Is It Too Late to Lock In Higher Bond Yields?

Plus: Why the stock market rally makes sense, is the bank stock rally over, and what’s next for the Fed. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=52846&elqTrackId=1e38729568e049e783d3f05bf38a1272&elq=5c5c9c3b843d4f42b93a098f677e3f01&elqaid=52846&elqat=1&elqCampaignId=26711) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] In this week's newsletter: - [Where to Invest in Bonds Now]( - [Why the Magnificent Seven’s Pull on the Stock Market Makes Sense to BlackRock’s Li]( - [Fed on Track for June Rate Cuts and More]( - [Why Big Bank Stocks Are No Longer Cheap]( - [After Nvidia’s GTC Conference, We Raise the Stock’s Fair Value to $910]( Stocks hit yet another set of record highs this week, with help from friendly words from Federal Reserve Chair Jerome Powell. It seems Fed officials aren’t too worried about [higher-than-expected readings on inflation]( and an economy that is chugging along at a faster pace than most expected. So while officials say that earlier expectations of five rate cuts this year were too aggressive, the [Fed is still penciling in three](. Morningstar’s chief US economist [Preston Caldwell thinks]( the Fed is wrong, and that not only will inflation fall faster than it anticipates, but that this year’s rate cuts will also turn out to be larger than expected. (For a refresher on how often prognosticators - including Fed officials - are wrong about the Fed’s moves, [here’s our piece from earlier this year]( For investors, the prospect of rate cuts might tarnish one silver lining of the Fed’s aggressive rate hikes: higher yields. But in the bond market, that isn’t necessarily going to be the case. Sarah Hansen spoke to bond fund managers about [where they see opportunities to lock in these higher yields](. Aside from the Fed meeting, it was a relatively quiet week for the stock market, where the path of least resistance is clearly higher. With stocks up 9% already in 2024 and 30% for the past 12 months, we spoke to [BlackRock global chief investment strategist Wei Li]( about her outlook for the market, in particular whether she’s worried about the rally being so heavily concentrated in a relatively small number of stocks (aka the Magnificent Seven). If there’s a poster child for this rally, it’s Nvidia. Morningstar equity strategist Brian Colello has his latest valuation update on the semiconductor chip designer, whose stock is up an eyepopping 250% over the past year. You can find [Colello’s deep dive into Nvidia’s prospects here](. Bank stocks have also been seeing big moves. After taking a beating during last spring’s [regional bank crisis]( these stocks have bounced and are no longer trading in bargain territory. We look at whether the bank stock rally has run its course and if there are still attractive names. As always, check out our [Markets page]( for our latest coverage and live stock market updates, along with our [weekly calendar]( of key upcoming data and events. Did a friend forward this email? [Sign up here](. [Where to Invest In Bonds Now]( [Where to Invest In Bonds Now]( The Fed is signaling rate cuts ahead. Here’s where to lock in higher yields. Sarah Hansen [Find Out More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Why Big Bank Stocks Are No Longer Cheap]( [Why Big Bank Stocks Are No Longer Cheap]( Despite positive fundamentals, the bank rally may not continue. Sarah Hansen [Fed on Track for June Rate Cuts and More]( [Fed on Track for June Rate Cuts and More]( We’re looking for deeper rate cuts than the Fed’s dot plot suggests. Preston Caldwell [Should You Invest In Japan Now That Rates Have Risen?]( [Should You Invest In Japan Now That Rates Have Risen?]( The key question for investors is whether the stock rally can be sustained. James Gard [After Nvidia’s GTC Conference, We Raise the Stock’s Fair Value to $910]( [After Nvidia’s GTC Conference, We Raise the Stock’s Fair Value to $910]( We’ve taken a fresh look at our model assumptions and we’re more optimistic about future industry capital expenditure on AI graphics processors. Our fair value for the stock has been raised from $730 to $910. Brian Colello [Why The Magnificent-Seven-Driven Stock Market Rally Makes Sense to BlackRock’s Li]( [Why The Magnificent-Seven-Driven Stock Market Rally Makes Sense to BlackRock’s Li]( Earnings and the outlook for tech stock growth support the move higher in stocks. Sarah Hansen [New Dividend Stocks: Can Meta and Salesforce Help Revive the Classic Strategy?]( [New Dividend Stocks: Can Meta and Salesforce Help Revive the Classic Strategy?]( Also, Morningstar forecasts five interest-rate cuts in 2024, and why Adobe’s outlook is slightly disappointing. David Harrell, Ivanna Hampton, Preston Caldwell [Reddit Stock Surges in IPO ]( [Reddit Stock Surges in IPO]( Shares of the buzzy social-media platform climbed 48% from their IPO price. Sarah Hansen [Why We Think 5 Interest-Rate Cuts Are Coming in 2024]( [Why We Think 5 Interest-Rate Cuts Are Coming in 2024]( With expected improvement in inflation, Morningstar expects more rate cuts than the Fed’s own forecast. Preston Caldwell, Ivanna Hampton [What’s Happening In the Markets This Week]( [What’s Happening In the Markets This Week]( Consumer confidence, GDP revision, and personal income on deck. Bella Albrecht [The Best US Stock Index Funds]( [The Best US Stock Index Funds]( Their prices are very much right. John Rekenthaler [3 Great Balanced Funds]( [3 Great Balanced Funds]( Bring peace of mind to your portfolio with these core holdings. Jason Kephart [The Most Popular ETF for Tracking the S&P 500]( [The Most Popular ETF for Tracking the S&P 500]( A rock-bottom fee adds to the exchange-traded fund’s recipe for success. Mo'ath Almahasneh [Bryan Armour: Is Index Investing’s Superpower Unstoppable?]( [Bryan Armour: Is Index Investing’s Superpower Unstoppable?]( A Morningstar researcher discusses rising passive share, bitcoin ETFs, and the future of active management. Christine Benz, Dan Lefkovitz Popular This Week [The Best Technology Stocks to Buy]( These 7 undervalued stocks offer attractive prices in a predominantly overvalued sector. Sbidag Demerjian [5 Stocks to Buy From the Best Money Managers]( These undervalued stocks are popular with top-rated concentrated fund managers. Susan Dziubinski [The Best Dividend Funds]( These dividend ETFs and mutual funds earn high ratings from Morningstar in 2024. Tori Brovet [Is Your Fund Under Pressure From Outflows?]( Look out for these four problems to see how your fund is shifting. Russel Kinnel [Top 10 Things to Know About Building a Diversified Portfolio]( Here’s how some key asset classes fare as portfolio diversifiers and what that means for building your portfolio. Amy Arnott [Why the Rise of Index Investing Isn’t Slowing Down Anytime Soon]( Investors have long preferred actively managed fixed-income funds, but even that has been shifting to passive. Jessica Bebel Get Top Stock Picks and Market Insights Every Week on The Morning Filter. Every Monday morning, Susan Dziubinski sits down with Morningstar Chief U.S. markets strategist Dave Sekera to discuss what's on his radar, new Morningstar research, and stock picks or plans for the week ahead. [Watch Now.](morningstar/streams?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=52846) Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2024 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602