Summer Shakeout amid Positive EPS Season The stock market in mid- to late-July experienced its worst stretch of the year, including its worst week since 2022. The strong start to the month sent the S&P 500 and the other major indices to all-time highs. Even following the late-month selloff, stocks entered the final partial trading week of July barely changed for the month. The stasis in the market is consistent with ongoing uncertainty. The nature of the presidential election changed dramatically over the past month. The Fed appears to be teeing up 50 basis points (bps) or possibly even 75 bps of rate cuts by the end of the year. However, no cuts appear likely until mid-September, leaving investors dangling. Consumers too are waiting for rate cuts, whether they know it or not, because a lower fed funds rate is the linchpin to getting the overall interest rate environment down from its multi-year peak. Amid the uncertainty, the second-quarter earnings season mostly has been a bright spot. While good past-quarter earnings are always important, investors hold their breaths regarding current-quarter outlooks. Companies have generally reaffirmed the moderately positive outlook for the full year, which is still trending toward high single-digit to low double-digit EPS growth for 2024. Up and Down in July The S&P 500, which came into mid-year up 14.5% for 2024, piled on an additional 3.8% in the first half of July. The index was up 18.8% for the year at its all-time closing peak of 5,667 on 7/16/24. By 7/19/24, the S&P 500 had shed over 100 points. And by 7/25/24, the index had lost more than 260 points from its all-time high, to close at 5,399. Given the strong start to the month, followed by equally strong selling, the S&P 500 entered the final partial trading week of July up 14.4% for the year - barely budged from where it stood at mid-year. The Trump assassination attempt and the switch in Democratic presidential contenders occurred in the space of two weekends. However, rather than point to political upheaval, most investors attributed the July selling to a much-needed correction in extremely overbought names in the Information Technology and Communication Services sectors. While some wealth flowed out of all equities in the late-July period, much of the proceeds from tech stock redemptions flowed into other sectors. With three trading days remaining in the month as of 7/26/24, Information Technology (IYW) was down 4% for the month of July; and Communication Services (XLC) was down just under 2%. Where did the money go? Lots flowed into the Financial sector (IYF), which was up 7% for the month. Upcoming cuts in the fed funds rate will pinch banks' net interest margins. However, the 2Q earnings season for the sector has been highly positive, featuring significant recovery in fee-based businesses such as investment banking. Those upcoming lower interest rates can also be expected to rekindle loan and mortgage growth, which have been an ongoing negative amid generally positive bank earnings results. Other winning sectors in July include Industrials (IYJ), up 4.5%; Utilities (IDU), up 3.3%; Healthcare, up 2.9%; Consumer Staples, up 2.5%; and Materials, up 2.4%. Most of these sectors rose with the market early in the month and then were able to hold onto their gains on generally positive second-quarter earnings results. As we prepared this report, the market on 7/29/24 was oscillating, rising in the morning on earnings optimism toward traditional growth leaders and then selling off by midday on fears those companies would disappoint. The market response to upcoming earnings and other major non-technology companies could determine not just the July outcome, but also the market's performance in August and into summer-end. Second-Quarter Earnings Season The above-cited July 29-through-August 2 period will be the biggest week in 2Q24 EPS season, with about one-third of S&P 500 components companies reporting results. We will be sure to weigh in on the biggest earnings week, which culminates with equally big economic news, the nonfarm payrolls for July on 8/2/24. In the interim, and based on 2Q24 EPS data through 7/26/24, the second-quarter earnings season has been a success so far. With just over 180 companies (36%) of S&P 500 component companies reporting, second-quarter 2024 earnings from continuing operations are up 9.1% on a share-weighted basis compared with 2Q23 EPS. According to Bloomberg, 2Q24 earnings are up 14.8% on a market-cap-weighted basis. This premium of market-cap-weighted to share-weighted EPS growth is consistent with recent quarters and is reflective of the earnings outperformance of the largest capitalization companies compared with small and mid-caps. According to the other earnings compiling agencies, FactSet reports 9.8% earnings growth for 2Q24 as of 7/26/24; and Refinitiv is reporting 12% earnings growth. Variation in performance measurements among FactSet, Refinitiv and Bloomberg reflect minor differences in calculating continuing operations earnings as well as different prior-year baselines. For the remainder of our 2Q earnings report card, we will mainly source Bloomberg data unless otherwise noted. An unusually high percentage of companies (31%) have reported negative earnings for 2Q24. The average EPS decline for the negative-earnings group, which is heavily weighted in Energy, Materials, and Real Estate, is 16%. For the 69% of companies reporting positive EPS, average earnings growth is a robust 22%. A key reason investors are optimistic about second-half 2024 earnings growth is that the negative drag from Energy, Materials, and Real Estate is expected to diminish in 3Q24 and particularly in 4Q24. About 79% of companies have reported positive EPS surprises in 2Q24, compared with (again) a high 14% of companies reporting negative surprises. According to FactSet, 78% of companies have reported positive EPS surprises. These percentage are above the 10-year average of 74%. For these companies, the median beat against consensus estimates is 5.2% (FactSet has it at 4.4%). For the first time in several quarters, the median beat against expectations is below the 10-year average of 6.8%. At the sector level, the strongest earnings growth is coming from Financial, Information Technology, and Utilities - all up in the 16%-17% range year over year. Communication Services 2Q24 earnings are up 15%. Other sectors reporting positive EPS growth include Healthcare, Consumer Discretionary, Consumer Staples, and Industrials, in descending order; all are up in the 2%-4% range. As noted, Energy, Materials, and Real Estate are all down; Materials is off in high single-digits, while Energy and Real Estate earnings are down 20%-21% from a year earlier. From a statistical standpoint, 36% would be considered a fairly reliable and predictive sample size. Timing of the remainder of 2Q24 earnings season, however, may introduce some variability. Over 61% of Financial companies have already reported, in what has been a better-than-anticipated season for the sector. Only 23% of Energy companies have reported; given similar sensitivity off all component companies to key commodities (oil and natural gas), the contribution from this sector will likely continue to pull down overall results. The swing sector is likely to be Information Technology. Fewer than 30% of tech companies have reported. Further, 2Q earnings from the heavy hitters (Apple, Microsoft, etc.) are not reflected in the data discussed above. Earnings from the big Healthcare, Industrial, and Consumer Discretionary (AMZN) companies could also play an outsized role. For 2Q24, Argus continues to model high-single-digit continuing-operations EPS growth for S&P 500 component companies. We see a higher likelihood that our forecast misses on the upside than on the downside. In other words, once all the component companies are tallied, we are more likely to see low-double-digit EPS growth for 2Q24 than we are to see mid-single-digit EPS growth. Conclusion Investors will veer away from earnings analysis for a few hours on the morning of 8/2/24 to assess the state of the labor economy. Argus Chief Economist Chris Graja, CFA, forecasts 185,000 new nonfarm payroll jobs for July, approximately in line with the 188,000 consensus forecast. The bigger focus will be on the unemployment rate, which was 4.1% in June. If July unemployment hits 4.2%, that would trigger the Sahm indicator. When unemployment rises 50 bps within a cycle, the Sahm rule posits, recession follows or has already begun. In this scenario, deteriorating labor markets become 'a self-reinforcing feedback loop,' according to former New York Fed president William Dudley. Secular and demographic factors may argue for structurally lower unemployment rates over the long term. This includes ongoing retirements from within the huge Baby Boomer cohort, and a smaller pool of workers from the generational cohorts that follow available to fill vacant boomer positions. Triggering the Sahm rule, nonetheless, would be a warning sign and presumably a wake-up call for the Fed to focus on the fight in front of it (preventing recession) and not the nearly won war against inflation.

Second-quarter earnings season kicks off this week, with PepsiCo and Delta Air Lines reporting before the open on Thursday, and J.P. Morgan, Wells Fargo, Citigroup, Bank of New York Mellon, and Fastenal reporting before the open on Friday. It is also "inflation" week, with June CPI and Initial Claims at 8:30am on Thursday, June PPI at 8:30am on Friday, as well as the University of Michigan Consumer Sentiment at 10:00am Friday. Of note, the CBOE FedWatch Tool is showing a 71% chance that the Fed cuts 25 basis points (bps) at the September 18 meeting and a 74% probability of 50+ bps cut by the end of 2024. The S&P 500 (SPX) has been remarkably tranquil even though only a handful of stocks are propelling the index higher. The SPX has now gone 345 trade days without a daily 2% drop, according to Carson Investment Research. One would think that we are overdue, but there have been periods when this kind of calm market has persisted for much longer. The last time we saw this much calm was back in 2016 to 2018, when the SPX went 351 days without a big dip. Prior to that, and the longest streak since 1950, was the 2003-2007 period, when the SPX went an incredible 949 days without a 2% drop. Other periods of time that featured extended serene price action were 1994 to 1996, 1983 to 1986, 1970 to 1973, 1966 to 1969, and 1963 to 1966. Some of these periods were followed by additional calm and some were, of course, followed by very nasty conditions. So much for the saying that a low VIX is bearish for stocks. (Mark Arbeter, CMT)

Second-quarter earnings season kicks off this week, with PepsiCo and Delta Air Lines reporting before the open on Thursday, and J.P. Morgan, Wells Fargo, Citigroup, Bank of New York Mellon, and Fastenal reporting before the open on Friday. It is also "inflation" week, with June CPI and Initial Claims at 8:30am on Thursday, June PPI at 8:30am on Friday, as well as the University of Michigan Consumer Sentiment at 10:00am Friday. Of note, the CBOE FedWatch Tool is showing a 71% chance that the Fed cuts 25 basis points (bps) at the September 18 meeting and a 74% probability of 50+ bps cut by the end of 2024. The S&P 500 (SPX) has been remarkably tranquil even though only a handful of stocks are propelling the index higher. The SPX has now gone 345 trade days without a daily 2% drop, according to Carson Investment Research. One would think that we are overdue, but there have been periods when this kind of calm market has persisted for much longer. The last time we saw this much calm was back in 2016 to 2018, when the SPX went 351 days without a big dip. Prior to that, and the longest streak since 1950, was the 2003-2007 period, when the SPX went an incredible 949 days without a 2% drop. Other periods of time that featured extended serene price action were 1994 to 1996, 1983 to 1986, 1970 to 1973, 1966 to 1969, and 1963 to 1966. Some of these periods were followed by additional calm and some were, of course, followed by very nasty conditions. So much for the saying that a low VIX is bearish for stocks. (Mark Arbeter, CMT)

U.S. stocks rose on Thursday ahead of the April jobs report due out on Friday. Apple (AAPL) rose 6% after hours when it announced a $110 billion stock buyback plan. The two-year Treasury yield fell to 4.889% while the 10-year yield was down to 4.58%. The Dow was up 0.9%, the S&P 500 gained 0.9% and the Nasdaq rose 1.5%. Crude oil traded above $79 per barrel and gold rose $3 to $2313 per ounce.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Laboratory Corp. Of America Hl (LH); Micron Technology Inc. (MU); Oracle Corp. (ORCL); Invesco Ltd (IVZ) and the Focus List deletions are Advanced Micro Devices Inc. (AMD); American Express Co. (AXP); Crowdstrike Holdings Inc (CRWD); Unitedhealth Group Inc (UNH).

No matter how you slice the price action from the last two quarters or past five months, the market may well have more upside ahead -- possibly in double digits. This is, of course, not a certainty, as there is always the possibility that something odd (say a pandemic) comes out of left field. But it is not rare for the S&P 500 (SPX) to be up for two consecutive quarters (at least during certain market periods), nor is it that uncommon for the index to be up for five straight months. Let's just hope that the solar eclipse next week is the only "odd" event we have for the rest of the year.

Depending on today's close, the three major indices might achieve 16 positive weeks out of 18 on their northern glide path. So far, this surely is a "leap" year. The Nasdaq finally made an all-time high (ATH), jumping above the last ATH from November 19, 2021. Yes, that took a long time (about 27.5 months). But after the 2000 high, it took the index more than 15 years to recover -- so just a couple years isn't so bad. Is this a significant breakout? As we have said, great breakouts to ATHs occur after multi-year bases, not after vicious rallies.

Stock indices dipped in October 2023, with the S&P 500 falling a sharp 10% off summer highs. Looking at 13F filings of big institutional portfolios, we see that the big guns were busy last quarter taking advantage of that dip. Citadel Advisors went on a buying spree, adding to its $100 billion portfolio across a range of sectors. As did D.E. Shaw, adding to its $67 billion portfolio. Vickers Stock Research, a subsidiary of Argus Research Group, analyzes insider trading and institutional stock ownership. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters and have come in for 4Q24. We review 13Fs of major activists to determine core holdings and new purchases. Activist investing is now less about generating a short-term return and more about achieving long-term returns through an active management/investor partnership. Based on data from Vickers, here are some recent new purchases and key holdings of activist investors, as well as other high-profile money managers.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Our stock/bond asset-allocation model, which we call the Stock Bond Barometer, is now indicating that stocks are the asset class offering the most value at the current market juncture. But not by much. The model takes into account current levels and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The output is expressed in terms of standard deviations to the mean, or sigma. The mean reading, going back to 1960, is a modest premium for stocks, of 0.16 sigma, with a standard deviation of 0.98. The current valuation level is a 0.04 sigma discount for stocks, which is now below fair value and down sharply from a 0.85 sigma premium at the end of 3Q. Other valuation measures also show reasonable multiples for stocks. The current forward P/E ratio for the S&P 500 is approximately 18, which is within the normal range of 10-21 and down from 23 at the end of 2021. The current S&P 500 dividend yield of 1.4%, while below the historical average of 2.9%, is up from an ultralow 1.2% also in 2021. And that current S&P 500 dividend yield is 35% of the 10-year Treasury yield, compared to the long-run average of 39% and the all-time low of 18% during 1999. We expect the results from our stock-bond valuation model to continue to improve, as interest rates head lower in 2024 and EPS growth picks up. Based in part on the output from our Stock Bond Barometer, our recommended asset allocation model for moderate accounts is 70% growth assets, including 68% equities and 2% alternatives; and 30% fixed income, with a focus on core and opportunistic segments of the bond market. On duration, we recommend focusing on the short end of the curve.

U.S. stocks were lower on Wednesday morning ahead of the Fed's rate decision later this afternoon. ADP's latest employment report shows 107,000 jobs were added in January, down from 164,000 in December and lower than expected. Shares of Paramount Global are up on news that billionaire Byron Allen has made a $14.3 billion takeover offer for Paramount Global. Meanwhile, Microsoft, Advanced Micro Devices and Alphabet are all trending lower after reporting fourth-quarter results. The S&P 500 is down 0.9%, the Dow 0.1%, the Nasdaq lost 1.5% and the Russell 2000 fell 0.5%. Crude oil was down 2%, while gold rose $17.50 to $2068 per ounce.

With the Santa Claus rally having fallen flat, attention turns to the first five trading sessions of January. And so far, three out of four weren't good. After that, the performance of stocks in all of January will be examined as key to 2024's performance.

Perspective is very important when analyzing the stock market. We know that a few stocks have accounted for most of the 21% year-to-date gain in the S&P 500 (SPX). And after another nice day on Tuesday, the index is only 3.2% from its January 3, 2022, all-time closing high (ATH) of 4,796.56. That's a long comeback from the 2022 bear market (-25%).

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

High mortgage rates are weighing on builders' confidence, but there are reasons to be optimistic. The National Association of Home Builders said that builder sentiment was down for a fourth consecutive month in November, but housing conditions may improve in the coming months helped by a recent decline in Treasury rates. The NAHB is forecasting a 5% increase in single-family starts in 2024 as "financial conditions ease with improving inflation data in the months ahead." D.R. Horton, the largest U.S. builder, could be a beneficiary. The company's fiscal 4Q orders jumped 39% even with high mortgage rates. On the company's November 7 earnings call, Chairman Donald Horton offered the following: "The supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable." DHI offered incentives to keep prices affordable and plans to continue them in 2024. The company's board showed its confidence by raising the full-year dividend by 20%. Existing-home sales for October declined 14.6% from prior-year levels to 3.79 million homes at a seasonally adjusted annual rate. We expect new-home sales for October to rise to 700,000 (SAAR) from 577,000 a year earlier, but decline from 759,000 in September. The S&P/Case-Shiller National Home Price Index for September will be released on November 28. With inventories tight and unemployment low, we expect home prices to remain elevated. The Zillow Home Value Index was up 1.1% YOY in September and up 1.8% in October. In this tumultuous housing market, Argus recommends Lennar, D.R. Horton, and Toll Brothers -- companies with solid financial strength that are adapting to market conditions.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Jim typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Linde Plc. (LIN); Crowdstrike Holdings Inc (CRWD); Advanced Micro Devices Inc. (AMD); Vertex Pharmaceuticals, Inc. (VRTX) and the Focus List deletions are Adobe Inc (ADBE); Albemarle Corp. (ALB); Catalent Inc. (CTLT); Intel Corp. (INTC).

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stubborn Inflation, Sturdy Consumers: Our Monthly Survey of the Economy, Interest Rates, and Stocks

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

August has been rough for stocks. The markets are down from their highs, although the year overall has been upbeat for stocks -- especially compared to a dismal 2022. The continued stress on the economy from higher interest rates, and questions about whether the Federal Reserve is done raising them, have weighed on valuations. Most economists are not convinced that the recession question has been answered. While there are strengths in the economy -- like the labor market and consumer spending -- inflation indicators inched up last month. The uncertain environment has impacted small-caps, mid-caps, large-caps, and even mega-caps. There is a wide range in data that shows how sectors are weathering this climate, with Communication Services up nearly 40% year-to-date but Consumer Staples down 2% for the same time period. In our opinion, some solid companies with strong financials have been oversold. For our list this week, we identified 10 BUY-rated large- or mega-cap companies across numerous industries that are selling at attractive valuations (more than 20% below their 52-week highs). They are listed according to company size, with the largest first.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Hot July: Our Monthly Survey of the Economy, Interest Rates, and Stocks

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

The Federal Reserve's interest-rate campaign halted growth in the residential and manufacturing sectors, and the sky-high dollar is proving a challenge for exports. But government spending -- an important segment of the economy -- is stepping up to help the consumer sector generate GDP growth. Over the past decade, government spending has accounted for 15%-19% of overall GDP. Some of the lower rates were during the 2010s, when Congress imposed a sequestration program in exchange for an increase in the debt ceiling in 2011. Of course, spending picked up during the pandemic, as bipartisan programs flooded the economy with $4.6 trillion (according to the Government Accountability Office). We calculate that government spending, on average, has increased at a 1.7% annualized rate over the past four years. Of the three GDP components that comprise government spending, the biggest driver has been nondefense spending, which on average has risen at an 8% rate (distorted by the pandemic, of course). Defense spending has grown at a rate below 1%, though we note a sharp acceleration to 4%-5% growth since Russia invaded Ukraine. Looking ahead, Washington has just been through another debt-cap debate, and excess growth may be limited in the quarters ahead. Still, the government remains committed to the Biden infrastructure plan as well as the Chips & Science Act -- and we anticipate that government spending will continue contributing to overall GDP growth.

After the Fed Finishes

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional stock ownership trends. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters, and have now come in from 1Q23. We review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Activists have made progress in the past year with high-profile investments into blue-chip companies such as FedEx Inc. and Union Pacific. Based on Vickers data, here are some recent new purchases and key holdings of Activist investors, as well as other high-profile money managers such as Warren Buffet of Berkshire Hathaway and Ken Griffin of Citadel Advisors LLC.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks were little changed on Wednesday morning as investors awaited the Fed's interest rate announcement and follow-up comments from Fed Chair Jerome Powell. Employment data was strong. Payroll provider ADP said that U.S. companies added 296,000 jobs in April, up from 142,000 in March and above the Reuters consensus forecast of 148,000. The Dow fell 0.2%, the S&P was flat, and the Nasdaq fell 0.3%. Crude oil traded near $69 per barrel, while gold rose $7 to $2031 per ounce.

The first-quarter EPS season is here, with some of the major financials starting to report Thursday night. In addition to that excitement, we have a couple of Federal Reserve presidents speaking on Tuesday; March CPI on Wednesday; a few more Fed speakers and March PPI on Thursday; and March Retail Sales on Friday. Remember one thing: the most-important market tell is the reaction to earnings, economic data, and Fed speakers -- not the actual numbers or the conversation.

In this edition, semiconductor chips are simultaneously in shortage and in surplus; the European banking system will be fine; technology fights back against financial criminals; and Barry Callebaut, Fineos, and Domino's Pizza.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

In 1Q23, stocks continued to recover from the bear-market lows of 2022, with the S&P 500 rising 7% for the quarter. Performance was led by last year's laggard sectors, including Communication Services and Technology. Last year's top-performing sector, Energy, was the worst in 1Q23. Financial Services, including banks, were not far ahead. The average stock in the Argus Universe of Coverage rose 4% in the quarter; the median stock advanced 2%. The average BUY-rated stock rose 5.4% and the average HOLD-rated stock gained 3.4%. Recently, we raised our sector rating on Technology to Over-Weight, and expect outperformance into 2Q -- especially if interest rates head lower. We also raised our rating on Financial Services, and the bottom five stocks in our list point to potential value opportunities.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Stocks fell on Wednesday morning ahead of the Fed's policy statement, as investors weighed more 4Q earnings reports and new labor market data. Payroll provider ADP said that U.S. companies added 106,000 jobs in January, down from a revised 253,000 in December and well below the Reuters consensus forecast of 178,000. On the earnings front, AMD rose more than 7% after the company posted strong 4Q results, helped by sales of data center chips, and pointed to a strong second half in 2023. Stryker shares also rose strongly following above-consensus 4Q sales and earnings and positive 2023 guidance. The Dow fell 0.7%, the S&P 0.3%, and the Nasdaq 0.2%. Crude oil fell 1% to $78 per barrel, while gold traded near $1945 per ounce.

One silver lining of a down market is that stocks become more affordable. During the very tough 2022 for almost all equities, the Technology sector was one of the hardest hit groups. Many Tech stocks, which are traditionally growth stocks, now offer both growth and value characteristics. When stock values pull back, especially far back, it usually is not a good time for investors to retreat. Rather, we advise that shareholders look for companies with strong managements, desirable products or services, and solid track records. For this week's list, we did exactly that in beaten-down Technology. We used the Argus Research Screening Tool and applied the following criteria: the stocks must be in the Technology sector; must be rated BUY at Argus; must carry an Argus Financial Strength rating of Medium-High or High; and must trade at least 30% below their 52-week high. Here are the top 10 results, suggesting attractive valuations.

October, as it has been many times in the past, was a wild month -- and at least a short-term bear killer. The month started out great and then the major indices fell off a small cliff and declined to new bear-market lows. But stocks had an amazing bullish reversal on October 13 and have been grinding nicely higher ever since. While it's a start, we are a long way from putting the bear fully into hibernation, despite the calendar's turn toward colder weather.

Stocks were mixed on Tuesday morning as investors awaited the September CPI report and 3Q earnings from major banks later this week. The International Monetary Fund cut its economic growth forecasts for 2023, citing the impact of the war in Ukraine, inflation, and rising interest rates. The IMF now expects global GDP to rise 2.7% next year, down from its July forecast of 2.9%. It maintained its 2022 growth forecast of 3.2%. The Dow rose 0.4%, the S&P fell 0.6%, and the Nasdaq fell 0.8%. Crude oil traded near $90 per barrel, while gold rose $2 to $1677 per ounce.

In this edition, Vocera Acquisition a Boon for Stryker's Moat, Salty Sentiment Doesn't Portend Rocky Seas for Norwegian, Rising Rates Are a Positive for Life Insurers Like Prudential, and AMD, Coupa Software, and Conagra Brands

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks rose strongly on Wednesday morning as investors weighed earnings reports from AMD, Starbucks, and CVS along with new U.S. service sector data. The Institute for Supply Management said that its nonmanufacturing index rose to 56.7 in July, up from 55.3 in June and above the Reuters consensus forecast of 53.5. The reading marked the first increase after three straight monthly declines. The Dow rose 0.9%, the S&P 0.9%, and the Nasdaq 1.8%. Crude oil fell 2% to $92 per barrel, while gold fell $19 to $1771 per ounce.

Stocks plunged on Thursday, more than wiping out their gains in Wednesday's rally, as investors reassessed the impact of rising interest rates and the Fed's ability to control inflation. On the employment front, first-time claims for state unemployment benefits rose to 200,000 for the week ended April 30, up from 181,000 a week earlier and above the consensus estimate. The data came ahead of the government's April employment report on Friday morning. The Reuters consensus calls for 391,000 new payroll jobs after a gain of 431,000 in March. The Dow fell 3.12%, the S&P 3.56%, and the Nasdaq 4.99%. Crude oil traded near $108 per barrel, while gold rose $9 to $1878 per ounce.

During the current rally, we have seen improvement in market breadth indicators -- although some remain bearish while others are only neutral. In the S&P 500, 62% of stocks are above their 50-day average (all breadth data as of the 3/25 close) from a February low of 24%, while 53% are above their 200-day, up from a recent low of 36% (which was the weakest level since June 2020). Generally, large market declines happen when this measure falls and stays below 45%, so we would like to see more improvement for the average stock in the S&P 500.