A 6.5% rate of GDP growth would usually merit “celebrations in the streets”, says Neil Irwin in The New York Times. Yet America’s second-quarter 6.5% annualised growth disappointed: it was lower than predicted and showed that the recovery is running into “obstacles”.
Shortages of building materials meant that the housing sector “actually contracted” slightly despite huge demand. Getting back to normal is proving a “grind”; consumption of services is still 7.4% below where you would have predicted it to be pre-pandemic, while “spending on durable goods”, which boomed during lockdowns, is 34% higher. Rising cases of the Delta variant in America could also sap the recovery. Investors are recalibrating.
As Nicholas Colas of DataTrek Research tells CNBC, all the “Big Tech companies” have reported unexpectedly good second-quarter earnings. Yet traders reacted by selling off most of them. Investors are worried that its pandemic sales boom will run out of steam. The concern is that we have reached peak earnings growth. “We’ve seen so much demand for tech... over the last year. Can it keep going?”. Corporate margins will be key, says Gina Martin Adams on Bloomberg. “Defined as earnings before interest and taxes divided by sales,” US operating margins are set to rise to a very healthy 16.7% over the next year. Yet spikes in inflation mean some are nervous.
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Analysts have “cut their margin estimates for a quarter of S&P 500 members in the last three months”. Margin trends have historically been a “strong leading indicator of stock-price direction”. For now the margin pressure is concentrated in a few sectors, such as “healthcare, utilities and consumer staples”. If it spreads that could presage a stockmarket rout.
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Pensioners ‘running down larger pots’ to avoid inheritance tax as rule change loomsChanges to inheritance tax (IHT) rules for unused pension pots from April 2027 could trigger an ‘exodus of large defined contribution pension pots’, as retirees spend their savings rather than leave their loved ones with an IHT bill.
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Why do experts think emerging markets will outperform?Emerging markets were one of the top-performing themes of 2025, but they could have further to run as global investors diversify
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Three Indian stocks poised to profitIndian stocks are making waves. Here, professional investor Gaurav Narain of the India Capital Growth Fund highlights three of his favourites
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UK small-cap stocks ‘are ready to run’Opinion UK small-cap stocks could be set for a multi-year bull market, with recent strong performance outstripping the large-cap indices
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Hints of a private credit crisis rattle investorsThere are similarities to 2007 in private credit. Investors shouldn’t panic, but they should be alert to the possibility of a crash.
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Investing in Taiwan: profit from the rise of Asia’s Silicon ValleyTaiwan has become a technology manufacturing powerhouse. Smart investors should buy in now, says Matthew Partridge
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‘Why you should mix bitcoin and gold’Opinion Bitcoin and gold are both monetary assets and tend to move in opposite directions. Here's why you should hold both
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Invest in the beauty industry as it takes on a new lookThe beauty industry is proving resilient in troubled times, helped by its ability to shape new trends, says Maryam Cockar
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Should you invest in energy provider SSE?Energy provider SSE is going for growth and looks reasonably valued. Should you invest?
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Has the market misjudged Relx?Relx shares fell on fears that AI was about to eat its lunch, but the firm remains well placed to thrive
