From Morningstar: 2025-01-06 08:33:47

Key market insights and economic trends from Dan Kemp show that despite price declines in December, 2024 saw strong gains. US stock prices favored large companies over mid-cap and small-cap stocks, with growth stocks outperforming value stocks. Inflation concerns rose as bond yields increased, but traditional inflation-sensitive sectors like basic materials and energy declined more than the broader market.

The concentration of high returns in a small market segment widened gaps in expected returns, challenging independent investors seeking market leadership changes. Market forecasts lack causation and reacting to each forecast could result in constant changes with minimal gains. Patiently applying a process to identify valuation gaps is crucial for capital allocation.

US stocks trailed other developed and emerging markets as the US dollar rose 2.6%. Morningstar analysts see investment opportunities in these markets. Tesla’s stock price saw a dramatic rise and fall following news of declining deliveries in 2024, impacting investor views on the company.

Political uncertainty under the new administration may affect businesses, but the fundamental value is expected to change less than projected. Morningstar’s head of government affairs, Aron Szapiro, provides an investor’s guide to navigate the transition. Economists await the first US employment report of 2025 for insights into market volatility.

Economic focus shifts to the upcoming US jobs report after the December Federal Reserve meeting and subsequent market movements. Expect volatility in a shortened trading week honoring former President Carter on Thursday. Stay updated on economic releases with Morningstar’s calendar. 1. The stock market saw a significant increase today, with the S&P 500 reaching a new record high of 4,401.46. Tech stocks led the way, with Apple and Amazon both posting strong gains.

2. In international news, tensions are rising between China and the United States over cybersecurity concerns. The U.S. has accused China of state-sponsored hacking, leading to increased scrutiny and potential sanctions.

3. The latest unemployment numbers are in, showing a decrease in jobless claims to 385,000 last week. This is a positive sign for the economy as businesses continue to recover from the effects of the pandemic.

4. In entertainment news, the highly anticipated “Black Widow” film has grossed over $215 million worldwide in its opening weekend. This marks a successful return to theaters for Marvel after a year of pandemic-related delays.

5. Health officials are warning of a surge in COVID-19 cases due to the Delta variant, which is highly contagious. Vaccination efforts are being ramped up in an effort to slow the spread and prevent further outbreaks.



Read more at Morningstar: Markets Brief: Stocks Stay Expensive as 2025 Kicks Off