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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.