Market Outlook - Second Quarter 2019
Market Outlook - 2nd Quarter 2019
The U.S. stock market snapped back from 2018's loss to post a strong gain in the first quarter of 2019. After falling more than 14% in the fourth quarter of last year and more than 5% for all of 2018, the Morningstar U.S. Market Index climbed 12.5% for the year to date through March 27, 2019. All areas of the Morningstar Style Box rose, but, in general, growth beat value, smaller-cap stocks led larger equities, and the technology, energy, and communication-services sectors made the largest advances.
From a bottom-up perspective, global equities are now only slightly undervalued. The median stock across our 1,500-plus coverage now trades 4% below our fair value estimate compared with a 14% discount toward the end of 2018. Not surprisingly, we also see fewer compelling investment opportunities, with the number of 5-star stocks down by half since year-end.