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Quarter-End Insights

Our Take on the Second Quarter

As the rally eases off the gas pedal, we take stock of winners, losers, valuations, and the opportunities remaining.

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The second quarter began as the first quarter ended--with stocks soaring--but the torrid run appears to have stalled since late May, and the markets have leveled off for the rest of the quarter through June 29. Altogether, the Morningstar U.S. Market Index added 15% for the trailing 13 weeks and is up 5% for the year.

Smaller was distinctively better in the second quarter, as the Morningstar Small Cap Indexes added between 21% and 22% for the trailing 13 weeks through June 29. The mid-cap indexes added between 16% and 20% for the quarter, while the large-cap indexes were the laggards with gains in the 9%-15% range. Value didn't seem to have an edge over growth. The leading components of the small-cap core index that raced higher were a diverse group, including Internet infrastructure firm  Brocade Communications (BRCD), organic grocer  Whole Foods Market (WFMI), clothing retailer  Chico's FAS (CHS), and personal smart phone maker  Palm (PALM).

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John Coumarianos has a position in the following securities mentioned above: MMM, HD, MSFT, BRK.B, JNJ, CVX. Find out about Morningstar’s editorial policies.