A Russell Investment Group survey showed that 38% of domestic large-cap and small-cap equity managers think U.S. stocks are generally either fairly valued or undervalued in the third quarter, up from 28% in the second quarter. Twenty-one percent of those managers are also bullish on U.S. Treasury bonds, and 32% are bullish on investment-grade corporate bonds. The study also found that 61% of equity managers are both bullish on the health-care sector and positive about growth stocks of consumer staple companies. Among the cyclical companies that money managers favor in the third quarter are materials and energy companies. The prospect of continued interest rate hikes and a slowing macroeconomic environment also remain a concern for almost all of the managers surveyed, although 84% of the executives said they think the Federal Reserve Board will raise interest rates at a less aggressive pace over the next two quarters. The findings were part of Russell's third quarter Investment Manager Outlook, comprising responses from senior executives at 128 money management firms.