Historical Challenges Revisited

Many observers note that large cap active managers have often struggled to outperform their benchmark indexes. This was one of many insights we discussed in our recent blog “Why Not Both? Blending Active and Passive Management” we specifically called out large growth managers as having some of the most severe challenges.

Could the Tide Be Turning?

The graph below highlights how the returns of mutual funds in the Lipper US Large Cap Growth category compare to the returns of the Russell 1000 Growth Index, a commonly used large growth benchmark. The blue triangles place

Fourth quarter earnings season is nearly complete, and it has been a good one. S&P 500 companies grew profits more than 18% year over year, according to FactSet data, with mega cap technology and financial companies doing most of the heavy lifting (about seven points of growth came from each). The Magnificent Seven grew earnings by an average of 37% and financials earnings jumped 50%. But the road ahead gets tougher. With new tariffs in place and more likely on the way, on top of mounting evidence that the U.S. economy is slowing, achieving double-digit earnings growth in 2025, as many expect, will be a tall task.

Big Numbers

The latest weekly sentiment survey data from the American Association of Individual Investors (AAII) released today shows significantly bearish sentiment from investors, marking the fourth consecutive week of predominantly bearish sentiment. 

Concerns of an economic slowdown brought on by potential tariffs, stickier inflation, and the possibility of higher-for-longer interest rates, coupled with a meaningful pullback in the technology sector, namely artificial intelligence (AI) related stocks, has dented sentiment in recent weeks. 

The percentage of individual investors who are bullish about short-term mark

Key Takeaways

• Yesterday, Treasury yields declined as investors got nervous about growth, with the 10-year yield temporarily dipping below 4.30%. 

• Consumer confidence fell in February, creating the catalyst for a decline in yields. 

• Recent signs of a downshift in growth led markets to price in two cuts by the Federal Reserve (Fed) in the latter half of this year. 

• On the plus side, improving loan demand suggests more capital expenditures. 

A Mixed Bag 

The Conference Board’s Consumer Confidence Index is composed of two main components: the Curren