Why We See Interest Rates Falling Drastically in 2024

Plus: Undervalued industrials stocks, good news for stock market bulls, and where to invest in bonds now. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=46836&elqTrackId=ab822c5eb01443548d07c5ace7705a89&elq=1648b597515d41efb6be4bd518ea3f63&elqaid=46836&elqat=1&elqCampaignId=23068) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] In this newsletter: - [Why We See Interest Rates Falling Drastically in 2024]( - [Markets Brief: Another Piece of Good News for Stock Market Bulls]( - [6 Undervalued Wide-Moat Industrials Stocks]( - [Where to Invest in Bonds as Interest Rates Peak]( - [9 Top-Performing Small-Value Stock Funds]( - [Undervalued Substitutes to Overvalued Stocks]( Here’s another one of my favorite bits of colorful Wall Street jargon: “the pain trade.” It’s the notion that markets will move the way that will hurt traders the most. This year, with investors wary of stocks and many people convinced the market would be flat, the pain trade was up. Now here we are with the market up nearly 20% from the start of the year and an eye-popping 27.8% since last October’s bear market lows. What’s notable is that it’s not just the so-called Magnificent Seven leading the move higher. In our weekly Markets Brief, we look under the hood of the rally and see what’s driving the push and what it could mean from here. As for those Magnificent Seven and other big winners, it may be time to do a little pruning. But where to put your money to work? Adam Fleck offers up a “[Substitute Seven]( of undervalued stocks for your portfolio. In the background, the Federal Reserve raised interest rates yet again, and as we [flagged last week]( it also talked tough about keeping rates higher to fight inflation. It’s now looking like the Fed will keep rates at current levels through the end of the year. However, Morningstar senior U.S. economist Preston Caldwell thinks 2024 could see the Fed sharply cutting rates. Here’s his take on the latest Fed meeting and his [outlook for big rate cuts](. For bond investors, this presents a new dynamic, with yields staying high for now but potentially moving down next year. How should investors handle their bond portfolio to make the most of this opportunity? Morningstar senior U.S. strategist David Sekera looks at [where to invest in bonds now](. When it comes to other opportunities to put money to work, our weekly stock screen looks for [high-quality undervalued industrials stocks]( which have lagged this year after outperforming in 2022’s bear market. And for our weekly funds screen, we hunt for the [top-performing small-value funds](. Lastly, earnings season is in full swing. Among this week’s highlights: - [Is Disney Stock a Buy Going Into Earnings?]( - [Is Alphabet Stock a Buy, Sell, or Fairly Valued After Earnings?]( - [Ford: Remarkable Strength As Pro Segment Profits Explode]( - [Microsoft: Solid Performance, With Azure Strength Offset by Margin Pressure in 2024]( As always, check out the [Markets page]( on Morningstar.com for our latest coverage and our new [weekly markets calendar]( highlighting key economic reports and corporate earnings. Did a friend forward this email? [Sign up here](. [Why We See Interest Rates Falling Drastically in 2024]( [Why We See Interest Rates Falling Drastically in 2024]( We see steep Fed rate cuts coming in 2024 as inflation subsides. Preston Caldwell [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Is the Stock Rally Broadening?]( [Is the Stock Rally Broadening?]( The “Magnificent Seven” rally gives way to wider gains. Tom Lauricella, Caryl Anne Francia [Weekly Markets Planner: Economics Calendar, Company Earnings, and More]( [Weekly Markets Planner: Economics Calendar, Company Earnings, and More]( July jobs report plus earnings from Amazon, Apple, SoFi, and Uber are next at bat. Caryl Anne Francia [6 Undervalued Wide-Moat Industrials Stocks]( [6 Undervalued Wide-Moat Industrials Stocks]( High-quality names, including Equifax and TransUnion, are trading at attractive prices. Jülide Sengil [Retirement in America: Were We Better Off 50 Years Ago?]( [Retirement in America: Were We Better Off 50 Years Ago?]( Examining nostalgia for the golden age of retirement. John Rekenthaler [7 Undervalued Substitutes to Overvalued Stocks]( [7 Undervalued Substitutes to Overvalued Stocks]( Loaded up on Apple, Tesla, and other market darlings? Pruning may be prudent. Adam Fleck [Slowing Inflation Provides Hope of a Soft Landing, but Plenty of Challenges Remain]( [Slowing Inflation Provides Hope of a Soft Landing, but Plenty of Challenges Remain]( U.S. markets reflect a renewed sense of optimism, but other areas indicate ongoing concern. Michael Manetta [After Earnings, Is Tesla Stock a Buy, a Sell, or Fairly Valued?]( [After Earnings, Is Tesla Stock a Buy, a Sell, or Fairly Valued?]( As the firm cuts prices and sacrifices near-term profit to drive volume growth, here’s what we think of Tesla stock. Seth Goldstein [Is Netflix a Buy, a Sell, or Fairly Valued After Earnings?]( [Is Netflix a Buy, a Sell, or Fairly Valued After Earnings?]( Here’s our take on what to think of Netflix earnings and stock. Neil Macker [Is Charles Schwab Stock a Buy, a Sell, or Fairly Valued After Earnings?]( [Is Charles Schwab Stock a Buy, a Sell, or Fairly Valued After Earnings?]( Here’s what we think of Schwab’s earnings and stock. Michael Wong [Undervalued by 25% and Yielding 5%-Plus, This Wide-Moat Stock Is a Buy]( [Undervalued by 25% and Yielding 5%-Plus, This Wide-Moat Stock Is a Buy]( This dividend stock has the wind at its back, too. Eric Compton [Commercial Real Estate Is in Trouble, but Not for the Reason You Think]( [Commercial Real Estate Is in Trouble, but Not for the Reason You Think]( Offices are only part of the story. Madeline Hume [My 8 Biggest Financial Mistakes]( [My 8 Biggest Financial Mistakes]( I’ve avoided most of the major pitfalls, but I don’t have a perfect record. Amy C. Arnott [3 Great Multisector Bond Funds]( [3 Great Multisector Bond Funds]( Don’t ignore recent yields. Paul Olmsted [Is International Investing Obsolete?]( [Is International Investing Obsolete?]( What the globalization of company revenue means for investment portfolios in the U.S. Dan Lefkovitz [Going Into Earnings, Is Disney Stock a Buy, a Sell, or Fairly Valued?]( [Going Into Earnings, Is Disney Stock a Buy, a Sell, or Fairly Valued?]( Watching profitability on streaming, Iger’s contract, and theme park attendance. Neil Macker [When Will the Fed Start Cutting Interest Rates?]( [When Will the Fed Start Cutting Interest Rates?]( Our latest economic forecast for interest rates, inflation, and GDP growth. Preston Caldwell [Growth Stocks Lift ESG Funds in Q2]( [Growth Stocks Lift ESG Funds in Q2]( The Magnificent Seven ran with the bulls, and these ESG funds reaped the benefits. Francesca Campo [Best Sustainable Companies to Own: 2023 Edition]( [Best Sustainable Companies to Own: 2023 Edition]( We believe these companies’ strong ESG management practices give them a long-term advantage. Leslie Norton [Best International Companies to Own: 2023 Edition]( [Best International Companies to Own: 2023 Edition]( These companies from various corners of the globe are well positioned for the future. Ruth Saldanha [Best Innovative Companies to Own: 2023 Edition]( [Best Innovative Companies to Own: 2023 Edition]( These companies are expected to benefit from disruptive technologies. Sachin Nagarajan Chart of the Week [9 Top-Performing Small-Value Stock Funds]( [9 Top-Performing Small-Value Stock Funds]( Funds from Invesco, DFA, and Pimco are among those with the best returns. Sadhika Thapa [Read More]( Share: [facebook]( [twitter]( [linkedin]( Earnings [GM: Stock Selloff Does Not Look Justified to Us]( [Visa: Growth Holds Up]( [Alphabet: Google Search and YouTube Growth Doubts Are Subsiding; Stock Remains Attractive]( [Microsoft: Solid Performance, With Azure Strength Offset by Margin Pressure in 2024]( [GE: Travel Boom Still Lifting the Firm’s Wings]( [AT&T: We Think the Market Is Overly Worried About Lead and Customer Growth]( [Snap: Advertisers Still Not Coming to the Platform Despite Impressive User Growth]( [Coca-Cola: Resilient Volume Buttressed by Innovation and In-Market Execution]( [ServiceNow: Strength Abounds With Premium AI Solutions Coming in September]( [Ford: Show Remarkable Strength As Pro Segment Profits Explode]( [Meta: AI Investments Are Paying Off, Reels Monetization Improving]( [Tilray: Shares Up 15% on Return to Profit Growth]( [Boeing: Runway Seems To Be Clearing, Space and Defense Aside]( [Cullen/Frost: Results Meet Expectations, but Outlook Dims Slightly]( [Exxon: Decline Largely Expected, but Long-Term Outlook Unchanged]( [Procter & Gamble: Margins Rebuild Even as Investments Persist]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. 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