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Market Update

Wait and See if Value Rally Holds, Fund Managers Say

Despite record Dow surge, value stocks are way behind growth.

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This past week's flight to so-called old-economy stocks gave a boost to long-suffering mutual funds that invest in value stocks, but the jolt was far too weak to allow them to catch up with more aggressive offerings, which have been riding the wave of the so-called new economy.

Far from calling an end to the bear market in value stocks, or those whose price is low in relation to fundamentals such as earnings and sales, some value-fund managers were taking a wait-and-see attitude. "Two days just doesn't mean anything," said Preston Athey, manager of T. Rowe Price Small Cap Value (PRSVX).

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.