As summer and the midpoint of the year approach, investors are noticing that sticking with stocks seems to be paying off.
Clare Hart, recognized as Morningstar’s “outstanding portfolio manager” of 2024, advises maintaining a consistent strategy. She is concluding nearly 20 years as the lead manager of JPMorgan’s Equity Income Fund OIEIX, which has achieved an annualized gain of 9.4% since 2004, surpassing Morningstar’s large value category by over a percentage point.
Hart’s fund selects stocks based on three criteria: quality, reasonable valuation, and dividend payments. They also favor companies with reliable management, strong industry positions, and robust structures. In an interview with MarketWatch, Hart notes they seek undervalued companies that are often innovative and disruptive within their sectors. Examples include Philip Morris International, which is shifting towards a “smokeless” future, and Procter & Gamble, a leader in market innovation.
Regarding Big Tech, the fund holds Microsoft and a smaller position in Apple compared to a few years ago due to valuation concerns.
With 32 years of industry experience, Hart has navigated numerous market crises.
In the portfolio, financials hold the largest weight, with Wells Fargo (WFC) leading. Reflecting on last year’s Silicon Valley Bank issues, she mentions, “We don’t believe this is a major financial crisis, but there’s definitely a lack of confidence in banks. We saw a good opportunity in the banks and understood the situation in Silicon Valley well enough to not expect a severe crisis.”
Wells Fargo has operated under a Federal Reserve-imposed balance sheet cap since 2018, requiring them to manage their business differently. She anticipates that once this cap is lifted, possibly by early 2025, Wells Fargo will operate even more efficiently.
Another key holding, Charles Schwab (SCHW), presented a buying opportunity during last year’s banking troubles, which raised concerns about its deposit base. She recalls that a conference call with Schwab reassured them that the company was stable and not altering its business.
“Schwab is a solid long-term investment,” she said. “Their extensive online tools make them a relevant platform for investors.”
Energy also comprises a significant part of the fund, with ConocoPhillips (COP) as the second-largest holding, and Chevron (CVX) and Exxon (XOM) in the top ten. She favors these companies because they adapt their investments based on valuations.
“We are optimistic about the energy sector overall. Although the world is transitioning from fossil fuels, these companies understand that shift and are adapting,” she said.
She notes that the rise of ESG funds has led some investors to move away from oil companies, creating opportunities. “Transitioning from fossil fuels will take time, and it’s crucial to invest in major companies leading this change efficiently and sustainably.”
Hart, who will pass the fund management to Andrew Brandon and David Silberman in September to spend more time with her family, has one lingering concern.
“The persistent inflation consumers face, not just at grocery stores but across all expenses, is troubling. Despite this, spending continues. I worry that we might soon reach a point of inflation fatigue, which should impact the market more significantly than it has so far.”
The markets
The S&P 500 and Nasdaq Composite are higher, with Treasury yields dropping. Oil prices CL are climbing, with gold GC00 and silver SI00 jumping and the dollar weak.
| Key asset performance | Last | 5d | 1m | YTD | 1y |
| S&P 500 | 5304.72 | 0.03% | 4.01% | 11.21% | 26.14% |
| Nasdaq Composite | 16,920.79 | 1.41% | 6.23% | 12.72% | 30.40% |
| 10-year Treasury | 4.457 | 3.60 | -23.00 | 57.61 | 76.47 |
| Gold | 2344.4 | -3.53% | -0.13% | 13.16% | 20.47% |
| Oil | 78.83 | -0.49% | -4.71% | 10.51% | 8.18% |
| Data: BourseWatch. Treasury yields change expressed in basis points | |||||
The buzz
UBS now predicts the S&P 500 will hit 5,600 this year, surpassing their recently revised estimate of 5,400.
Starting Tuesday, a new “T+1” trading rule requires all U.S. stocks, bonds, and ETFs to settle within one day.
GameStop’s stock is rising after the company announced on Friday that it completed a $933.4 million stock sale.
USCellular and TDS are selling wireless and spectrum assets to T-Mobile in a $4.4 billion deal.
Atlantica Sustainable’s stock is dropping as the renewable-energy company agreed to go private at a price below recent trading levels.
Virgin Galactic shares are up after Switzerland’s central bank increased its holdings.
DraftKings and Flutter Entertainment stocks fell following the approval of a new Illinois sports betting tax proposal by the state senate.
This week’s data includes the Fed’s preferred inflation measure. Before that, the S&P Case-Shiller home price index reached a new high in March. Consumer confidence data is due at 10 a.m. Minneapolis Fed President Neel Kashkari speaks at 9:55 a.m., and Fed Governor Lisa Cook and San Francisco Fed President Mary Daly will speak at 1 p.m.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
| GME | GameStop |
| NVDA | Nvidia |
| AMC | AMC Entertainment |
| TSLA | Tesla |
| AAPL | Apple |
| NIO | Nio |
| FFIE | Faraday Future Intelligent Electric |
| AMD | Advanced Micro Devices |
| SMCI | Super Micro Computer |
| TSM | Taiwan Semiconductor Manufacturing |
The chart
Goldman Sachs analysts offer this chart that shows the overall likelihood of finding employment remains at or above the prepandemic rate. That means workers continue to transition into jobs after unemployment without having to fill the gap with part-time work.
A team led by Jan Hatzius, the bank’s chief economist, say that job finding rates are particularly favorable for foreign-born, low-skilled and workers without a college degree. However, say the hiring rate is now noticeably below its prepandemic level, which is hitting new entrants to the job market hardest.
