Smart Investor: Picking Winning Stocks, Behind the Bond Yield Surge, and Nvidia Earnings Outlook

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In this week’s newsletter:

• Market Wrap: Stocks Fall as Industrials and Utilities Decline
• Why Bond Yields Are Rising—and Might Keep Heading Higher
• For Emerging Market Stock Funds, Concentration Risk May Be Eclipsing Macro Risk
• Private Credit Is Showing More Signs of Distress
• Going Into Earnings, Is Nvidia Stock a Buy, a Sell, or Fairly Valued?
• What Europe’s Extreme Weather Means for Its Stocks and Economy
• Can You Identify Winning Stocks in Advance?
• What’s Happening in the Markets This Week

Stocks may have stumbled a bit this past week, but the main focus was elsewhere, as bond yields have been steadily climbing across the world’s biggest markets. This past week, the US Treasury 30-year bond yield rose to the point that the Treasury took what analysts called an extremely unusual (and unlikely to succeed) effort to push rates back down. We dug into why bond yields are moving higher from Japan to the United States, and why those factors might not end anytime soon.

One such factor is the massive AI infrastructure buildout. Another corner of the financial world being driven by such trends is emerging markets, where concentration among just a few AI-related stocks is at extreme levels. Leslie Norton spoke with fund managers about how they are navigating this unusual landscape.

Semiconductor stocks will also be in focus in the coming week when Nvidia reports second-quarter earnings. Morningstar’s Brian Colello weighs in on what he’ll be watching when the chip behemoth reports, and he explains why he thinks it will be another “beat and raise” quarter.

Executives at big Wall Street firms are trying to sell private credit funds to individual investors. When asked about credit problems in this market, the execs’ response has been “Nothing to see here, folks.” But the data tells a different story. PitchBook LCD has its latest dive into private credit quality, and the numbers show growing stress.

An entirely different stress is shaping Europe’s outlook: extreme heat. Our Germany correspondent, Antje Schiffler, looks at the toll weather is taking on Europe’s economy, and why it may linger even if summer 2027 is “normal.”

Lastly, Morningstar Indexes’ Dan Lefkovitz revisits his discussion with Professor Hendrik Bessembinder, whose research has found that while the stock market overall has generated strong returns, most individual stocks haven’t. Check out the transcript of Lefkovitz’s Q&A with Dr. Bessembinder at the Morningstar Investment Conference earlier this summer.

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