access ample capital from private equity funds and private credit markets. Staying private for longer has also allowed companies to find their footing without the intense focus on quarterly results (or hefty regulatory burdens) that public companies face. In 2000, the median age for a company going public was 6 years old. By 2025, it had doubled to 12 years, according to a University of Florida study.}

^{The anticipated pickup in IPO activity should also expand the opportunity set for investors seeking exposure to the AI revolution. Many of the companies that have benefitted most from the AI boom are still privately held, in part because, until recently, they haven’t needed vast amounts of capital to grow. As their capital needs increase and more of them enter the public sphere, a wider group of investors will have the chance to participate in their growth.}

^{Risks to the Outlook}

^{Of course, the year is still young, and a lot can happen. Just as the number of IPOs tends to rise when markets are on the upswing, the opposite is also true. More than once we’ve seen expectations for robust IPO activity upended by major events that made markets jittery and led companies to delay offerings, particularly those planning blockbuster IPOs.}

^{A shift in investor sentiment towards industries expected to produce large numbers of IPOs can also put a damper on things. This year, for instance, investors have grown skittish about the potential impact of AI on software firms, driving down share prices in the industry and prompting speculation that some smaller tech companies may delay offerings until conditions improve.}

^{Off to the Races}

^{No doubt, the performance of early 2026 IPOs is being watched closely by investors, firms planning to go public later in the year and others seeking to gauge the market’s appetite for new listings.}

^{It’s worth noting that the share prices of newly public companies tend to be more volatile than peers who have been public for longer. That’s especially true for highly anticipated IPOs that provide investors with exposure to industries that aren’t well-represented in the universe of publicly traded stocks. For instance, the share prices of companies generating a lot of buzz will surge when they first go public, fueled by pent-up demand, and then gradually settle to more-sustainable levels.}

^{Even a poor public debut isn’t necessarily an indicator of a stock’s long-term prospects. Keep in mind that Google, which was a well-known brand when it went public in 2004, had a disappointing IPO but went on to deliver stellar returns over time.}

^{Of course, whether the IPO market ultimately regains its footing will depend not just on company fundamentals, but on the broader market environment. Periods of heightened volatility—such as those driven by geopolitical conflict or sharp moves in energy prices—have a history of delaying IPOs rather than canceling them outright.}

^{For investors, that distinction matters. A slower or more uneven IPO calendar doesn’t eliminate opportunity, but it does raise the bar for selectivity, patience and diversification. As always, navigating new listings is less about chasing headlines and more about staying disciplined and focused on long‑term goals.}

^{Invest wisely and live richly,}

^Kara

^{The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting t} ^{he particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.}

Higher Oil, Higher Stakes: A New Test for Consumers and the Fed

Wed, 11 Mar 2026 18:30:07 GMT

Higher Oil, Higher Stakes: A New Test for Consumers and the Fed

As the conflict in Iran extends into its second week, oil prices have ratcheted higher, threatening higher inflation and placing additional strain on consumers. While the market implications are significant, it is important to acknowledge that the conflict carries a very real human cost, with civilians facing the most severe consequences. Against that backdrop, rising energy prices are becoming an economic concern for households, policymakers and investors alike.

Key Takeaways:

Higher oil prices pressure consumers, but duration matters. Short-lived spikes typically slow spending only modestly; prolonged increases pose a greater risk to growth.
Inflation becomes a problem if energy prices stay elevated. Temporary oil shocks lift headline inflation briefly, while sustained gains could delay Fed rate cuts.
Volatility isn’t a strategy signal. Energy-driven market swings create near-term uncertainty, but diversified, long-term investors have historically been rewarded for staying disciplined.

The price of a barrel of Brent crude oil, the standard by which most globally traded petroleum is priced, was up over 50% from Dec levels, reflecting concerns about constrained supply as the conflict widens across the Middle East.

Brent Crude Oil Price ($/bbl)

Past performance is not a reliable indicator of current or future results . Source: Kestra Investment Management with data from FactSet. Time period from April 2021 – March 9, 2026.

For the U.S. consumer, higher oil prices act as a tax that limits how much consumers can spend on other items. Because the US economy is heavily dependent on consumers, higher oil prices represent a meaningful headwind to continued GDP growth. While pinpointing the exact economic impact of more expensive oil is difficult, one often-cited quote suggests that every $10 increase in the price of oil sets back economic growth by 0.1%. Other studies show that even the increase in the probability of supply shocks can have a similar drag on economic growth.

Even more important than the level of oil prices is the duration – how long do high prices remain? If oil prices fall back after a short spike, the effects on inflation and the economy are likely to fade quickly. Analysis by Piper Sandler shows that higher gasoline prices tend to push headline inflation up for a few months, but the impact does not meaningfully spill over into core inflation, which better reflects underlying price pressures. That’s because energy now makes up a much smaller share of household spending than it did decades ago. As a result, consumers generally absorb temporary increases at the pump without sharply cutting back elsewhere. In this scenario, any slowdown in consumer spending or economic growth would likely be modest and short‑lived, with little impact on jobs.

But that benign picture changes if oil prices stay elevated for an extended period. Piper Sandler estimates that every 15% rise in gasoline prices can add about half a percentage point to year‑over‑year headline inflation within a few months. Sustained increases gradually squeeze purchasing power and raise inflation readings for longer.

While the U.S. economy is more energy‑independent and resilient than in the past, limiting the risk of a major growth shock, persistently higher oil prices would still be inflationary and could weigh on spending and confidence over time. For investors, the key distinction is whether higher energy prices prove temporary noise or a lasting trend.

Cooling Inflation or Protecting Jobs? The Federal Reserve’s Dilemma

Another potential complication of higher oil prices is the Federal Reserve’s inability to respond. If elevated oil prices drove inflation higher, the Fed would normally raise interest rates, acting as a brake on the economy and tamping down prices. However, that playbook is more challenging because the other side of the Fed’s dual-mandate—maximum employment—is becoming more stressed .

On March 6 ^th the Bureau of Labor Statistics released their monthly payroll report, which showed an unexpected decrease of 92,000 jobs. It’s only the 6 ^th time in 3 years with negative growth, but the expectation for February jobs was very different from reality. Every major bank and market researcher was predicting marginally positive job growth, so this report was a shock to market participants.

As of this writing, markets are still pricing in about two Fed funds rate cuts this year, which has been largely consistent in 2026 so far.

February Jobs Disappoint

Monthly Change in Non-Farm Payrolls (thousands)

Source: Kestra Investment Management, U.S. Bureau of Labor Statistics with data from Federal Reserve Bank of St. Louis. Data as of March 6, 2026.

A weakening labor market alongside rising oil prices and sustained inflation would make the Fed’s job markedly more difficult. Tightening monetary policy to tamp down inflation may strangle an already weak jobs market. Remaining accommodative risks headline inflation running away from them.

The good news for consumers is that the oil markets are expecting prices to ease in the latter part of the year. In fact, oil futures contracts suggest prices may drop below $90 by the summer, which would also suggest market participants expect the conflict to not be prolonged.

Brent Crude Continuous Futures Contracts ($/bbl)

Past performance is not a reliable indicator of current or future results . Forward looking estimates may not come to pass. Source: Kestra Investment Management with data from FactSet. Data as of March 6 ^th , 2026.

While the oil market appears to be betting that prices will not remain elevated, some corners of the fixed-income market are preparing for higher inflation. For instance, 10-year bond yields in the US, UK, Japan, and Germany are all trading higher since the conflict.

Global Yields Are Moving Higher

10-Year Yields for US, UK, Japanese, and German Bonds

Past performance is not a reliable indicator of current or future results . Source: Kestra Investment Management with data from FactSet. Data as of March 6 ^th , 2026.

Conclusion

In addition to the very real human cost of conflict, higher oil prices introduce short‑term uncertainty for consumers, markets, and policymakers, especially when inflation and labor conditions are already somewhat precarious. Yet history offers an important reminder: periods of oil price volatility have often been followed by constructive opportunities for disciplined, long‑term investors. While sustained energy inflation can pressure spending and complicate the Fed’s response, markets have repeatedly shown an ability to adapt as growth drivers shift and a new equilibrium emerges. For investors, the takeaway is not to react to volatility itself, but to remain focused on fundamentals, diversification, and patience—traits that have historically been rewarded in the aftermath of energy‑driven market stress.

Can U.S. Stocks Continue Earnings Momentum?

Wed, 04 Mar 2026 20:19:34 GMT

Can U.S. Stocks Continue Earnings Momentum?

As the final earnings season of 2025 draws to a close, companies in the S&P 500 Index have demonstrated strong earnings momentum. According to FactSet, the blended year-over-year earnings growth rate for the benchmark is 14.2% as of February 27th, with almost all companies in the S&P 500 having reported fourth quarter earnings. Another strong set of results makes it five consecutive quarters of double-digit growth.

Earnings strength was broad based across the index with all 11 sectors reporting positive growth relative to the previous year. Standouts included Information Technology (IT) and Industrials, with year-over-year growth rates of 34% and 27%, respectively. At the other end of the spectrum, Healthcare and Consumer Discretionary have been laggards, though both sectors grew earnings year over year by 0.4%.

S&P 500 Q4 2025 Year-over-year Earnings Growth

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index . This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast or guarantee of futures results. Source: Kestra Investment Management with data from FactSet Earnings Insight. Index: S&P 500. Data as of February 27, 2026.

Analysts are expecting this excellent run to continue. Estimates for year-over-year earnings growth rates for all four quarters of 2026 are in double-digits, and for all of 2026, the S&P 500 is expected to grow earnings by nearly 15%.

S&P 500 Quarterly Year-over-Year Earnings Growth: 2025 actuals and 2026 estimates

* - estimates for 2026 earnings are from FactSet’s Earnings Insight. ** - blended earnings growth rate based on a combination of reported earnings numbers and estimate with 96% of companies reporting. Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index . This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast or guarantee of futures results. Source: Kestra Investment Management with data from FactSet Earnings Insight and Bloomberg. Index: S&P 500. Data as of February 27, 2026.

Over the course of this earnings season, 73% of companies beat their earnings estimates, and the same number beat revenue estimates. While these rates are impressive, they are weaker relative to their ten-year averages. Those that beat, however, had earnings coming in 6.8% above estimates.

Earnings season reinforced that the state of the stock market remains strong. Robust growth rates in revenue, tailwinds from fiscal stimulus and monetary policy, and improving breadth all signal optimism that the rally can continue.

Market Flash - Military Action in Iran

Wed, 04 Mar 2026 19:32:55 GMT

Market Flash - Military Action in Iran

Recent U.S. military action in Iran has raised questions about geopolitical risk and market stability. In a special Market Flash, Kara examines how investors are responding. While markets have been volatile, historical patterns suggest these periods are shorter than anticipated.

Money with Murphy: Q1 Wake-Up Call

Thu, 26 Feb 2026 00:15:32 GMT

Money with Murphy: Q1 Wake-Up Call

Mega-cap tech stumbled hard in Q1, but diversification came through. Kara Murphy breaks down the quarter’s surprises—from market shakeups to rising trade tensions—and why the “boring stuff” might just be your portfolio’s MVP.

Small and Mid-Caps Are Re-Entering the Conversation

Tue, 17 Feb 2026 22:32:16 GMT

Small and Mid-Caps Are Re-Entering the Conversation

The past three years have been an excellent time to be an investor. From 2023-2025, the S&P 500 delivered a 23% annualized return, thanks largely to enthusiasm over artificial intelligence (AI) and the outsized impact of the Magnificent Seven. These mega-cap stalwarts have become essential portfolio building blocks, with their strong earnings, diversified business models, and central role in AI. For the last few years at least, bigger has been better.

To put this into perspective, the mid-cap S&P 400 index and small-cap S&P 600 index returned 13% and 10%, respectively, over the same three-year period. Those are strong returns to be sure, but well short of what the largest companies delivered. Yet for the first time during this extended bull run, we are starting to see signs that a shift could be underway.

For instance, in January, the small-cap index led the way with a 5.6% return and mid-caps were up 4.1%. Meanwhile, the S&P 500 lagged, moving up just1.5%. Given the dependable performance of the biggest companies in the market, it might be fair to ask whether this is a sustained rotation into a broadening rally or just another false start? In this week’s Markets in a Minute, we evaluate the merits of the recent rally in the small- and mid-cap (SMID) universe and explore whether they can lead the next leg higher for the market.

Last 3 Years Annualized and 2026 Year-To-Date Performance: S&P 500, S&P 600, and S&P 400

Source: Kestra Investment Management with data from FactSet. Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. Indexes: S&P 500, S&P Mid Cap 400, and S&P Small Cap 600. Year-to-date data as of January 31, 2026.

Macro Tailwinds Support Rotation

One benefit for the SMID caps is lower interest rates. After three rate cuts in late 2025 by the Federal Reserve, borrowing costs declined. Unlike the biggest companies that generally don’t rely heavily on borrowing, smaller firms often take on more substantial levels of debt, leaving them extra sensitive to the level of rates and Fed policy.

In addition to lower financing costs, small- and mid-sized companies, in aggregate, have lower valuations than their larger counterparts. At the end of 2025, the forward price-to-earnings ratio of the S&P 500 reached a multi-decade high of 22.1x, compared to a long-term average of 16.6x.

Meanwhile, the forward price-to-earnings ratios for the mid-cap S&P 400 and small-cap S&P 600 are more in line with their usual long-term levels. For the mid-cap benchmark, it closed the year at 15.9x while the small-cap S&P 600 finished the year at 14.7x.

Valuation gaps alone don’t trigger rotations. However, when they are paired with improving financing conditions and stronger fundamentals, leadership can broaden.

Speaking of fundamentals, the earnings backdrop for the SMID caps is setting up nicely after a challenging period. In 2023 and 2024, both small- and mid-caps earnings growth lagged the S&P 500 significantly. But 2026 could see a marked shift: Morningstar reports that earnings for the S&P Small Cap 600 are expected to grow by 19% and the S&P Mid Cap 400 by 17%. Both of those numbers are higher than the 14% estimate for the S&P 500.

YoY Annual Earnings Per Share Growth Rates – S&P 500, S&P 600, and S&P 400 

* - 2026 estimates from a Morningstar poll of FactSet analysts. Source: Kestra Investment Management with data from Bloomberg and Morningstar. Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Indexes: S&P 500, S&P Mid Cap 400, and S&P Small Cap 600.

The Risks to the Story

SMID-cap stocks have had false starts before; several risks could still disrupt this stretch of outperformance. Any stress that materializes in the credit markets will hit smaller companies harder due to their debt-heavy profile. With credit spreads at historically low levels, any shock that emerges could stall the rotation. While earnings expectations for small- and mid-cap companies have trended higher as financing conditions improved, actual earnings may still disappoint.

Bottom Line: A Rotation Worth Watching

While large-cap companies have contributed the lion’s share of US stock market gains over the last few years, investors should recall that over the very long term, smaller companies have actually tended to outperform their larger peers. In addition, because of the extended outperformance of large caps, they represent a much larger proportion of many investor portfolios. Maintaining exposure to small and mid-sized stocks ensures that investors right size risk in their portfolios and potentially benefit from a more sustained rotation to smaller companies.

As always, invest wisely and live richly.

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. Does not offer tax or legal advice.

Beyond Big Tech: The Global Surge in AI Adoption and Implications for Investors

Thu, 12 Feb 2026 20:27:50 GMT

Beyond Big Tech: The Global Surge in AI Adoption and Implications for Investors

Key Takeaways

Artificial intelligence (AI) adoption is accelerating across sectors, industries and international markets, creating a wider opportunity set for investors. Investors are rewarding companies leaning into AI.
American companies have led the way in AI development, but usage of the technology is higher outside the United States, particularly in emerging markets.
Companies using AI are finding some surprising benefits, including greater employee satisfaction. The cost-savings benefits aren’t as great as we might expect, but that may change over time as best-use cases become clearer.

Bring on the AI

Many companies and individuals haven’t entirely figured out what they should use AI for, but they clearly want it anyway. Usage of ChatGPT and other AI tools has risen at an astonishing rate over a relatively short period. As of December 2025, ChatGPT had about 900 million weekly users, representing 10% of the world’s adult population, according to a study by OpenAI, Harvard University and Duke University.

ChatGPT Usage Exploding Weekly Active Users (Millions)

_{Source: Kestra Investment Management with data from the Business of Apps AI Report, Axios, TechCrunch, Reuters, The Information, and Pew Research.}

Fear, Optimism and the Jobs Question

Like other technological advances, AI has generated a mix of fear, optimism, and controversy. According to a recent Gallup survey , 61% of Americans believe it will eliminate more jobs than it creates. Interestingly, the survey also found that most Americans believe AI will boost productivity and economic growth.

We believe AI will continue to have both positive and negative economic impacts. Some of the impact will be tied to productivity gains, and some to what we call job relocation. While AI is likely to reduce the need for certain types of jobs, it should also create new opportunities. For workers, the key is remaining flexible — in other words, staying open to updating your skills, learning new ones and shifting to roles in high-growth areas.

Far and Wide

Investors have rewarded companies at the forefront of the AI race handsomely, pushing the stock prices of major cloud-service providers, and chip makers to dizzying highs. But if AI is to live up to its transformational promise, adoption must spread well beyond the tech sector, helping a much larger share of companies to become more innovative, faster growing and efficient.

“AI is one of the most important things humanity is working on. It is more profound than, I dunno, electricity or fire.”

Google CEO Sundar Pichai, 2018

It will take years to find out if such bold predictions prove right, but many companies have already jumped on the proverbial bandwagon. During the one-year period ending in the third quarter of 2025, the percentage of companies citing AI on earnings calls rose across every S&P 500 sector except Utilities, according to FactSet. Non-tech sectors, including Financials, Industrials and Materials, had some of the biggest increases in AI mentions on earnings calls.

Investors are rewarding companies that are leaning into AI — or at least talking about it on earnings calls — contributing to the outperformance of certain stocks.

S&P 500 Stocks Average Price Change

(June 30 ^th , 2025 – December 5 ^th , 2025)

_{Source: Kestra Investment Management with data from FactSet.}

Patent-application trends also show broad adoption across industries. Transportation, telecom, manufacturing, and life and medical sciences are among the industries leading the way in filing AI-related patent applications.

Manufacturing has been in a multi-year slump, which may help explain why the sector is bullish on the promise of AI. Deloitte recently surveyed 600 executives from leading manufacturing companies and found that a whopping 85% believe “smart manufacturing” will improve their competitive advantage, agility and just-in-time production, along with attracting new talent. Smart manufacturing blends automation hardware, data analytics, sensors and cloud-computing platforms to modernize production.

Enterprise Use of AI By Country

_{Source: Kestra Investment Management with data from TE Connectivity}

Leading in Development, Lagging in Adoption

American companies have been at the forefront of developing AI, but they haven’t necessarily led when it comes to putting the technology to use. Some 55% of U.S. respondents who participated in a recent worldwide survey of engineers and executives said their companies have been using AI for less than a year. By contrast, more than half of respondents from China and Japan said their companies have been using AI for at least three years. The United States also falls short when it comes to individuals’ use of AI. It ranks 24 ^th globally, behind Poland and Taiwan, for individual use of AI, according a Microsoft study .

Emerging markets, on the other hand, tend to be far more excited about the burgeoning technology. South Korea, for instance, set out to become an AI superpower. To that end, it is among the first countries to put a coordinated regulatory regime in place. Seoul is spending heavily on training programs, financial incentives for small and mid-sized businesses to adopt AI and other initiatives. In fact, South Korea is now the world’s second-largest paid market for ChatGPT, behind the United States.

How do the benefits stack up?

Despite concerns over AI’s impact on the job market, many companies are finding that it makes employees feel better about their jobs. A recent McKinsey & Company survey of firms using AI found that the top-three benefits are greater innovation (64%) and employee and customer satisfaction (45% on both metrics). AI may be helping to boost morale in the workplace because, among other things, it helps employees perform routine tasks more efficiently, freeing them to focus on more meaningful work and improving work-life balance.

In the McKinsey survey, the percentage of companies that derived cost savings (38%) was lower than we might expect. Cost savings has long been a selling point for AI but figuring how to extract meaningful savings from the technology isn’t necessarily intuitive.

Under the Dome

Many discussions about AI center on whether we’re in a bubble. It’s a valid question, but in some ways misses the bigger picture. As AI adoption grows, investors have more opportunities to gain exposure to companies and markets that stand to benefit over the long term. So, what happens in a single, highly valued corner of the equities market is perhaps less important than the broader trend.

Some observers have compared the AI phenomenon to a dome settling over the globe. The analogy seems to fit. As with past technological revolutions — from railroads in the 19 ^th century to the dot-com boom, more than a century later — we don’t know how the companies building out the infrastructure will ultimately fare. But history suggests that everything under the dome will look different years from now.

Invest wisely and live richly,

Kara

_{The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be soughtregarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.}

The Rise of Active ETFs and the Implications for Investors

Thu, 29 Jan 2026 20:43:30 GMT

The Rise of Active ETFs and the Implications for Investors

Key Takeaways

ETFs are no longer just passive, low-cost vehicles. Active management, leverage, and complex strategies now define a significant and growing portion of the ETF universe.
Choice and innovation come with tradeoffs. While product variety has increased, so have fees and structural complexity—raising the stakes for fund selection.
Advisor due diligence is more critical than ever. In an ETF landscape with growing complexity, maintaining portfolio discipline and aligning exposures with client objectives requires deep and consistent analysis.

The ETF Market is Structurally Shifting

For years, investing in an exchange-traded fund (ETF) meant investing passively in an index. ETF investors bought portfolios designed to capture the returns of an index, like the widely followed S&P 500, by matching the holdings of the index. This approached allowed portfolios to replicate the performance of the index, but gave up the prospect of outperformance. This is in contrast to active management, which attempts to outperform an index.

That convention reflected reality: regulatory and structural constraints made it difficult (often impractical) to deliver active management within an ETF wrapper. As a result, mutual funds remained the primary vehicle for active strategies.

That paradigm shifted in 2019, when updated rules opened the door for active management in ETFs. Asset managers moved quickly to capitalize, and the market responded. With more than 5,000 ETFs now trading, surpassing the total number of publicly listed stocks, the investment landscape has become far more crowded than it was a decade ago. New product launches and asset flows reveal that ETFs have become the investment vehicle of choice, reflecting their success in lowering costs, improving tax efficiency, and broadening access to markets.

The ETF Landscape Has Shifted

Investors face a growing burden navigating 5,000+ funds

_{Source: Morningstar Direct as of 12/31/2025. Number of US Listed Companies for 2025 is estimated based on IPO and delisting data from StockAnalysis.com.}

The growing number of ETFs is not inherently a problem; rather, it signals that ETFs no longer simply represent various swaths of the market. Increasingly, they express specific, tactical, and sometimes highly complex exposures. Need leveraged inverse exposure to a single stock? There’s now an ETF for that (but this is not a recommendation or advice!).

This explosion of choice, however, brings real challenges. Advisors and investors now face the daunting task of navigating thousands of options, often with overlapping mandates and varying levels of risk. The competition among issuers has intensified, driving product innovation but also encouraging the launch of

more complex—and potentially higherrisk—strategies designed to justify higher fees and capture attention. For less experienced investors, these products can be difficult to fully understand.

The ETF market is fast approaching a tipping point. For advisors, this moment underscores the importance of conducting disciplined due diligence, ensuring portfolios remain grounded in fundamental investment principles amid an increasingly noisy product ecosystem.

Active vs Passive: The Debate Takes A New Shape

Asset managers have clearly responded to growing demand for active ETFs. In 2025 alone, more than 1,000 ETFs were launched, and roughly 900 of those products employed active strategies. This surge is not a oneoff event but part of a broader, multiyear trend in both product launches and asset flows. Active ETFs now capture a growing share of total ETF inflows each year, and momentum suggests that this shift is far from over.

Active ETFs Punch Above Their Weight

Investors are increasingly revealing their preference for active management

_{Source: Bloomberg, J.P Morgan Asset Management as of 12/31/2025} .

If the evolution simply reflected a rotation from passive to active management within ETFs, it might merit less scrutiny. But the broader ETF landscape is changing at the same time. Costs, for instance, are moving higher. Newly launched ETFs are meaningfully more expensive than their predecessors, particularly in popular categories where 2025 launches carried expense ratios two to six times higher than existing peers. For investors, the stakes have risen because of rapid product proliferation, rising fees, and increasingly complex mandates, reinforcing the need for careful evaluation of funds beyond headline labels.

Average Expense Ratios for ETFs Launched in 2025 Compared to the Category Average

_{Source: Kestra Investment Management using data from Morningstar Direct. Fund data as of 1/16/2026. Expense ratios are prospectus net expense ratios. Intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.}

OK, Things Are Different Now. So What Do We Do?

The ETF market has fundamentally changed, evolving from a simple, lowcost vehicle for passive exposure into a crowded marketplace defined by active management, tactical strategies, and rising complexity. While innovation has expanded the toolkit available to advisors, it has also introduced new risks—higher fees, overlapping mandates, and products whose behavior may diverge sharply from client expectations. As ETFs continue to outpace traditional vehicles in both launches and flows, the burden increasingly shifts to investors to separate useful tools from costly distractions.

In this environment, ETFs are no longer “plugandplay” solutions. Effective implementation now requires the same level of scrutiny historically reserved for mutual funds and alternative strategies. Success will hinge on disciplined due diligence, fee awareness, and a clear framework for determining when an ETF adds genuine portfolio value versus when it simply reflects product proliferation. As ETF complexity continues to increase, the real work for advisors will lie in establishing repeatable, disciplined duediligence processes. These frameworks must be robust enough to evaluate rising costs, growing structural nuance, and evermore targeted exposures—allowing advisors to navigate an expanding opportunity set without losing sight of portfolio fundamentals.

Michael Humbert

_{The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.}

Money with Murphy: Will 2026 Finally Break Big Tech’s Grip on CapEx?

Wed, 21 Jan 2026 19:51:05 GMT

Money with Murphy: Will 2026 Finally Break Big Tech’s Grip on CapEx?

After years of record-breaking investment from the hyperscalers, 2026 may finally bring a shift. New incentives stemming from the implementation of the One Big Beautiful Bill Act (OBBBA) could push companies outside of technology into the much-needed CapEx boom. In this episode of Money with Murphy, Kara explores why the broadening out of business investment is critical for sustained productivity, earnings growth, and stock market performance.

Thriving in Uncertainty: Market Review and Outlook

Fri, 16 Jan 2026 18:28:05 GMT

Thriving in Uncertainty: Market Review and Outlook

Key Takeaways

The S&P 500 posted its third consecutive year of double-digit gains, although its 17% gain for 2025 was short of the 20% gain in the previous two years
International markets returned to prominence, with emerging markets like South Korea, Mexico, and Brazil along with developed markets in the United Kingdom and Japan outperforming the US
A variety of policies will drive market performance in 2026, including the Federal Reserve’s monetary policy and tariffs

The bull market run remained resilient for a third consecutive year. Despite significant external shocks stemming from tariffs, geopolitical uncertainty, and growing concerns about the sustainability of capital expenditures for AI, investors who stayed the course were rewarded.

In a volatile start to the year, the S&P 500 plummeted 19% in the first quarter only to finish the year up by nearly 17%. It’s only the fourth time since 1926 that the benchmark index has returned greater than 15% in three consecutive years. A growing economy and enthusiasm about the possibilities of AI more than compensated for significant headwinds.

While the market’s momentum is backed by strong fundamentals of double-digit earnings growth for a second consecutive year, valuations have become stretched to levels not seen since the dot-com bubble. In addition, 2025 marked the year when international markets took leadership as the MSCI Emerging Markets index posted a 33% gain, highlighted by outstanding years in South Korea, Brazil, and Mexico. Developed markets excluding the United States also performed well, with the United Kingdom and Japan posting returns of 33% and 25%, respectively.

With another excellent year of market returns behind us, it’s worth asking if the bull market can reach a fourth year? If so, where do we need to direct our attention? In this week’s Markets in a Minute, we unpack where potential opportunities may lie.

A Broadening Out of the Rally?

The 3-year bull market has been heavily driven by artificial intelligence broadly, and the Magnificent Seven specifically. However, in 2025, only two stocks in the esteemed Mag 7 group (Alphabet, Nvidia) outperformed the S&P 500. While Communications Services and Information Technology remained the top performing sectors, strength in Industrials, Utilities, and Financials indicate there are promising returns elsewhere.

All 11 sectors of the S&P 500 posted a gain in 2025, and forward earnings for the coming year are encouraging. For instance, the Materials sector is expected to grow earnings by 23% and Industrials by 15%.

Mag 7 vs. S&P 500 Returns in 2025

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Source: Kestra Investment Management with data from FactSet.

International Markets Shine

After years of global dominance, the US stock market took a backseat to foreign markets in 2025. International equities benefited from lower starting valuations and US dollar weakness following Donald Trump’s implementation of broad-based tariffs. Across the globe, company earnings are expected to accelerate for the upcoming year thanks to the combination of heavy government spending in Europe, AI innovation in Asia, and loose monetary policy from central banks in emerging markets.

International Market vs. S&P 500 Returns in 2025

Past performance is not a reliable indicator of current or future results. Note: Returns are in USD. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index.  Source: Kestra Investment Management with data from FactSet.

The Fixed-Income Picture: Bonds Post Best Year Since 2020

Fixed income also staged a comeback, with the Bloomberg US Aggregate Bond Index returning over 7% in 2025, its best year since 2020, helped by three consecutive rate cuts from the Federal Reserve to close the year. As the Federal Reserve drove shorter-term rates lower, long-term rates increased because of concern over increased government borrowing, sticky inflation, and slowing demand for Treasuries in the United States.

In addition to lower short-term rates, credit spreads tightened, benefiting high-yield bonds and corporates. By contrast, municipal bonds lagged, especially early in the year, due to increased supply and policy uncertainty. With credit spreads at historic lows and uncertainty around the Federal Reserve’s direction in 2026, there is heightened importance around diversification across sectors and duration.

Gold and Silver’s Parabolic Rise

In the last year, precious metals enjoyed outsized returns. Gold’s 65% rally in 2025 was its best in decades, and the momentum was fueled by strong demand from foreign central banks and retail investors alike. US dollar weakness in the aftermath of Liberation Day in April added additional fuel, and these factors could persist in 2026.

Not to be outdone, silver exploded at the end of the year to finish with a 160% gain on the year as an accessible and alternative option to gold. Silver’s role as a key ingredient in the AI data center buildout, along with its utility for companies across industrials, electric vehicles, and solar energy provides differentiated value to its precious metal peer.

Unpacking Chaotic Policy Developments

President Donald Trump’s second term in the White House has seen numerous historic shifts. In April, the enactment and subsequent softening of historic tariffs upended global markets and conventional trade policy. Heightened tariffs were one aspect of a number of foreign policy shifts that signaled a more multi-polar world.

After standing pat in the first half of the year, the Federal Reserve resumed its rate-cutting cycle in September. Three consecutive cuts at their final meetings of the year brought the federal funds target range to 3.50-3.75% in response to a weakening labor market. Disagreement within the committee has made it challenging to predict the course of interest rates in 2026 and the appointment of a new Fed Chair in June is likely to change the calculus.

Diversification is Protection Against Uncertainty

As 2026 begins, markets are balancing strong economic momentum with elevated valuations and unpredictable policy shifts. Despite these risks, broader sector participation, improving global leadership, and a healthier fixed-income backdrop create meaningful opportunities. In a year likely defined by change, disciplined diversification and a focus on fundamentals remain the best guide forward.

Invest wisely and live richly,

Kara

Money with Murphy: Market Resilience in the Face of Headwinds

Tue, 06 Jan 2026 23:04:15 GMT

Money with Murphy: Market Resilience in the Face of Headwinds

In 2025, financial markets were tested but responded with resilience, posting a third consecutive year of double-digit gains. All 11 sectors of the S&P 500 saw gains but only two stocks in the Magnificent Seven beat the index’s 17% return. Earnings growth kept up pace proving the market’s momentum was backed by strong fundamentals. As we look at 2026, we will be monitoring continued political uncertainty, heightened valuations, and the sustainability of AI-related capital expenditures. In this week’s Money with Murphy, Kara walks through the highlights of 2025 and what to watch for in the months ahead.

Money with Murphy: 2025 Year in Review

Mon, 22 Dec 2025 22:28:37 GMT

Money with Murphy: 2025 Year in Review

Markets covered a lot of ground in 2025 but remained resilient. Tariff announcements in the first quarter of the year led to a significant drawdown and volatility across the globe. Yet, markets immediately bounced back to reach record highs with strong earnings growth fueled by AI-driven technology companies. Kara’s year in review covers the year’s biggest stories.

Worried about an AI Bubble? The Case for Emerging Markets

Wed, 10 Dec 2025 22:44:00 GMT

Worried about an AI Bubble? The Case for Emerging Markets

I talk to many investors around the country and the most common question I’ve been getting the last few months has been: are we in an artificial intelligence (AI) bubble? While we believe we are still in the early days of the AI buildout, the best way to cushion your portfolio from a potentially rocky road ahead is to own asset classes that behave differently from each other. One such differentiated asset class is emerging markets, potentially one of the most underrated storylines in the market this year.

So far in 2025, the MSCI Emerging Markets Index has returned more than 25%, nearly 10% higher than the S&P 500. This strength comes after over a decade of trailing the U.S. stock market. What’s driving this reversal in emerging market stocks and is it sustainable?

Emerging Markets vs. United States Year-To-Date Stock Market Performance (Jan 1 = 100)

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. United States returns are represented by the S&P 500 Index. Emerging market returns are reflected by the MSCI Emerging Markets Index. Source: Kestra Investment Management with data from FactSet. Performance data as of November 28 ^th , 2025.

Should investors own emerging market stocks?

This year’s surge in the emerging markets index has been driven by countries as diverse and geographically distributed as South Korea, South Africa, and Mexico, which are all up over 40% year-to-date. Despite their diversity, these countries tend to share a handful of characteristics: faster-growing economies, a younger population and an expanding middle class. This greater growth potential can also come with greater risks, including more uneven growth rates, higher political volatility and less diverse economies.

Emerging markets, by their nature, can be hard to define. India, for instance, is one of the world’s largest economies whose influence is growing on the global stage. The country’s economy has features of a well-established developed market, including deepening capital markets, strong regulatory framework and highly sophisticated manufacturing. Conversely, persistent challenges in building a robust infrastructure and a low income per capita lag behind developed markets.

Emerging market stocks overall have benefited from attractive valuations relative to the U.S. market along with sustained weakness in the US dollar.

Next 12 Months P/E (Range, Current, 20 Year Long-Term Average)

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. United States returns are represented by the S&P 500 Index. Emerging market returns are reflected by the MSCI Emerging Markets Index. Developed ex-U.S. returns are reflected by the MSCI EAFE Index. Source: Kestra Investment Management with data from Bloomberg. Performance data from December 1 ^st , 2005 to November 28 ^th , 2025.

While 2025 has been a year to remember for the emerging markets, it’s worth mentioning that past performance doesn’t guarantee future results. As investors, it’s important to be prudent and forward-looking. So, can this shift in leadership sustain itself?

What Is the Outlook for Emerging Markets?

The U.S. economy and stock market have been resilient through a chaotic year, and Bloomberg’s forecast for earnings per share (EPS) growth in 2026 for the S&P 500 comes in at a healthy 13.0%. While that is a strong forecast outlook relative to developed market peers, it pales in comparison to the 17.3% expected earnings growth for the emerging market universe.

2026 YoY Earnings Per Share Growth Rates: U.S. vs. Emerging Markets vs. Developed ex-U.S.

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. United States returns are represented by the S&P 500, emerging markets returns are reflected by the MSCI Emerging Markets Index and developed ex-U.S. returns are reflected by the MSCI EAFE Index. Source: Kestra Investment Management with data from Bloomberg.

Because of the unique nature of emerging markets, adding stocks from those regions can help diversify portfolios. Diversification has become increasingly important at a time when the U.S. market is becoming concentrated into a select few leaders, particularly those tied to the artificial intelligence boom. By adding a prudent allocation across a range of geographies, investors can limit some of their dependence on an expensive U.S. market.

What Are the Risks of Emerging Markets?

While emerging markets offer stronger potential growth and lower valuations, they also come with risks. For one, emerging markets comprise a wide spectrum of countries that vary dramatically based on their policy, financial infrastructure and sector strengths. Performance in any single country can vary tremendously based on these and other factors.

In addition, geopolitical instability and de-globalization are becoming the new normal. Emerging markets generally suffer from more sensitivity to global shocks, and that can leave them more vulnerable during times of stress. In particular, President Trump’s tariffs can have an outsized impact on emerging market countries that are particularly reliant on exports to the United States.

The Case for Emerging Markets

Emerging markets can provide investors a combination of above-average economic growth, attractive valuations and access to new markets. In addition, the asset class can help opportunistic investors diversify away from US markets that are increasingly tied to AI.

Invest wisely and live richly,

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

Gratitude in the Markets: What Investors Can Be Thankful For

Tue, 18 Nov 2025 22:38:26 GMT

Gratitude in the Markets: What Investors Can Be Thankful For

November 18, 2025

Kara Murphy, CFA

Resilience in the Face of Tariffs

In April, the new Trump administration announced an extensive set of tariffs. In response to the sharp shift away from nearly 100 years of lower barriers to trade, stocks plummeted. In a five-day period from April 2 to April 8, the S&P 500 fell by more than 11%, extending losses that had started months earlier.

As the S&P 500 neared bear market territory, the administration paused a large share of the tariffs for 90 days. The pause prompted a rally in stocks even more virulent than the recent decline. The market has returned about 15% so far this year, which follows two consecutive years with returns over 20%.

S&P 500 Year-To-Date Performance (Jan 1 = 100)

_{Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index.

Source: Kestra Investment Management with data from FactSet. Performance data as of November 17th, 2025.}

Excellent Earnings Performance

For the fourth consecutive quarter, companies in the S&P 500 are set to grow earnings by a double-digit percentage. With 92% of the index companies reporting results, the earnings growth rate for Q3 2025 is 13.1%. Despite a challenging macroeconomic backdrop, corporate profitability continues to provide the narrative to sustain the bull rally.

Earnings results across the market have beaten on both the top and bottom lines, with 82% of companies beating earnings per share (EPS) expectations and 76% surprising to the upside on revenue numbers. While the market may be expensive on a valuation basis, companies are doing their part to sustain lofty prices.

S&P 500 Earnings Results Relative to Estimates: Q3 2025

_{Past performance is not a reliable indicator of current or future results.

Source: Kestra Investment Management with data from FactSet}

Accommodative Monetary Policy

While the Federal Reserve has always been an important driver of economic growth and market, politics have kept it in the news more than usual this year. Uncharacteristically high levels of dissension on the committee, calls for Fed Chair Jerome Powell to be fired from the President, and a perceived lack of independence have led to increased scrutiny of the country’s central bank.

Outside of political influences, policymakers have had to balance a weakening labor market with persistent inflation. Despite these conflicting signals, the Fed lowered the Fed funds rate on two separate occasions to 3.75-4.00%. This decision will help with the cost of borrowing for both consumers and businesses and is expected to be followed by additional cuts.

Resilience, Profits, and Rate Cuts: A Full Plate of Gratitude

As we gather with loved ones this Thanksgiving, it’s worth remembering that investing isn’t just about numbers on a screen, it’s about building for the future. We’re committing to the things that matter most: security for our families, opportunities for future generations, and the freedom to live life on our terms.

Invest wisely, live richly and happy Thanksgiving,

Kara

_{The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.}

Money with Murphy: The Popularity of Private Credit: Wall Street’s Latest Trending Asset Class

Thu, 13 Nov 2025 18:21:00 GMT

Money with Murphy: The Popularity of Private Credit: Wall Street’s Latest Trending Asset Class

“When you see one cockroach, there’s probably more,” said JPMorgan CEO Jamie Dimon in an Oct. 14 comment referring to cracks he’s seeing in the banking sector. The, now, infamous cockroach quote sparked important debate about the $1.6 trillion private credit market, which has grown 300% over the past decade while delivering strong risk-adjusted returns. Understanding both the opportunities and risks of this evolving asset class is essential for investors looking to tap into one of the market’s most compelling areas of growth.

Common End-of-Year Tax Client Considerations

Wed, 29 Oct 2025 21:33:16 GMT

Common End-of-Year Tax Client Considerations

The end of the year offers a chance not only for personal reflection but also for thoughtful tax planning. As portfolios shift with another strong market, investors are well served to consider if their portfolio is still on track—both from a risk and tax standpoint. Let’s consider a few key scenarios that can be tackled heading into year end.

Another Year, Another Stock That Did Better Than We Expected

Each year, a few standout stocks capture attention with spectacular returns—think names like Palantir, Oracle, Netflix, GE Aerospace, Uber, Johnson & Johnson, and Intel have outpaced the market this year. Holding one can feel like hitting the jackpot, but big winners often bring a hidden cost: concentration risk.

When one position grows too large, it can expose investors to outsized drawdowns and throw a portfolio off balance. After such strong gains, it may be time to rebalance—locking in success while keeping long-term goals on track and the right amount of risk in a portfolio.

Capital Gains Distributions and Mutual Fund Outflows

Mutual funds have many strengths, but tax efficiency isn’t one of them. They can distribute capital gains even when shareholders haven’t sold any shares, creating “phantom gains” and unexpected tax bills. A major driver of these gains is investor redemptions—when outflows force funds to sell holdings. Eight of the last ten years have seen net outflows from mutual funds in aggregate, and 2025 appears to be following suit.

While not every fund with outflows will make distributions, the risk rises as redemptions increase. If your mutual funds are seeing outflows, it may be wise to rebalance toward more tax-efficient options like ETFs before your mutual fund pays out capital gains.

Mutual Fund Net Flows by Year, in billions

Source: Morningstar Direct. Mutual funds include US open ended funds, excluding money market and feeder funds. YTD 2025 is as of September 30, 2025.

Tax-Management Best Practices

Year-end is prime time to put disciplined tax management into practice. Sometimes that means taking your medicine: not just avoiding taxes, but paying them. With U.S. markets at new highs, many investors have let their aversion to paying capital gains taxes let their portfolios drift far from their target allocation—often that means a portfolio has higher than intended risks. Realizing those gains now allows an investor to address those unintended risks.

Consider setting a “capital gains budget”—an amount you’re willing to realize this year and in 2026—to balance tax costs with the benefits of proper portfolio positioning. This approach helps investors stay focused on long-term objectives, plan for taxes before markets shift, and take advantage of strategies like tax-loss harvesting (selling losing positions to offset gains).

The trend in taxes and the investment landscape is one of increasingly complexity, meaning that working with knowledgeable financial advisors is increasingly valuable. The right guidance can help clients anticipate potential liabilities, make informed decisions, and stay on track toward their long-term financial goals.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

A Rising Tide: Third Quarter Market Review and Outlook

Tue, 21 Oct 2025 23:19:38 GMT

A Rising Tide: Third Quarter Market Review and Outlook

Key Takeaways

The broad U.S. stock market climbed to new highs fueled by strong corporate earnings, especially among technology companies. Broad-based gains pushed all S&P 500 sectors into positive territory for the year-to-date period.
The bond market rallied as well, buoyed by a dip in interest rates across maturities.
The U.S. economy continued to show resilience despite lingering inflation and trade uncertainty. While the job market is weakening, unemployment remains low by historical standards.

For much of this year, uncertainty around trade, fiscal and monetary policy ran high. In the third quarter, however, investors got answers to some key policy questions with the passage of President Trump’s One Big Beautiful Bill Act and the Federal Reserve’s resumption of the rate-cutting cycle it paused nearly a year ago.

They also got welcome news on corporate earnings, which helped ease (but not erase) worries about the impact of historically high tariffs. The S&P 500 index posted strong earnings growth , beating analysts’ expectations by a healthy margin. The index marked its nineth consecutive quarter of positive earnings.

Earnings growth, greater policy clarity and other tailwinds drove U.S. stocks to new highs. The third quarter marked the first quarter this year the U.S. stock market outperformed international equities markets, which have been buoyed by a sharp decline in the value of the dollar. Read on for a closer look at third-quarter trends and our take on the near-term outlook.

2025 Year-to-Date Returns, % change

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Note: views are from a U.S. dollar perspective. Data labels represent total year-to-date returns. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. Source: Kestra Investment Management with data from FactSet. Index proxies: Bloomberg U.S. AGG Bond Index, ICE BofA U.S. Corporate, ICE BofA U.S. High Yield, Bloomberg Municipal Bond, S&P 500, MSCI EM, MSCI World ex US Index, Dow Jones U.S. Select REIT, and Bloomberg Commodity Index. Data as of September 30, 2025.

The AI Effect

The Technology sector, which tumbled in the first quarter and has been climbing back since then, rallied after reporting strong earnings. The sector’s robust earnings growth accounted for nearly 60% of the S&P 500’s total earnings growth.

Continued strong demand for artificial intelligence (AI) and massive capital investments have been a tailwind for earnings in the Tech sector and beyond. Some of the biggest names in Tech and Communications Services are collectively spending hundreds of billions to build out and expand their AI infrastructure over the next year.

Behind Technology and Communications Services, Industrials has been the third best-performing sector for the year, and that’s no coincidence. Massive investments in data centers, fiber-optic networks and other AI-related infrastructure have begun to flow through to the sector and lift earnings, helping to offset the pain of higher materials prices, labor shortages and other headwinds.

All in all, every sector fared relatively well for the quarter. Even Consumer Discretionary and Healthcare, which were in negative territory at the end of the second quarter, saw positive returns.

U.S. Equity Sectors, 2025 Year-to-Date Returns, % change

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Note: views are from a U.S. dollar perspective. Data labels represent total year-to-date returns. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. Source: S&P and FactSet. Index proxies: S&P 500 Index sectors. Data as of September 30, 2025.

Economic Resilience and a Yellow Flag

As reflected in the equities market, the U.S. economy has remained resilient this year despite policy uncertainty, sticky inflation and other headwinds. Gross domestic product (GDP) is expected to grow by 3.8%, according to the Atlanta Fed’s latest GDPNow forecast .

That said, the all-important job market has been showing signs of strain. Job growth has trended downward in recent months, and small business hiring continues to slow. The unemployment rate (still low by historical standards) ticked up to 4.3% in August.

Why is job growth slowing even as the economy continues to grow? More-restrictive federal immigration policy, which is shrinking the labor pool, may be one factor. Cuts to the federal workforce and AI-driven productivity gains may also be contributing to the slowdown.

Either way, the weakening job market prompted the Fed in September to resume its rate-cutting cycle, after pausing for nearly a year because of sticky inflation and the potential inflationary effects of higher tariffs. The central bank cut its benchmark rate by a quarter of a percentage point last month and is expected to lower it by another half point by the end of the year, assuming the labor market doesn’t show signs of improvement.

We’re keeping a close eye on the condition of labor market, which some have described as “low hire, low fire.” While layoffs have risen over the last several years, we haven’t seen the kind of spike that typically ushers in a recession. In fact, layoffs remain at low levels by historical standards, which gives us some comfort in the underlying strength of the job market.

Tax Cuts and Other Tailwinds

We also believe that continued investment in AI should help to underpin economic growth. By one estimate, between $3 trillion and $4 trillion will be spent on AI infrastructure by the end of decade. (Watch this edition of Money with Murphy for a deeper dive into the promise and challenges surrounding AI.)

In addition, we have yet to see the full economic impact of the One Big Beautiful Bill Act (OBBBA). The bill includes some complex and potentially controversial elements, such as its impact on the deficit and government spending. But it also contains a range of incentives to support U.S. businesses, including tax provisions aimed at encouraging companies to build new factories and increase spending on heavy equipment. (Watch this edition of Money with Murphy to learn more about what’s in the OBBBA.)

Of course, the path forward won’t be without challenges. Trade uncertainty continues to loom large, including on-again, off-again skirmishes over tariffs between United States and China. What’s more, the U.S. is once again in the midst of a government shutdown, which can have wide ranging implications for the economy and the markets.

Still, periods of uncertainty often give way to opportunity, as we’ve seen this year. As always, staying the course, especially when markets are unsettled, remains one of the most-reliable ways to reach your long-term financial goals.

Invest wisely and live richly,

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. Does not offer tax or legal advice.

Money with Murphy: Solid-footing: Stability, New Highs and the Road to 2026

Tue, 21 Oct 2025 22:57:25 GMT

Money with Murphy: Solid-footing: Stability, New Highs and the Road to 2026

Markets regained their footing in the third quarter, with stocks, bonds, commodities, and real estate all posting gains and nearly every S&P 500 sector ending the period higher. A stable U.S. dollar, new tax legislation, and easing tariff concerns helped fuel the rally, especially in tech and emerging markets. At the same time, labor market softening and a Fed rate cut supported bonds, while investors shifted focus to upcoming earnings guidance on AI spending and tariffs. With more rate cuts expected, the job market and CEO outlooks will be key drivers heading into 2026. Learn more in this week's Money with Murphy.

No Place Like Home: Pain Points in the Housing Market and the Path Ahead

Tue, 02 Sep 2025 21:18:03 GMT

No Place Like Home: Pain Points in the Housing Market and the Path Ahead

If you’ve driven past half-finished subdivisions or watched apartment buildings rise in your neighborhood, you might assume that the housing market is on a roll. In reality, housing has been one of the weakest areas of the economy for some time — stuck in a rut characterized by a low supply of homes for sale and tepid demand tied to affordability challenges.

In this week’s edition of Markets in a Minute, we explore the state of the all-important housing market and its outlook. For this discussion, we focus on the single-family housing market, which makes up the largest share of the residential market.

Why Housing Matters

A home is more than a place to live. It’s where we make memories, form community connections and grow families.. For many individuals, their home is not only a place to live but also one of the largest assets on their balance sheet. According to Pew Research , home equity accounted for a median of 45% of homeowners’ net worth in 2021.

The housing market also has an outsized impact on the economy. It underpins a large swath of the financial services sector and drives spending on everything from big-ticket household items (like furniture and appliances) to construction material. Millions of Americans work in jobs tied, directly or indirectly, to the health of the market. In 2024, the market accounted for roughly 16% of gross domestic product , as measured by spending on residential investment and housing services.

The Post-Pandemic Experience

Thanks to pent-up demand and low mortgage rates, the housing market came roaring out of the pandemic. But it began to cool in 2022 as borrowing costs surged , exacerbating long-standing affordability challenges that have priced many Americans, especially first-time buyers, out of the market.

For many young adults, the homebuying process has become frustratingly long, if they succeed at all. The average age of first-time homebuyers reached an all-time high of 38 years old in 2024, according to the National Association of Realtors.

Home Ownership Affordability Index

Source: Kestra Investment Management with data from the Federal Reserve Bank of Atlanta. Data from January 2005 through April 2025

While many younger Americans are sitting on the sidelines, many older homeowners are feeling stuck in place — reluctant to sell and venture into a market defined by higher rates and home prices than in years past. According to a recent Redfin commission survey , more than a third of U.S. homeowners say they never plan to sell. The so-called lock-in effect among existing homeowners has suppressed both supply and demand.

In July, the national inventory of unsold existing homes on the market rose slightly from the prior month to 1.55 million, the equivalent of 4.6 months’ supply at the current monthly sales pace. After years of unusually slim inventory that pushed prices higher, months’ supply has now risen to its highest level in five years.

Where do we go from here?

While supply has shown signs of improving and mortgage rates have dipped lately, we may be a long way off from seeing a more-balanced housing market because of persistent structural issues.

Even if rates continue to fall in the near term, many would-be buyers may still find themselves priced out. Lower rates typically stimulate demand, which means already high home prices may rise further if the supply side of the equation doesn’t improve meaningfully.

Of course, lower rates are likely to entice many homeowners who have put off a move to sell, which would bring more shadow inventory into the market. The additional supply should alleviate some pricing pressure, but that may not be enough to compensate for the national housing deficit tied to years of underbuilding.

How did we get here? The global financial crisis, which had its origins in the housing market, has cast a long shadow. The crisis brought once-robust homebuilding activity to a near standstill, and it has yet to fully recover . Today, the U.S. is short an estimated 4 to 7 million homes.

The outlook for the housing market depends a lot on whether homebuilders feel comfortable ramping up production. Right now, that doesn’t appear too likely. Since late 2021, homebuilder confidence has declined sharply and remained well below average. As a result, housing starts have fallen.

For many builders, it has become increasingly difficult to construct a home that the average American can afford. Elevated borrowing costs, high material and land prices, and labor shortages have driven up expenses . Higher tariffs are expected to put added pressure on input costs.

Housing Starts (Seasonally Adjusted)

Source: Kestra Investment Management with data from the US Census Bureau. Data from January 2015 – May 2025.

What can be done to ease the housing crunch?

Policymakers have been wrestling with the question for years, and they’re rolling out all sorts of proposals. The Trump administration, for instance, has proposed selling some federal land to increase the supply of land for building affordable housing, but the idea has met with opposition. Meanwhile, many cities and states have managed to scale back regulatory barriers , including zoning and environmental rules, that added cost and time to the homebuilding process.

Of course, the health of the housing market varies from place to place. As the adage goes, all real estate is local. In some metro areas, housing costs have climbed so far so fast that the markets have become especially vulnerable to downturns – much like high relative valuations can make stocks more susceptible to bad news. In other areas, affordability pressures are less extreme and the risks of downturn more muted.

We’ve seen some of these dynamics play out in our home base of Austin, Texas. After years of eye-popping growth, rents and home prices have been falling for months, although they remain above pre-pandemic levels. High housing costs have weighed on demand, while supply has increased partly as a result of zoning changes and other efforts by city leaders to increase density and affordability.

The Bottom Line

Given recent trends, the near-term outlook for housing is still murky, which means that the market’s contribution to economic growth will likely remain muted in the short term.

Yet there are some silver linings. The raft of policy proposals being floated across the country may alleviate some pressures. And while housing activity has stalled, household balance sheets remain strong. As a result, the market isn’t likely to be the catalyst for a broader economic downturn, as it was during the financial crisis.

Invest wisely and live richly,

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

Money with Murphy: What Q2 Earnings Tells us about AI’s Impact

Wed, 20 Aug 2025 16:08:16 GMT

Money with Murphy: What Q2 Earnings Tells us about AI’s Impact

This quarter’s earnings results are in—and they’re sending a powerful message. In this week’s Money with Murphy, Kara breaks down one of the strongest earnings seasons in recent years and unpacks how artificial intelligence is reshaping more than just the tech sector, the AI ripple effects are reaching deep into industrials and beyond. Kara also explores what rising guidance and shifting corporate investments say about the future—and whether we’re witnessing the early stages of a new economic revolution.

The Fed Effect: Power, Politics, and Your Portfolio

Tue, 12 Aug 2025 21:51:19 GMT

The Fed Effect: Power, Politics, and Your Portfolio

Since its founding more than a century ago, the Federal Reserve has been the subject of intense scrutiny. Economists, politicians and the financial press, among others, love to second-guess the central bank. Think of it as the financial world’s version of Monday morning quarterbacking. Lately, President Trump has grabbed more than a few headlines for his efforts to sway Fed policy .

Why all the fuss about the Fed? The central bank’s decisions can have a major impact on the economy and the markets. It’s one of the country’s most powerful institutions, yet arguably one of the least understood. In this week’s Markets in a Minute , we answer some basic questions about the Fed, touching on a few common misconceptions along the way.

Why do we even need a Fed?

Before Congress established the Fed in 1913, the U.S. economy was much more volatile. The country experienced painful booms and busts. Bank runs and failures were not uncommon.

Without a central bank to stabilize the banking system, the country sometimes had to rely on private citizens to bail it out. Famed financier J.P. Morgan stepped in to help stabilize financial markets during several crises, including during the Panic of 1907 . The unemployment rate more than doubled the year following the panic, while the economy declined by 10%, This crisis rattled Wall Street and set off bank runs and ignited a reform movement that led to the creation of the Federal Reserve years later.

In the more than one hundred years since it’s founding, the Fed has grown in complexity and importance such that today, reporters and investors alike hang on every spoken or written word of its leaders.

What’s the role of the modern Fed?

While the Federal Reserve was established initially to address the banking panics that had plagued the United States’ economy, today its primary goal is to balance stable prices (ie limit inflation) with creating as many jobs as possible. In this balancing act, the Fed’s role has evolved to become broader and more complicated than many realize.

Federal Open Market Committee (FOMC)

Most well-known is the Fed’s setting of interest rates or, more specifically, the fed funds rate, the rate at which banks will lend to each other overnight. Rates are adjusted up and down in order to support the Fed’s twin goals of taming inflation and promoting full employment . For instance, if inflation is too high, policymakers at the Fed will raise interest rates. Conversely, if jobs are becoming harder to find and the number of unemployed is growing, they will lower rates.

Board of Governors

Seven governors are appointed by the president with tenures of 14 years and staggered terms, designed to help protect the Federal Reserve from political influence. Together, they oversee the complex system that makes up the Fed and are ultimately responsible for helping to set interest rate policy and overseeing regional activities.

Regional Reserve Banks

Twelve banks scattered around the country act as “banks for the bankers,” making it easier for commercial banks and the US government to do business. In addition, each of the regional banks has a staff of economists who research local, national and global economic issues, much of which is made available to the public. One resource you may have seen in these pages is the St. Louis Fed’s FRED , a free online, searchable database of more than 800,000 economic indicators. See below for an example of what’s available.

While the Fed has a clearly designed set of roles, it can also innovate during times of stress to meet the needs of the moment. During the global financial crisis that began in 2008, for instance, the central bank’s initial efforts to respond didn’t pack enough of a punch. But it kept trying new approaches , including making large purchases of assets that it normally doesn’t buy in an effort to support the battered mortgage and housing markets. Its drive to find solutions helped restore public confidence and buoy stocks.

Coming out of the global financial crisis, the Fed took on additional responsibilities in order to help forestall future crises. New duties included supervising banks and non-bank lenders, conducting annual stress tests for banks. In addition, the Office of Financial Stability Policy and Research was created within the Fed, which integrates economic research with supervisory policy to spot systemic risk earlier.

Mortgage rates have been on the high side for several years. When the Fed cuts rates, will home buyers finally get some relief?

Not necessarily. Perhaps the biggest misconception about the Fed is that it controls all interest rates. The central bank directly controls only the federal funds rate , the interest rate charged by banks to borrow from each other overnight. Changes in the fed funds rate influences other rates — in other words, the rates consumers pay on things like credit cards and auto loans. However, mortgage and other long-term rates are closely tied to the outlook for growth and inflation.

That said, it’s not hard to see why some people think the Fed controls mortgage rates. Mortgage rates often fall when the Fed cuts its policy rate in response to an economic slowdown, though this is not always the case. In fact, since the Fed started cutting rates in September 2024, the average 30-year mortgage rate has increased from around 6.2% to around 6.7%.

With President Trump pressuring the Federal Reserve to cut interest rates, there’s been a lot of discussion about the Fed’s independence. What does that mean?

From its founding, the Federal Reserve system was designed to be insulated from political pressures. In addition to long and staggered terms for members of the board of governors, the central bank is decentralized through its 12 regional banks and it is self-funded, meaning it pays for its operations through interest and fees, remitting any surplus back to the US Treasury.

While the Fed is independent, though, it is still accountable to Congress. Congress sets goals for the Fed (ie maximum employment and stable prices), and Federal Reserve officials determine how to achieve those goals.

Why does it matter that the Federal Reserve remains independent?

In theory, independence allows the Fed to focus on long-term economic goals, without being influenced by the day’s political pressures or public sentiment. Many economists have argued that when a central bank is independent , it can more easily promote low and steady inflation .

Yet lowering rates to juice economic growth is tempting to politicians from both sides of the aisle. More jobs can mean more votes. Last year, for instance, Sen. Elizabeth Warren penned an open letter to the central bank calling on it to swiftly cut rates and arguing that its “delays” had threated the economy and “left the Fed behind the curve.”

As tempting as it may be, cutting rates preemptively — in other words, before clear signs of economic trouble — is risky. It may boost growth in the short term, while also stoking inflation over the medium- to long-term.

History offers cautionary tales. In the early ‘70s, President Nixon put enormous pressure on the Fed to keep rates low in advance of his re-election campaign. Whether he succeeded is a matter of debate. But economists often blame preemptively lower short-term rates for contributing to the Great Inflation of the 1970s.

Remaining insulated from politics allows the Federal Reserve to make monetary and supervisory decisions based on economic realities rather than short-term political goals, which can distort policy and destabilize markets. The very belief that the Fed is committed to combatting inflation can help officials subdue price increases, even if higher rates are unpopular and sometimes painful.

Why not cut rates at the first hint of trouble?

The central bank certainly isn’t infallible. Even with its vast data resources, the Fed must make decisions based on incomplete or lagging indicators. Economic readings are often updated as more information becomes available, which means policymakers, investors and others must make real-time decisions based on imperfect snapshots.

Like its predecessors, today’s Fed is facing some tough choices amid intense political pressure.

Politics may create the noise, but the Fed’s decisions send the signal investors can’t afford to miss.

Invest wisely and live richly,

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. Does not offer tax or legal advice.

Money with Murphy: Meme Stocks: Risk vs. Reward in Today’s Market

Mon, 11 Aug 2025 17:39:34 GMT

Money with Murphy: Meme Stocks: Risk vs. Reward in Today’s Market

A new wave of meme stock mania has taken over social media, sending the prices of some surprising companies soaring. But behind the hype lies a cautionary tale—just ask investors who bought AMC at its peak during the 2021 frenzy. In this week’s Money with Murphy, Kara Murphy draws on her experience as a former stock analyst to explain why chasing momentum can backfire, and what investors should focus on instead. Spoiler: fundamentals still matter.

The One Big Beautiful Bill: What It Means for Markets

Thu, 24 Jul 2025 21:20:44 GMT

The One Big Beautiful Bill: What It Means for Markets

Earlier this month, the One Big Beautiful Bill Act was signed into effect, introducing a range of incentives aimed at supporting U.S. businesses. Key provisions include expanded bonus depreciation, enhanced credits for manufacturing and R&D, and changes to international tax rules. While the bill includes some complex and potentially controversial elements, such as its impact on the deficit and government spending, this week’s Money with Murphy focuses on how the business-related provisions could influence companies—and, in turn, investment portfolios.

Tariff Turmoil and Rebound: Second Quarter Market Review and Outlook

Tue, 15 Jul 2025 21:52:13 GMT

Tariff Turmoil and Rebound: Second Quarter Market Review and Outlook

Key Takeaways

The broad U.S. stock market saw another volatile quarter, starting with a sharp tariff-induced sell-off and ending at record highs. The S&P 500 index gained 6% year-to-date through the second quarter.
The broad U.S. bond market extended its comeback. The Bloomberg U.S. Aggregate Bond Index returned 4% year to date through the quarter.
Solid economic data, including cooler-than-expected inflation readings, helped push stocks to new highs. Yet many of the risks that triggered the second-quarter sell-off, including tariff uncertainty, are still a factor.

The start of summer often feels like a reset — a time to shed jackets, settle into longer days and look forward to family vacations. This year, the market gave us another reason to feel sunnier in the second quarter, staging a remarkable comeback after a rough start to the year.

In this week’s Markets in a Minute, we recap some key themes from the quarter, including pockets of outperformance and opportunity that should provide a tailwind for investors with broadly diversified portfolios.

V-Shaped Recovery

The quarter kicked off with President Trump’s Liberation Day when the administration unveiled sweeping tariffs, sending stocks into a nosedive. However, the pain didn’t last long. Within days, Trump announced a 90-day pause on tariffs for all countries except China, and the market cheered.

On April 9, the S&P 500 gained more than 9%, among its largest one-day returns in history. By the end of the quarter, the index, which at one point was down by nearly 15%, had more than erased its losses.

Year-to-Date Performance, S&P 500

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Note: views are from a U.S. dollar perspective. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future results. Source: Kestra Investment Management with data from FactSet. Index data from January 1, 2025 through June 30, 2025.

Beyond the Bounce

As always, the market’s headline performance is only part of the story. Extending a rebound that began in the first quarter, international equities outshined their U.S. counterparts. International developed-market equities returned 19% year-to-date through the second quarter, more than triple the 6% gain for U.S. equities. That said, the magnitude of their outperformance has begun to narrow lately.

Value stocks — which had overtaken growth stocks earlier this year after a prolonged slump — lost some momentum as market leadership narrowed again. Still, we continue to see opportunity in value stocks, supported by attractive relative valuations.

Bonds Are Back

After years of disappointing returns, bonds have also been a bright spot this year, which is welcome news for investors seeking to diversify their portfolios. Within the Treasury market, we believe the so-called belly of the yield curve offers the most-attractive opportunity from a risk-reward standpoint. Yields on longer-term U.S. Treasuries are higher than (most of) their shorter-term counterparts, which generally suggests investors anticipate stronger economic growth and/or higher inflation ahead.

Treasury Yield Curve – December 31, 2024 vs June 30, 2025

Source: Kestra Investment Management with data from FactSet of the U.S. Treasury yield curve. Data as of June 30, 2025.

Over the past year, yields on intermediate-term Treasurys (5- to 10-year U.S. government bonds) have risen to levels not seen in years, offering investors a combination of elevated income and potential price appreciation if interest rates fall later in the year. (Bond prices tend to rise when rates decline and vice versa.)

Economic Resilience

Solid economic data underpinned the market’s rebound in the second quarter. Inflation has been milder than expected, and the labor market, despite signs of weakening, remains on solid footing. The unemployment rate (4.1% in June) is still enviable by historical standards, and job creation has been robust.

The generally positive economic backdrop has given the Federal Reserve room to take a wait-and-see approach to further rate cuts. The central bank is closely monitoring incoming data to assess how trade and immigration policy changes may impact growth, labor markets and inflation.

Risks Back in Focus

Stocks may have rallied, but some risks remain. Policy uncertainty continues to run high. The Trump administration set a July 9 deadline for lifting its tariff pause but subsequently pushed the date to Aug. 1. It continues to threaten to impose steep tariffs on many countries as it hammers out individual deals.

And although the passage of the administration’s “big, beautiful” bill eliminated some policy uncertainty, the legislation also raised concerns that higher spending and tax cuts could substantially widen the federal deficit and push up the national debt. These fiscal challenges are hardly new. They’ve been a uniquely American problem for decades now.

On top of fiscal challenges, we face more smoldering geopolitical risks than at any time in recent decades. The long-running Israel-Hamas war and conflict in Ukraine continue to grab headlines, and the second quarter saw U.S. military action in Iran, leading to a short-lived spike in oil prices.

The quarter also served as a reminder of the risks tied to market concentration and stretched valuations among the S&P 500’s largest stocks. A handful of mega-cap names drove both the sell-off and rebound, underscoring how dependent the broader market has become on their performance.

The Bottom Line

Perhaps the biggest takeaway from the turbulent first half of 2025 is that diversification is once again demonstrating its value. It can not only help protect portfolios from the kind of volatility we’ve seen in recent months, but may also position them to capture gains when overlooked areas of the market finally get their day in the sun.

Invest wisely and live richly,

Kara

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

Diablo Magazine Best ofthe East Bay 2025

Tue, 15 Jul 2025 17:17:26 GMT

Best of the East Bay 2025

We’re excited to announce that Pacific Wealth Planning, Inc. was named a Runner-Up for Diablo Magazine’s Best of the East Bay 2025 in the July issue, released today.

This recognition was a huge surprise, and we’re deeply grateful to everyone who nominated us. Although we didn’t win first place, being acknowledged among the best in the East Bay is a true honor. Thank you for your incredible support.

We look forward to continuing to serve our wonderful community.

From Bear Scare to Record Highs – A Resilient Q2 Recap

mike@pacwealthplan.com (Michael Steinbeck ) — Tue, 08 Jul 2025 23:39:29 GMT

From Bear Scare to Record Highs – A Resilient Q2 Recap

In the second quarter, markets took investors on a wild ride—from a sharp selloff that nearly pushed stocks into bear market territory to a powerful rebound that ended with new all-time highs. Bonds also posted gains, while the U.S. dollar saw a notable decline. Economic data remained supportive, with easing inflation and strong job growth helping stabilize sentiment. In this week’s Money with Murphy , Kara breaks down the key drivers behind Q2’s volatility, what the latest numbers are telling us, and why diversification remains critical heading into the second half of the year.

Money with Murphy: Stars, Stripes, and Spending

Thu, 03 Jul 2025 18:23:59 GMT

Money with Murphy: Stars, Stripes, and Spending

In this Fourth of July edition of Money with Murphy, we explore how Americans celebrate Independence Day—past and present. From fireworks and parades to burgers and multi-billion-dollar spending, the holiday has evolved into a powerful mix of tradition and economic activity. We’ll highlight some surprising stats, a few historical quirks, and even what markets tend to do in July. Because whether you’re traveling or grilling, you’re part of a celebration as old as the country itself.

Tensions Rise, Oil Surges – Markets React

Mon, 23 Jun 2025 19:52:53 GMT

Tensions Rise, Oil Surges – Markets React

Introduction

Last week, tensions in the Middle East escalated as Israel launched an assault on strategic Iranian infrastructure, high level officials within the Iranian regime, and individuals associated with Iran’s nuclear program. Consistent with similar events in the past, markets reacted quickly, with the largest impact seen in an abrupt rise in the price of oil.

The initial market response suggests that, at this point, the primary concern is centered around an oil supply disruption, implying to us that the conflict may remain contained to Israel and Iran. As the attacks between the two countries have intensified, however, concerns about a broader regional conflict involving other Arab states and the United States have increased but remain modest.

Initial Response

On Friday the 13th, global equity markets declined, with US, Japan, and China indices all experiencing a 1-day decline of around 1% and European equities declining by nearly 2%. The 10-year US treasury yield rose slightly as higher oil prices led to concerns about inflation. Yet, by the time of this writing, global equities had recovered some—or even all—of those losses, suggesting that markets are currently more sensitive to oil supply risks than to the possibility of wider conflict.

Following the attack on Thursday evening, WTI Crude Oil prices jumped by over 7%.

Brent Crude Oil Price ($/bbl)

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Note: views are from a U.S. dollar perspective. Source: Kestra Investment Management with data from FactSet. Time period from April 2021 – June 2025

Oil Market Implications

Given that Iran controls one of the main chokepoints for global energy trade - the Strait of Hormuz - a reduction in global oil supply is the primary risk to global financial markets. About a quarter of global energy trade, including oil and liquified natural gas, flows through the region. 76% of these energy products are destined for Asian countries including China, Japan, and South Korea.

Map of Strait of Hormuz and Surrounding Area

Source : U.S. Energy Information Administration

While it may seem like the impact on US energy supply would be limited, it’s important to note that in prior conflicts, Iran has threatened to shut down the Strait of Hormuz. This would cause significant disruption in global energy trade as suppliers are forced to re-route shipments and prompt Asian countries to seek supply from other regions, tightening the global energy market and indirectly impacting US prices.

If Iran were to shut down the shipping lane, doing so would also hurt its own exports. Additionally, pressure from Iran’s key trading partners who are reliant on the route for their energy imports means that a prolonged closure of the Strait of Hormuz is less likely. However, Iran does have a history of targeting oil tankers in the Strait of Hormuz during the conflict. As war risk is elevated in the region, the cost to insure these shipments rises dramatically, which in turn impacts the cost of oil through elevated shipping costs. Re-routing these shipments is possible in some cases, but costly. Finally, further supply constraints could result if Israel targets oil infrastructure. So far, some of Iranians oil infrastructure has been targeted, but not all.

In the short-term, a supply shock alone could reignite inflationary pressures, as declining oil prices have been one of the key drivers in bringing inflation down. In this case, higher oil prices and a possible decline in consumer spending could have a negative impact on corporate profit margins. The key questions at this point are whether the conflict remains brief and isolated to Israel and Iran, or whether a protracted regional battle erupts including the involvement of other countries, particularly the United States.

What’s Ahead

Whether the conflict remains brief and isolated to Iran and Israel, or if it becomes protracted with more countries becoming involved the result is likely to be similar. Volatility in oil, stock and bond markets has recently increased relative to the last two years, and given this conflict it is likely to continue to remain elevated. The difference is likely to be in the extent of this higher volatility: in a contained conflict, it is likely to be short-lived but will last longer if the conflict broadens out.

While every market shock is unique in some way, history tells us that markets eventually recover. Eventually, as conflicts pass or as companies and individuals adjust to a new normal, fundamentals reassert themselves. A diversified portfolio remains one of the best tools for weathering market volatility. Time has shown that diversification and maintaining a disciplined, long-term approach to investing are two of the best ways to grow wealth over time. We continue to emphasize global diversification across the portfolios that we manage and believe that it is too early to know whether a meaningful change to any portfolio’s overall risk allocation is warranted, but the situation requires ongoing monitoring.

Growth of $1, Adjusted for Inflation (1802-2024)

NOTE: Values are indexed to 1, log scale. Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and not subject to fees. It is not possible to invest directly in an index. Source: Siegel, Jeremy, Stocks for the Long Run (2022), 6 ^th edition with updates to 2024.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Investment Services, LLC, Kestra Private Wealth Services, and Bluespring Wealth Partners, LLC, do not offer tax or legal advice.

Money with Murphy: Evaluating Economic Implications of the “One Big Beautiful Bill”

Sun, 01 Jun 2025 20:44:17 GMT

The “One Big Beautiful Bill” encompasses sweeping changes to tax policy, spending, and regulations. However, according to the CBO, if enacted, these changes would significantly add to the national deficit. In this week’s Money with Murphy , Kara takes a deeper dive into the “One Big Beautiful Bill” and how it could reshape America’s fiscal future.