Smart Investor: What’s Next for Bond Yields, 40 Newly Cheap Stocks, and Tech IPOs

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With just a couple of days to go in 2024, the Morningstar US Market Index is on track for a second consecutive year of gaining more than 25%. The S&P 500, meanwhile, is looking at similar gains, which would mark the first time since 1997 and 1998 that the index has clocked in with back-to-back returns north of 26%.

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As we’ve been noting, these gains are particularly impressive given that one of the key tailwinds for stocks —expectations for lower interest rates—has faded at the end of the year, with the Federal Reserve now much more cautious about the scope of rate cuts in 2025.

As was the case in 2023, technology stocks have been a big driver of overall market returns this year. One window into investor bullishness on tech can be seen in the performance of recent tech IPOs. Our colleagues over at PitchBook highlight the massive returns on a handful of these newly minted stocks, such as Tempus AI, which is up nearly 90%, and Reddit, which has more than doubled this year. Check out the story here.

So, what’s next for the markets? This week and next we’ll be highlighting more of our 2025 market outlooks, starting with a couple more from the team at PitchBook LCD digging into expectations for key segments of the credit market. We’ve got a look at the 2025 outlook for the booming area of private credit as well as what could be in store for distressed debt.

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Speaking of bonds, Gabe Alpert checked in with some top money managers for their takes on where bond yields are going next year. Find out here what fund managers at BlackRock, Allspring, and BNY Mellon are thinking.

Also, Susan Dziubinski and Dan Lefkovitz chat about why dividend stocks lagged in 2024 along with some dividend-paying names that Morningstar analysts think are attractive buys right now.

Lastly, this week’s screen for newly undervalued stocks hit a gusher, with 40 names entering 4- and 5-star territory, according to Morningstar’s stock analysts. The list includes some of the biggest energy stocks as well as a company that has been one of the biggest names in tech for decades.

Be sure to visit our Markets page for our latest coverage and live stock market updates, along with our weekly calendar of key upcoming data and events.