Insights
into
key
market
performance
and
economic
trends
from
Dan
Kemp,
Morningstar’s
global
chief
research
and
investment
officer.
Investors
appeared
to
breathe
a
sigh
of
relief
last
week
as
the
April
Consumer
Prices
Index
(CPI)
showed
that
inflation
continues
to
slow.
Core
CPI
(which
excludes
volatile
food
and
energy
prices)
rose
by
3.6%
over
the
last
year,
a
decline
from
3.8%
in
March
and
in
line
with
the
expectations.
The
improved
inflation
data
was
accompanied
with
more
evidence
that
the
economy
is
slowing
in
the
form
of
weaker
retail
sales
and
industrial
production.
In
an
environment
where
inflation
is
seen
as
the
main
enemy,
market
participants
appear
willing
to
overlook
the
prospect
of
a
softer
economy.
Bond
Prices
Rise,
So
Do
Equities
This
sanguine
view
of
the
future
was
seen
most
notably
in
the
yield
of
US
Treasury
bonds
as
yields
fell
for
both
shorter
and
longer
term
debt.
As
a
consequence,
the
Morningstar
US
Core
Bond
index
rose
0.57%
over
the
week
and
is
up
2.32%
over
the
last
month.
Although
this
will
be
a
relief
for
bond
investors
who
have
experienced
negative
returns
in
two
of
the
last
three
calendar
years,
it
is
important
to
note
that
while
inflation
remains
the
focus
of
investors,
bonds
are
less
likely
to
provide
diversification
for
the
equity
positions
in
portfolios
as
the
prices
of
equities
and
bonds
are
more
likely
to
be
correlated.
This
may
change
if
investors
become
more
concerned
about
a
weakening
economy.
Technology
Leads
the
Way
Equity
investors
also
displayed
their
relief
at
the
improving
inflation
picture
with
the
Morningstar
US
Market
index
rising
1.6%
over
the
week.
Within
the
US
market,
technology
companies
showed
the
greatest
gains
as
investor
enthusiasm
for
AI
was
further
kindled
by
the
release
of
Chat
GPT’s
latest
model.
The
stock
prices
of
Nvidia,
Microsoft
and
Apple
all
rose
over
the
week
pushing
the
Morningstar
US
technology
index
up
2.97%.
Nvidia
is
likely
to
be
back
in
the
spotlight
this
week
as
it
releases
it
latest
financial
results
on
Wednesday.
Find
out
what
Morningstar’s
Nvidia
analyst
Brian
Colello
is
expecting
here.
Meme
Stocks
Are
Back
The
so-called
‘meme
stocks’
were
back
in
the
headlines
last
week
as
GameStop
rose
271%
before
falling
back
57%
to
end
the
week
up
58%.
For
those
who
prefer
their
rollercoaster
rides
to
be
confined
to
the
theme
park
rather
than
their
portfolio,
I
recommend
this
excellent
article
by
Morningstar
Portfolio
Manager
John
Owens
who
likens
picking
stocks
to
a
visit
to
the
grocers.
A
Lot
of
Fed
Comment,
But
Investors
Can
Tune
Out
Despite
improved
inflation
data
and
falling
bond
yields,
expectations
for
a
near
term
cut
in
interest
rates
remain
stable
(source:
CME
FedWatch).
This
may
change
this
week
as
a
paucity
of
economic
data
coupled
with
a
surfeit
of
comments
by
Federal
Reserve
officials
may
encourage
investors
to
alter
their
expectations.
While
this
can
help
the
folk
of
Wall
St.
pass
the
time,
it
has
little
to
do
with
investing
and
can
be
safely
ignored
by
those
focused
on
reaching
their
financial
goals.
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