Smart Investor: Best Industrial Stocks, Why Trump vs. the Fed is Worrying Investors, and a Sweet Spot for Bond Yields

This week’s highlights:

• Weekly Market Update: Energy Stocks Gain While Utilities Slide
• The Best Industrials Stocks to Buy
• Trump’s Pressure on Fed Is Just the Latest US Policy Concern for Global Investors
• Why the Fed’s Independence Matters to Markets, the Economy, and Your Wallet
• Vanguard’s Sara Devereux: Why It’s a ‘Terrific Environment’ for Bond Income
• 6 Key Takeaways From Examining 10 Years of Stock Performance by Sector
• Nvidia Earnings: No Signs of a Slowdown in Demand for AI Chips

It’s been a while since I’ve seen a reference to former Fed Chair William McChesney Martin’s famous “punch bowl” speech. But for American investors, business, and consumers, it’s a critical metaphor. In 1955, Martin said, “The Federal Reserve … is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.”

For now, the markets seem to be applying the “TACO trade” mentality to President Donald Trump’s efforts to exert control over the Fed. The evidence is clear: Central bankers may not be perfect, but their independence is critical to maintaining economic stability. Lowering interest rates now may juice the economy, but watch out for the inflation hangover.

We spoke with investors and strategists outside the United States about how they view the Trump administration’s push to influence the Fed, along with other headlines from this year. Check out our story about why some see growing political risks to investing in US assets.

For now, at least, investors are being rewarded for a steady-as-she goes approach. Stocks edged higher in the latest week, even as Nvidia’s artificial intelligence juggernaut seemed to leave traders wanting more. (Check out Morningstar’s take on Nvidia’s earnings and why its selloff is a buying opportunity)

We also checked in with Sara Devereux, Vanguard’s global head of fixed income, on the outlook for the bond market. While Devereux expressed concern about the deteriorating US fiscal position, she thinks that investors are in a sweet spot for bond yields.

Meanwhile, Morningstar Indexes strategist Dan Lefkovitz, looked at how the different stock sectors have historically performed. He highlights six key takeaways for investors. It’s a great read.

Speaking of sectors, we updated our look at the best industrial stocks to buy. As we noted a few weeks back, industrials have been the sleeper powerhouse in the market this year. Even with these gains, we’ve got 12 undervalued industrial stocks to consider for your buy list.

As always, be sure to visit our Markets page for our latest coverage and live stock market updates along with our full weekly calendar of key upcoming data and events.