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This week’s highlights:
Investors got their relief rally this past week, but reality limited the gains. Thanks to the ceasefire in the Iran war announced Tuesday, stocks and bonds gained, while oil prices eased back. But the good feeling didn’t last long, due to concerns about the durability of the ceasefire and the knowledge that the war’s impact could be felt for some time to come.
As Karen Gilchrist wrote this past week, analysts say it will take weeks—and in some cases, years—for the damage from the Iran war to be reversed. Oil prices are not seen heading back to pre-war levels any time soon. For more on why investors shouldn’t expect a quick return to normalcy, check out this story.
The first signs of the oil spike’s effect on inflation could be seen in the March CPI report. While the overall CPI increase was somewhat smaller than expected, and core inflation (which excludes food and energy costs) was also soft, analysts say the full effects of the war across the economy have yet to be seen.
This past week, we also finished up our first-quarter market wrap-ups and second-quarter outlooks. (You can check out our landing page for the complete coverage.) One trend dominating the stock market has been the significant selloff in software stocks, fueled by growing concerns about how artificial intelligence may upend the business models of legacy software stocks. After the damage, what’s next? Morningstar manager research analyst Robby Greengold compiled comments from top stock fund managers at Fidelity and Morgan Stanley, among others, on how they are thinking about software stocks in an AI world.
Another key trend has been the outperformance of small-company stocks after years of lagging behind large-cap stocks and the overall market. Morningstar senior US strategist Dave Sekera offers his thoughts on what has been driving the improved performance of small caps and how investors should approach this segment of the market.
When it comes to SpaceX’s giant IPO expected in the next few months, opinionated investors likely fall into one of two buckets. The first is: “It’s Elon; I’m in no matter what the price.” The second is: “It’s Elon; I wouldn’t touch this with a ten-foot pole.” But there is also a third bucket that encompasses most investors, even if they don’t realize it: Index fund owners who will have no choice but to have the stock in their portfolio. That’s because at a potentially mammoth $1.75 trillion market cap, SpaceX stock will quickly become among the largest holdings in US stock index funds and ETFs. Morningstar manager research analyst Zachary Evens digs into how the big index providers are thinking about handling the SpaceX IPO and what it could mean for investor portfolios.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming data and events.