Smart investor: Top-cap growth funds, tariffs, the economy and the experts on the 2025 Outlook

Want to stay informed with market insights and investment ideas from Morningstar? Sign up for my weekly Smart Investor newsletter here.

After a soft start to the year, stocks and bonds rebounded strongly in the past week. As Sarah Hansen reports, the catalyst for the twin gains was December’s consumer price index report, which showed core inflation coming in on the softer side of expectations. Against this background, Morningstar’s US market index rose 3.1% on the week, while bond yields fell back from their highest levels in over a year. But long-term interest rates remain significantly higher than just a few months ago.

Was the CPI report really that good? On the one hand, the Federal Reserve is still expected to pause its rate cuts. But Morningstar Chief Economist Preston Caldwell saw a lot to like under the hood.

But the CPI report does not address concerns that the new presidential administration and the Republican Congress will adopt policies that could exacerbate inflationary pressures. This week, we’ve updated our investor’s guide to the next Trump administration, which looks at what could affect your portfolio.

Additionally, Caldwell takes a deep dive into the potential impact Trump’s proposed tariffs could have on the US economy. As he explains, it depends a lot on which countries are targeted.

Speaking of outlook, Christine Benz is back with her annual look at what some of Wall Street’s biggest money managers expect from bonds and stocks in 2025. The big takeaway: It might be time to downgrade your expectations for long-term returns.

Meanwhile, earnings season kicked off last week with the big banks releasing fourth-quarter results that investors mostly cheered. See what our analysts thought about JPMorgan, Wells Fargo, Citi and Bank of America.

Finally, we have our weekly fund screens of the top performers across key equity and bond fund categories. This time we look at the best performing high growth equity funds and there is a clear winner. Tip: It’s a well-known Boston-based fund company.

Okay, that wasn’t really the last topic. It’s actually a surprise column from John Rekenthaler, who came out of retirement to write a must-read on how to interpret the stock market’s post-election rally through the eyes of the late Ben Graham. Don’t miss it.

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