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:
Weekly Market Update: Stocks Rise 1.35% as Tech Sector Gains
Bonds Might Be Losing Money, but There Is a Bright Side
Why Investors Shouldn’t Hold Their Breath for Interest Rate Cuts
January Inflation Report ‘Throws Cold Water’ on March Fed Cut
DeepSeek Shows There Is No Longer One “AI Trade,” but Many
8 Top-Performing High Yield Bond Funds
Stocks have slid into a holding pattern after their rally in early January, caught between growing worries about renewed inflation pressures and optimism about the economy. This past week, stocks shuddered briefly but then seemed to shrug off inflation news, with the Morningstar US Market Index gaining 1.35%.
While inflation concerns have been bubbling since the November election, the news has been pretty good–that is, until this week, when the Consumer Price Index came in hotter than expected for January. Not only did the report throw cold water on the idea of a Fed interest rate cut in March, but expectations are also rapidly fading for rate cuts in 2025. As Sarah Hansen reports, the bond market is now priced for just one measly cut this year, and one big Wall Street firm is saying the Fed is done cutting rates. Find out more here.
This dynamic has thrown some sand into the gears for stocks, more so for the bond market. Since November, the broad bond market is in negative territory. But as Dan Lefkovitz writes, there may be a silver lining for investors in this selloff.
Beyond the Fed, investors continue to digest the implications for big tech stocks from the late January revelation that China’s DeepSeek R1 artificial intelligence model has less need for the most advanced semiconductors. Gabe Alpert checked in with some top stock fund managers on what they think is next for the AI trade. Their conclusion: The rising tide won’t lift all boats. Check it out.
Lastly, we have a few screens for you. Bella Albrecht has eight top-performing high-yield bond funds, including offerings from BlackRock and Fidelity. We’ve also got the latest look at newly overvalued stocks (a well-known pizza chain is looking a little too hot), as well as 10 newly undervalued stocks (a list that includes a venerable computer maker and a heavy machinery company).
Be sure to visit our Markets page for our latest coverage and live stock market updates, along with our weekly calendar of key upcoming data and events.
