This week’s highlights:
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“Trees don’t grow to the sky.”
This has always been one of my favorite Wall Street aphorisms, courtesy of an old bond market source. This past week, we’ve seen it play out with tech stocks, which dropped some 4% after their big 2025 rally, taking the overall market down 1.6%. To read some parts of the financial press, the selloff was attributable either to the heads of Goldman Sachs and Morgan Stanley saying there would be a stock market correction, or a sudden bout of concern about the sustainability of the massive investments in artificial intelligence. Neither explanation makes a lot of sense. It’s more likely that it’s simply been a good year, so why not lock in some profits on the mega-cap stocks that have driven the rally? We’ll be taking a closer look under the hood of the tech selloff and the broader market this coming week.
Meanwhile, Dave Sekera, chief US market strategist for Morningstar, has his stock market outlook for November. He notes that our analysts have been ratcheting the valuations on many stocks they cover, leading to the market trading at a slight 2% discount as of the end of October. However, reflecting the concentration of market forces, only six stocks were responsible for most of the dollar amount of the valuation increases. Check out Sekera’s take here on valuations and where he sees opportunities to put money to work in the market right now. For another good read on the markets more broadly, Dan Lefkovitz looks back at 2025’s “Trump trades” – which ones worked and which ones didn’t.
Meanwhile, investors have had a new element of uncertainty to navigate: the pace of Federal Reserve rate cuts. The bond market had been priced around the certainty of a cut happening in December, but the government shutdown means a lack of data on the economy. At the same time, after a long period during which investors could count on high agreement among Fed officials about the course of interest rates, their most recent meeting revealed a growing split. Sarah Hansen digs into what a divided Fed could mean for rate cuts in coming months.
Lastly, we have our monthly screen for stocks that raised dividends during October. There were 22 stocks on Morningstar’s coverage list that lifted their payouts, but only one is undervalued. Check out the story here.
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.