Consumer stocks, international, small caps, healthcare opportunities highlighted for second half of 2025
From Morningstar: 2025-06-27 04:46:00
At the Morningstar Investment Conference in Chicago, Dominic Pappalardo and Philip Straehl highlighted opportunities in international stocks, small caps, global consumer discretionary stocks, and healthcare names in equity markets. They recommend a large overweight position in US Treasuries and a slight overweight position in emerging markets in fixed-income markets.
Pappalardo noted the dramatic selloff in April followed by a rebound in US equities. International markets outperformed the US in the first half of 2025, with regions like Germany and Latin America up close to 30%. Economic data has remained stable with factors like GDP, unemployment, and inflation showing consistency.
Straehl identified consumer discretionary, healthcare, international, and small-cap stocks as opportunities due to valuation discounts. Factors affecting consumer stocks include cost inflation, sluggish Chinese growth, and tariff rates. He expects international stocks to outperform US stocks in the next 10 years with an 8% return on developed-market stocks and an 11% return on emerging-market stocks.
Pappalardo sees value in fixed income for downside protection and income generation. He recommends holding high-quality fixed-income insurance, with US Treasuries offering yields over 4% and emerging-market debt trading at a discount. He advised against corporate credit due to expensive valuation relative to credit spread ratios. 1. The stock market surged today, with the S&P 500 reaching a record high of 4,239.18. This comes as investors remain optimistic about the economy’s recovery from the pandemic, with strong corporate earnings and low interest rates driving the market rally.
2. In other news, the unemployment rate fell to 5.8% in May, down from 6.1% in April. This marks a significant improvement in the labor market, with employers adding 559,000 jobs last month. The hospitality and leisure sectors saw the largest gains, as businesses continue to reopen.
3. The Biden administration announced a plan to donate 80 million COVID-19 vaccine doses to countries in need by the end of June. This initiative is part of a global effort to combat the pandemic and ensure equitable access to vaccines. The US will distribute doses through COVAX, a global vaccine sharing program.
4. On the tech front, Apple unveiled new privacy features at its annual Worldwide Developers Conference. The updates include Mail Privacy Protection, which prevents senders from knowing when an email is opened, and iCloud+ with enhanced privacy protections. These changes aim to strengthen user privacy and security across Apple’s ecosystem.
Read more at Morningstar: Consumer Stocks Stand Out Among Opportunities for…