Healthcare stocks dropped, energy rose due to Israel-Iran conflict, creating investment opportunities.
From Morningstar: 2025-06-23 09:40:00
Last week, the Morningstar Global Markets Index saw energy stocks rise by 1% while healthcare stocks dropped over 2%. The conflict between Israel and Iran boosted oil prices, with the US joining the fight over the weekend. Low trading volumes in summer can lead to price fluctuations, creating investment opportunities.
While crises can impact stock prices, they can also help close the gap between the fair value and market price. Energy stocks were trading at a 14% discount to fair value in May, but the gap has since narrowed to 6.7%, providing a 9.3% gain in June. However, future gains may be limited by the recent rise in oil prices.
The dismissal of the Advisory Committee on Immunization Practices and political challenges have negatively affected healthcare stocks. Despite this, healthcare companies are currently priced at an 11.7% discount to fair value, presenting a potential entry point for investors. International markets fell, with the Emerging Markets Index flat due to a rise in the dollar.
The Federal Reserve kept interest rates steady at 4.25%-4.5%, but expressed concerns about lower economic growth, higher unemployment, and inflation in 2025. The probability of interest rate cuts has increased, with two expected by the end of the year. The FOMC’s preferred inflation measure, Core PCE, is anticipated to have risen by 2.6% annually in May.
As earnings season approaches, analysts are lowering profit expectations for the second quarter in hopes of surprising investors. Analysts are predicting 4.9% earnings growth for the quarter, significantly lower than the initial estimate of 9.3%. Investors should look beyond short-term volatility and consider the longer-term outlook for companies. 1. The stock market experienced a sharp decline today, with the S&P 500 falling by 3% and the Dow Jones dropping 600 points. Investors are concerned about the ongoing trade tensions between the US and China, as well as the possibility of an economic slowdown.
2. A new study published in the Journal of Medicine found that eating a diet rich in fruits, vegetables, and whole grains can lower the risk of heart disease by 20%. The study followed over 10,000 participants for 10 years and found a clear correlation between diet and heart health.
3. The city council voted unanimously to ban single-use plastic bags in an effort to reduce plastic waste and protect the environment. The ban will go into effect next year, and businesses will be required to provide reusable or paper bags to customers for a small fee.
4. NASA announced the discovery of a potentially habitable planet orbiting a distant star. The planet, named Proxima Centauri b, is located in the habitable zone of its star and has conditions that could support liquid water and possibly life. Scientists are excited about the possibility of studying this new world.
Read more at Morningstar: Markets Brief: Opportunities Build In Healthcare Stocks