Insights
into
key
market
performance
and
economic
trends
from
Dan
Kemp,
Morningstar’s
global
chief
research
and
investment
officer.
Meme
stocks
were
back
in
the
headlines
last
week
as
GameStop (GME) first
rose
101%
and
subsequently
fell
39%
on
Friday
to
finish
flat
on
the
week.
This
followed
the
announcement
of
a
29%
decline
in
year-over-year
sales
and
the
second
capital
raising
in
a
month.
This
reminds
us
that
while
capital
markets
are
designed
to
enable
investment,
they
are
often
used
for
speculation
and
investors
can
be
confused
between
the
two.
The
essential
difference
is
that
Investment
is
always
focused
on
the
long
term,
supported
by
research,
and
enjoys
a
positive
expected
return.
Speculation
is
any
activity
that
does
not
comply
with
those
rules.
To
understand
why
we
get
drawn
into
speculation
and
how
to
avoid
it,
check
out
this
article
by
Morningstar
behavioural
scientist
Danielle
Labotka.
Small-Cap
Stocks
Struggle
Elsewhere,
the
price
of
US
equities
rose
sharply
with
the
Morningstar
US
Market
index
up
1.06%
over
the
week.
The
path
of
larger,
growth-oriented
companies
differed
sharply
from
smaller,
value-orientated
companies
as
evidenced
by
the
Morningstar
Small
Value
index
which
fell
2.88%.
In
such
an
environment,
it
is
worth
digging
deeper
into
the
opportunities
provided
by
a
market.
Morningstar’s
new
sector
pages
can
help
you
do
this.
US
Job
Boom
The
US
employment
report
on
Friday
showed
revealed
higher
growth
than
expected,
with
272,000
new
jobs
created
in
May.
While
commentators
made
much
of
this
news
and
the
impact
of
the
future
path
of
interest
rates,
investors
were
nonplussed,
as
indicated
by
the
CME
FedWatch
tool
which
shows
that
interest
rate
expectations
for
December
were
virtually
unchanged
over
the
week.
To
put
these
latest
results
in
a
longer-term
investing
context
read
Philip
Straehl,
Morningstar
wealth’s
chief
investment
officer
for
the
Americas’
comments
on
the
release
here.
Don’t
Ignore
Bonds
In
contrast
to
equities,
core
bond
prices
have
changed
little
this
year
as
investors
have
vacillated
about
the
direction
of
the
economy
and
interest
rates.
Following
a
period
of
falling
prices,
this
lackluster
outcome
for
bondholders
can
encourage
investors
to
ignore
this
asset
class.
However,
with
higher
yields
and
lower
inflation,
it
is
a
good
time
to
consider
the
contrarian
view.
To
help
you
do
this,
Morningstar
writer
Danny
Noonan
presents
the
case
for
bonds
in
this
article.
All
Eyes
on
the
Fed
this
Week
The
focus
of
market
commentators
will
be
firmly
fixed
on
the
outcome
of
the
Federal
Reserve
Open
Market
Committee
(FOMC)
this
week.
While
few
expect
any
change
in
interest
rates,
chairman
Powell’s
comments
at
the
subsequent
press
conference
will
be
closely
parsed
for
any
hint
of
the
future
path
of
interest
rates.
While
gazing
into
a
crystal
ball
can
be
entertaining,
it
is
unlikely
to
yield
useful
information
for
investors.
For
those
who
are
serious
about
reaching
their
financial
goals,
the
virtues
of
patience,
independent
thought
and
the
hard
work
of
fundamental
research
remain
the
best
indicators
of
success.
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