Best-Performing Stocks of Q2

Plus: 33 undervalued stocks, get ready for another rate hike, top sector stock picks. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=46246&elqTrackId=b60eba7e19fc47abbeba3063757eb12a&elq=ac77062cc36a47198621611283da9d79&elqaid=46246&elqat=1&elqCampaignId=22723) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] In this newsletter: - [Fed Seen On Track to Raise Rates After Solid June Jobs Report]( - [14 Charts On New Bull Market for Stocks, Mixed Returns for Bonds in Q2]( - [Q2's Best-Performing Stocks]( - [There’s Good News for Investors in Rates Staying Higher for Longer]( - [33 Undervalued Stocks]( - [Q2 in Review and Market Outlook]( Late last year, folks were already talking up the most anticipated recession in history, and here we are still waiting in July. Now, any economist worth their salt will remind you that the monthly jobs report—always so highly anticipated in the markets—is at best a coincident indicator, if not a lagging picture of the economy. So ignore the headlines about the jobs report “miss.” It was a still a solid report, and likely too hot for the Federal Reserve’s liking. We take a [look under the hood of the jobs report]( and what it means for the Fed. Normally that might be bad for the markets, but there’s good news for investors in a “higher for longer” rate environment in the bond market. Our [weekly Markets Brief]( digs into what a solid economy and higher rates mean for your portfolio. It may have been a holiday-shortened week capped by the jobs report, but it was also the kickoff of the third quarter. So this week, we rolled out [our quarterly markets review and outlook coverage](. In the review category, we started off with our overview of the quarter that was for stocks, bonds, commodities, and even crypto, [told by Lauren Solberg in 14 charts](. It’s a great read for anyone looking to capture the last three months. Next up, we’ve got our look at the best- and worst-performing stocks from the second quarter—lists that include [Wayfair, Palantir, and Nvidia]( on the upside and EVgo, Advance Auto Parts, and Dish Network among [the biggest losers](. Check out both stories for more details of the stocks with the biggest moves. If you’re a mutual fund investor, there’s a very good chance you own at least one of the funds we highlight in Katherine Lynch's Q2 performance wrap-ups of the [largest stock funds]( and [largest bond funds](. Also this week, our stock analysts are out with their top stock picks across all 11 stock sectors, including [technology stocks]( [communications services]( (an oddball sector that ranges from Meta to Verizon to Disney), [real estate]( [financial services]( and [energy](. For the coming week, watch for our coverage of the latest inflation news, along with the return of our weekly stock and fund screens. As always, check out the [Markets page]( on Morningstar.com for our latest coverage and live stock market updates. [Best-Performing Stocks of Q2 2023]( [Best-Performing Stocks of Q2 2023]( Wayfair, Palantir, and Nvidia stocks were among the biggest gainers during the second quarter. Caryl Anne Francia [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Worst-Performing Stocks of Q2 2023]( [Worst-Performing Stocks of Q2 2023]( EVgo, Advance Auto Parts, and Dish Network were among the biggest decliners during the second quarter. Caryl Anne Francia [There’s Good News for Investors in Rates Staying Higher for Longer]( [There’s Good News for Investors in Rates Staying Higher for Longer]( With the Fed believed to be readying another rate hike, bonds offer attractive yields even after inflation. Tom Lauricella, Caryl Anne Francia [How the Largest U.S. Stock Funds Performed in Q2]( [How the Largest U.S. Stock Funds Performed in Q2]( While growth funds powered ahead, value funds made paltry gains. Katherine Lynch [How the Largest Bond Funds Performed in Q2]( [How the Largest Bond Funds Performed in Q2]( Big bond funds from Vanguard, iShares, and American Funds lagged as rates rose. Katherine Lynch [Fed Seen On Track to Raise Rates After Solid June Jobs Report]( [Fed Seen On Track to Raise Rates After Solid June Jobs Report]( Despite some moderation of hiring, the labor market is tighter than the regulator would like. Lauren Solberg [Fixed-Income Sector Results Mixed in Q2]( [Fixed-Income Sector Results Mixed in Q2]( Lingering bond market volatility in the second quarter rewarded investors who took risk. Thomas Murphy [Is Eli Lilly Stock a Buy, Sell, or Fairly Valued After Its 2023 Rally?]( [Is Eli Lilly Stock a Buy, Sell, or Fairly Valued After Its 2023 Rally?]( With a 30% rally on optimism about two key drug lines, here’s what we think of Eli Lilly stock. Damien Conover [3 Emerging-Markets Funds to Consider]( [3 Emerging-Markets Funds to Consider]( This might be the time to get in. Russel Kinnel [Is Hedging with Nontraditional Investments Worth the Effort?]( [Is Hedging with Nontraditional Investments Worth the Effort?]( Most hedges do not make enough money to justify their inclusion in investors’ portfolios. John Rekenthaler [Kenvue Stock: Put This Wide-Moat Name on Your Watchlist]( [Kenvue Stock: Put This Wide-Moat Name on Your Watchlist]( There’s a lot to like about Johnson & Johnson’s spinoff. Here’s what we think the shares are worth. Keonhee Kim [33 Undervalued Stocks]( [33 Undervalued Stocks]( Here’s the new list of Morningstar’s top underpriced analyst picks for third-quarter 2023. Susan Dziubinski [The Best Investments for Taxable Accounts]( [The Best Investments for Taxable Accounts]( With some care, investors can build a tax-efficient portfolio that’s diversified, too. Christine Benz [4 Stocks to Buy in 3Q 2023]( [4 Stocks to Buy in 3Q 2023]( Plus our second-quarter stock market recap and third-quarter outlook. Susan Dziubinski, David Sekera [Growth-Stock Funds Fly High but Fall Short in 2023′s First Half]( [Growth-Stock Funds Fly High but Fall Short in 2023′s First Half]( Most stock-pickers missed the market’s best-performing sectors and stocks. Robby Greengold [Bond Funds Post Mixed Results in Q2]( [Bond Funds Post Mixed Results in Q2]( Lingering bond market volatility in the second quarter rewarded investors who took risk. Thomas Murphy Chart of the Week [14 Charts On New Bull Market for Stocks, Mixed Returns for Bonds in Q2]( [14 Charts On New Bull Market for Stocks, Mixed Returns for Bonds in Q2]( A look back at the market’s second-quarter performance as investors wrestled with a changing outlook for the Fed. Lauren Solberg [Read More]( Share: [facebook]( [twitter]( [linkedin]( Quarter-End Insights [Q2 2023 in Review and Market Outlook]( Our analysts and specialists put the performance trends of stock, sectors, bonds, and funds in the second quarter of 2023 into perspective, and look ahead with a fresh market outlook. [Industrials: Fewer Stocks Are Undervalued, but Investment Opportunities Still Exist]( Easing supply chains and a more constructive outlook on the global economy have benefited the industrial distribution and industrial products businesses. [Healthcare: Innovative Products and Defensive Nature Should Support Solid Results in Uncertain Times]( We see plenty of opportunities in healthcare, especially in biopharma, healthcare providers, healthcare plans, and diagnostics and research. [Basic Materials: Sector Underperforms, Creating Opportunities Amid Decline]( Our top picks include Albemarle and Dow. [Utilities: Still Running in Place]( The sector has remained flat due in large part to a long-overdue valuation correction. [Consumer Cyclical: Despite Macro Headwinds and Near-Term Uncertainties, There Are Ample Opportunities to Invest]( We expect strong travel demand to persist, and restaurant sales have held up remarkably well. [Financial Services: The Financial Sector Is Undervalued, but There Are Clouds On the Horizon]( Expectations for interest rates have risen, and charge-offs could climb above pre-pandemic levels. [Energy: Stocks Losing Steam as Commodity Doldrums Weigh on Sector]( Global oil prices are down even as natural gas prices also weather a tough spell. [Consumer Defensive: Competitively Advantaged Firms Positioned to Withstand Promotional Resurge and Evolving Consumer Behavior]( We see opportunities in consumer-packaged goods and the alcoholic beverages space. [Real Estate: Sector Continues to Underperform Despite High Same-Store NOI Growth]( Park Hotels & Resorts and Ventas are among our top picks. [Communication Services: As Meta and Alphabet Soar, Traditional Telecom Comes Under Renewed Pressure]( While pessimism weighs on telecom valuations, wireless carriers poised to reap benefits of recent price increases. [Technology: After Taking Hits in 2022, Tech Hits Some New Highs in 2023]( We see fewer buying opportunities even as the sector is now an outperformer to the broader market. Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. 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](. © 2023 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602