Morningstar

Smart Investor: What’s Next for the Markets, Undervalued Dividend Raisers, and Bond Investing for Yield

We wrap up our coverage of the markets and the week.

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This week’s highlights:

Where to even begin.

This past week, we saw one of the biggest one-day stock market rallies in history as President Donald Trump again reversed direction by announcing a 90-day pause in many countries’ tariffs. But at the same time, he ratcheted up the trade war with China, which threatens real damage to the economies of both the US and China.

Stocks, while remaining extremely volatile, aren’t even the real story here. Investors should pay close attention both to the surprising rise in Treasury bond yields and to the decline in the value of the US dollar to a three-year low against the euro. Both trends could prove to be canaries in the coal mine about global investors turning their back on the United States as a safe haven. Meanwhile, one safe haven has been gold, which hit record highs this past week, and analysts say it could be primed for more gains.

As Preston Caldwell, Morningstar’s senior US economist, writes, even with the pauses, the effective embargo of China through tariffs will be enough to drive down US economic growth and push inflation higher. The irony is that Trump’s trade war is coming at a time when progress on reducing inflation was coming back online, as could be seen in the good news from the March Consumer Price Index report.

In addition to helping navigate this historic level of confusion in the markets, we’re doing our best to help look forward. Sarah Hansen previews an earnings season where much of the focus will be forward guidance and, indeed, on whether companies decline to provide an outlook because of the uncertainty. We spoke to BlackRock’s Russell Brownback about how he’s approaching the bond market and why he sees opportunities among attractive yields.

Also this week, Ivanna Hampton spoke with Dominic Pappalardo, chief multi-asset strategist for Morningstar Investment Management, about what might lie ahead for the markets and how investors can approach their portfolios in this environment.

For more of Morningstar’s coverage of the tariff turmoil and what it means for your portfolio, check out our landing page reachable by clicking here.

Lastly, we’re still keeping up with our regular screens, including our month look at undervalued dividend-paying stocks have raised their payouts. This time around, we found eight companies, including a venerable cloud computing name and a semiconductor stock.

As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our weekly calendar of key upcoming data and events.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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