The US stock market saw valuations rise faster than the market return, driven by increases in just five stocks like Nvidia and Microsoft. Growth stocks are at a high premium, while small-cap stocks are attractively valued. However, overall market valuation offers no margin of safety for macro risks like trade negotiations and slowing economic growth.

In the tech and communications sectors, fair value increases have been significant due to artificial intelligence. Healthcare stocks have seen reductions in fair values due to government policy uncertainty. The real estate sector remains flat, while energy is undervalued. Utilities, consumer defensive, and financial sectors are overvalued, with caution advised for industrials due to slowing growth.

Read more at Morningstar: Where We See Investing Opportunities