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In this week’s newsletter:
Remember when tariff headlines would drive markets up and down in the flash of a social media post? Well, Friday was a throwback to that, as traders suddenly decided to push the market down 2.7%, apparently based on President Donald Trump’s threat to impose new tariffs on China. As a result, Friday’s decline was the worst since the heart of the tariff turmoil in April, and stocks finished the week down some 2.5%, with energy names being the prime culprit.
To some degree, this was noise. Rewind to Wednesday, and the S&P 500 was hitting yet another record high. But as Morningstar’s chief US economist Dave Sekera notes, thanks to a near-straight-up rally since the spring, there isn’t much room for error. Check out Sekera’s fourth-quarter outlook. He thinks the market is on a tightrope, and he suggests where long-term investors can find opportunities in a somewhat pricey environment.
Another key trend this year has been the big decline in the US dollar, which has ended a rally going back to 2010. This has important implications for trade, inflation, and the relative performance of non-US investments. Will the dollar continue to fall? Here’s Morningstar’s take.
We’re also wrapping up our quarterly markets coverage this week, which includes outlooks and top stock picks for each sector from our equity analysts. Check out their takes on technology, healthcare, and energy stocks, among others. For all of Morningstar’s quarterly coverage, see our summary landing page.
Among the sectors with big gains this year are utilities. For most of their history, these stocks have been dull, defensive, and largely owned for their dividends. But the AI boom has turned electricity into a hot commodity, and utilities now look a lot more like growth stocks. Sarah Hansen examines this potential secular shift in a key industry.
On the subject of dividend-paying stocks, Morningstar Indexes strategist Dan Lefkovitz notes that though the market is at record highs, companies have been buying back their own shares at a frantic pace. Lefkovitz explains why this may not be good news for dividend investors.
To make it a dividend trifecta, this week, we updated our monthly screen for undervalued stocks that just raised their payouts. We have three names, including one of the biggest tech companies on the planet.
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.
