What’s Going on in Equities and ETFs

The current market landscape presents a tale of two extremes. On one hand, a wave of volatility has swept through equity markets, pushing many fundamentally sound value stocks toward their 52-week lows. On the other hand, a select group of momentum-driven names continues to defy gravity, posting spectacular gains. This divergence creates a complex environment for investors, offering compelling opportunities for both the patient value hunter and the agile trend follower, all while significant macroeconomic risks simmer beneath the surface.

Stocks at 52-Week Lows and Investment Opportunities

Robert Half, despite recent challenges and a low stock price, shows financial strength, including solid dividends, whereas other stocks like UnitedHealth reflect sector-wide challenges. Albemarle, Kohl’s, and Moderna are seen as highly undervalued but carry high uncertainty. Italian stocks Saipem and Banca Mediolanum sit near yearly lows but need more fundamental review.

Top Dividend Payers in the FTSE MIB

For investors seeking income, Italian stocks, particularly in the banking sector, are offering exceptionally high dividend yields in 2025. The total distribution from Piazza Affari is expected to reach a record €44 billion, up 13% from 2024.

Beyond high yields, it’s crucial to assess dividend sustainability. Companies like Intesa Sanpaolo and Enel are often cited for their stable payout histories and solid financials, making them “cassaforte” (safe) stocks for income-focused investors. The roster of stocks trading near their 52-week lows includes several companies with undeniably strong foundations. UnitedHealth Group finds itself in a curious position, trading midway between its high and low for the year. The market has penalised the healthcare giant due to an unexpected leadership transition, yet beneath this headline noise, the company’s revenues continue to grow at a steady clip, and its dividend, which has been increased for twenty-two consecutive years, remains well-covered with a conservative payout ratio. Similarly, Morningstar Inc. has touched its low, a move that appears disconnected from its intrinsic value as analytical models and Wall Street targets suggest a significant upside, with some analysts setting price objectives substantially above the current trading range. The Italian market also offers its own gems. Amplifon, despite a temporary setback in its share price, is widely viewed as possessing strong corporate resilience and clear prospects for a medium-term recovery. STMicroelectronics maintains a solid industrial base and a compelling valuation relative to its technical fundamentals. Meanwhile, Banco BPM stands out with an exceptional operational margin and a dividend yield that surpasses five per cent, a testament to its underlying profitability even as its stock price retreats from recent highs.

Highlights from the Q3 2025 Earnings Season

 In Q2 2025, the tech sector vastly outperformed the S&P 500, with earnings growth of 22.5% and revenue growth of 15.3%. All 33 tech companies that had reported by August 1 beat earnings estimates. Performance within this elite group has been uneven. NVIDIA (+54%), Meta (+30%), and Microsoft (+21%) were leaders, largely driven by their clear narratives and execution in AI. In contrast, Apple (-3.99%) and Tesla lagged, with Apple penalised for its perceived delay in AI monetisation.

 Best Performing ETFs of Q3 2025

These dramatic stock-specific movements are unfolding against a backdrop of considerable macroeconomic tension and shifting sectoral trends. All eyes are fixed on the Federal Reserve, with the market anxiously awaiting its upcoming meeting. The prevailing expectation is for a new rate cut, but it is far from certain. Underlying this hope are persistent concerns, as U.S. inflation remains stubbornly above the central bank’s target, the federal debt has ballooned to over thirty-six trillion dollars, and doubts are growing about the feasibility of a true “soft landing” for the economy. The relentless rally in the technology sector, while profitable for some, is breeding a sense of unease, with many seasoned investors warning of the increasing risk of a sudden correction. This risk is amplified by what appears to be excessive confidence in the power of monetary easing to sustain high valuations indefinitely. Further contributing to the instability are persistent inflationary pressures and a concurrent rise in consumer credit, which together create a fragile underpinning for the economy. In this environment, many market participants may be underestimating the profound structural and macroeconomic risks at play. This has prompted a discernible shift in strategy among some analysts, who are advocating for a sector rotation—taking profits from overheated, high-flying stocks and reallocating that capital into undervalued names that may offer a greater margin of safety against a potential market pullback.This dynamic and bifurcated market offers a clear path for strategic portfolio reallocation. The critical task for investors is to carefully balance the attractive, high-conviction opportunities presented by undervalued, high-quality companies against the undeniable momentum in select growth names. However, it remains essential to maintain a vigilant watch on the broader macroeconomic landscape. The dual pressures of lofty technology valuations and persistent inflation concerns are powerful forces that could swiftly reshape the market narrative. Success in the current climate will likely depend on a disciplined, selective approach that does not lose sight of the fundamental difference between price and value.