Want to stay informed with market insights and investing ideas from Morningstar? Sign up for my weekly Smart Investor newsletter here.
This week’s highlights:
While stocks continued to eke out the occasional new record high, momentum has definitely cooled since the spring rebound. To a large degree, the market has gone sideways since early June, as evidenced by the latest week’s minor gains.
In the background, one significant change is now clear: The economy is slowing, and when it comes to the job market, it has slowed by a large margin. As we show in our coverage of the jobs report, this spring, the US economy was still generating north of 100,000 jobs a month. As of August, the three-month average for new job creation in the United States is under 30,000.
The weaker-than-expected August jobs report had bond futures traders scrambling to place bets on additional Federal Reserve interest rate cuts this year. As Sarah Hansen reports, markets are now looking for a series of rate cuts before 2025 draws to a close.
Against this backdrop, what’s next for the stock market?
Dave Sekera, chief US market strategist for Morningstar, takes a close look at the recent rally in small-company stocks. While the overall stock market looks fairly valued, Sekera notes that small caps are trading at a significant discount. However, much depends on the health of the economy. Check out Sekera’s take on where he sees the best opportunities in stocks right now.
Also this past week, we have Leslie Norton’s Q&A with longtime stock market strategist Ed Yardeni on his outlook for equities, including his take on why President Donald Trump’s attacks on Fed independence could lead to a big stock market rally—but not the kind that investors want to see. It’s a great read.
Lastly, our monthly screen is for stocks that have just raised dividends. We hunt among names with higher payouts for stocks trading at attractive prices, according to Morningstar analysts. This month we’ve got two.
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