Skip to Content
Quarter-End Insights

Morningstar's Take on the First Quarter

Our analysis of the first quarter in stocks and funds.

Morningstar's analysts have provided in-depth reviews and outlooks across equity sectors and fund categories for the first quarter of 2021.


Quarterly Market Outlook: North American Stocks Only a Little Overvalued
The broad equity market is trading at a 3% premium to our fair value estimates.

Economic Outlook: U.S. Will Be Ready to Restart After Mass Vaccination
Consumers are ready to spend.

Drugmakers and Managed-Care Firms Still Look Undervalued
We don't expect any major changes to U.S. healthcare policy.

Utilities Shaking the Interest-Rate Stigma
Strong fundamentals should allow the sector to continue producing positive returns even as interest rates climb.

Outperforming Basic Materials Leaves Few Bargains
Opportunities in green hydrogen could benefit industrial gas companies.

Communication-Services Investors Warm Up to Smaller Media Stocks
The giants still have an edge in this rapidly changing market, though.

Energy Climbs as Vaccine Rolls Out and Oil Prices Rise
Even after the rally, the sector is undervalued, with the average stock trading at a 9% discount.

Tech Pullback Reveals Some Attractive Opportunities
Software is the most attractive subsector.

Financials Stocks Should Handle Rising Interest Rates Better Than Other Sectors
Most of the sector is fairly valued.

Transportation, Construction Optimism Lifts Industrials
We expect the U.S. to increase spending on missiles, missile defense, and space militarization.

Vaccine Rollout a Big Lift for Hotels and Retail Real Estate
Sector trades at a 4% premium to our fair value estimates.

Consumer Cyclical Is Poised for a Boom in 2021, but Bargains Are Scant
We expect leisure travel to return in the coming quarters.

Consumer Defensive Trading at a 10% Premium
We're keeping an eye on online grocery shopping.

10 Undervalued Wide-Moat Stocks
Here's a peek at the cheapest constituents of the Morningstar Wide Moat Focus Index--as well as names that have been added and cut.

Drugmakers and Managed-Care Firms Are Poised for Growth
These areas remain undervalued even though valuations for the overall healthcare sector look a bit high.

Vaccine Rollout Drives Energy's Rise
But the sector's current tailwinds are likely unsustainable, so investors should prioritize high-quality businesses with stable balance sheets.


Another Quarter of Gains for the U.S. Equity Market
Value drives U.S. equity market gains in the first quarter.

The First Quarter in Bond Funds
Rising interest rates unsettle bond markets.

The First Quarter in International Stock Funds
The recovery continues.

Download the quarter-end data.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.