Dave Sekera, Chief U.S. Market Strategist; Preston Caldwell, Head of U.S. Economics
The Pendulum Swings Too Far: U.S. Equity Markets are Undervalued
Often times, equity markets can act like a pendulum in the short run, quickly swinging from overvaluation to undervaluation. According to a composite of the stocks under our coverage, we think now is one of these times.
As much as we opined that the equity market was overvalued coming into the year, we think stocks have fallen too much and offer a significant amount of value for long-term investors. In our 2022 Outlook, we noted that the slowing rate of economic growth, tightening monetary policy, inflation running hot, and rising interest rates all presented headwinds that the market would need to contend with this year.
In this continuation of our popular quarterly Market Outlook series, we’ll provide:
• Insights on the most undervalued sectors and stocks across the 700 stocks we cover in the U.S.
• 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.
Dave Sekera, CFA, Chief U.S. Market Strategist
Preston Caldwell, Head of U.S. Economics, Morningstar