Morningstar’s 2022 US Stock Market Outlook

2022 is starting off on very different footing than 2021. The growth rate for the U.S. economy is slowing, monetary conditions are tightening, and inflation is at its highest rate in decades. According to a composite of our equity valuations, we calculate that the broad U.S. equity market is 5% overvalued. Yet, while the market is broadly overvalued, we see upside opportunity for investors in the Value category and Small Cap stocks, both of which should benefit from continued economic prosperity. In this continuation of our popular quarterly Market Outlook series, we’ll provide: • Key valuation context that will help you explain the stock market outlook to your clients and highlight where we see value for investors today. • Our economic outlook for the U.S., covering the underlying assumptions supporting our growth forecasts and inflation projections. In our market outlook, we utilize a bottom-up perspective to determine market valuation. By leveraging off of the 1,500 companies covered by Morningstar's equity analysts, we identify which areas are undervalued versus which are overvalued. From growth stocks to value stocks and from small-cap to large-cap, we will identify where we see value today. In addition, we will review sector valuations and review individual stock valuations. Following the prepared presentation, we will be happy to address as many questions from the audience as time allows. Presented by: Dave Sekera, CFA, Chief U.S. Market Strategist Preston Caldwell, Head of U.S. Economics