Weekly Tee Up: PCE, the Fed's Fav

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.

Both the Nasdaq and the S&P 500 hit new highs on inflation data that came in as expected. Other economic data released today included initial jobless claims, which came to 215,000, up from last week's revised 212,000 and ahead of expectations. Ongoing unemployment rose to 1,905,000 from the previous week's revised 1,860,000; that raised the insured unemployment rate by 0.1% to 1.3%. The S&P 500 rose 0.5%, the Nasdaq gained 0.9%, while the Dow fell 0.1%.

Another week has flown by in early 2024, while stocks have seen more recovery highs and the major indices have seen more all-time highs. The S&P 500 (SPX) rose 1.7%, the S&P 100 popped 1.9%, the Nasdaq and the Nasdaq 100 added 1.4%, the S&P 400 tacked on 1%, and the Russell 2000 lost 0.9%. For the SPX, the "100," and both Nasdaq indices, last week was the fifteenth of 17 on the upside; it is 14 of 17 for the "400." During the 17 weeks, the SPX has gained 23.6%, while both Nasdaq indices are up over 26%. Those are great returns for a full year!

Two inflation reports were released last week. Both indicated that pricing pressures are retreating from peaks -- but inflation remains above the Fed's target of 2.0%. Progress to that level may be harder to achieve in the months ahead. According to the latest Consumer Price Index (CPI) report, the overall inflation rate in January of 3.1% was lower than the prior month's 3.4%. That's great -- except Wall Street was looking for 2.9%. The core CPI rate, excluding food and energy, didn't move at all and remains at 3.4%. What's propping up core CPI? Transportation Services (+9.5% YOY) and Shelter (+6.0%). These categories have prices that don't typically fall sharply. The other inflation report last week was the Producer Price Index (PPI). It measures pricing trends farther up the supply chain, at the manufacturing level. Here, we also saw a slowdown in the rate of decline in inflation. The core final demand PPI rate for January was 2.6%, steady month-to-month after having fallen from 4.4% a year ago. We have noted for months that progress will be slow for inflation returning to the 2.0% level. And nothing was terribly alarming in either report. Energy prices remain under control, and prices at the PPI Intermediate demand level (even farther up the value chain) continue to outright decline. We think the June 2022 CPI rate was the peak reading for the index this cycle, as the housing market cools, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed lifted the feds fund rate from 0.0% to above 5.25% over the past 18 months, and the hikes appear to be reducing inflationary pressures. We still look for the U.S. central bank to be lowering rates in 2H24 as their concern shifts more toward economic growth.

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 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 Dell Technologies Inc (DELL); Autozone Inc. (AZO); Pinterest Inc (PINS); Oshkosh Corp (OSK) and the Focus List deletions are MongoDB Inc (MDB); Old Dominion Freight Line, Inc (ODFL); Tesla Inc (TSLA); Twilio Inc (TWLO).

The "Energizer Bunny" stock market seems to have a lot of juice left, as the major indices powered to new all-time highs on Monday while smaller-cap stocks also joined in. The S&P 500 (SPX) and the S&P 100 rose 0.8%, the Nasdaq and Nasdaq 100 rallied a bit more than 1%, the S&P 400 tacked on 0.9%, and the Russell 2000 led the day, popping 1.7%. Ten of the 11 SPX sectors rose, with Consumer Discretionary, Technology, Communication Services, Real Estate, Healthcare, Industrials, Utilities, and Staples all rising 0.6% to 1.5%.

On Friday, the Bureau of Labor Statistics (BLS) likely will provide further evidence that the U.S. job market is healthy, but cooling. Last week, we saw evidence that the economy is very healthy and inflation is cooling. Thursday's Gross Domestic Product report from the Bureau of Economic Analysis showed that low unemployment and rising wages are sustaining the consumer sector as a resilient driver of GDP, even in the wake of the Federal Reserve's 11 rate hikes to tame inflation. Fourth-quarter GDP rose by a better-than-consensus 3.3%. Last Friday, the BEA reported that Personal Spending increased 5.9% on a year-over-year basis in December, fueled by a 4.7% increase in Personal Income. Evidence that inflation is slowing (though slightly less emphatic) came from the GDP Price Index, rising just 1.5% at a seasonally adjusted annual rate in 4Q. The Fed-favorite PCE Core deflator for December decelerated to 2.9% year-over-year growth from a 3.2% pace in November. Despite the strong GDP, futures contracts on fed funds moved very little, suggesting traders still expect the Federal Open Market Committee to maintain the funds target of 5.25%-5.5% when it meets this week. Futures imply a 50% chance for a quarter-point reduction in March. We expect the employment report on Friday will show that January payroll growth eased to 155,000 from a surprisingly strong 216,000 in December, and the unemployment rate remained at 3.7%. We expect growth in average hourly earnings to fall by one-tenth to 4.0%, and average hours worked to remain at 34.3. Jerome Powell is likely to share the FOMC's insights on the job market during his press conference following the meeting on Wednesday. Fed Governor Christopher Waller shared his views in a speech at the Brookings Institution on January 16, as follows: "I see the surprises in the December jobs report as largely noise against a trend of ongoing moderation that supports progress toward 2% inflation."

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.

Here is the list of the Top Picks for 2024 from the Argus team of analysts. The team is deeply experienced, as each analyst has spent ,on average, 25 years on Wall Street and 15 years at Argus Research. As such, our analysts are extremely well-versed in our proprietary fundamental six-point system and the sectors they cover. They also have solid relationships with many of the management teams they cover. But they do not operate in a vacuum. An Investment Policy Committee (IPC) comprised of Director of Research Jim Kelleher, CFA; President John Eade; Chief Compliance Officer & Senior Financial Analyst Kevin Heal; and Director of Financial Institutions Research Steve Biggar provide macro outlooks for the economy, interest rates, earnings, and the stock market. The IPC reviews all proposed ratings changes. Our list below is organized by sector.

Investors Win: Our Monthly Survey of the Economy, Interest Rates, and Stocks

The 2023 Rally Falters

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 on Friday morning amid signs that the White House and congressional Republicans were close to a debt ceiling deal. The deal would reportedly raise the debt ceiling for two years while capping nondefense discretionary spending at current-year levels. Meanwhile, the Commerce Department reported increases in both consumer spending and inflation. Consumer spending rose 0.8% in April, up from a revised 0.1% increase in March and above the Reuters consensus forecast of 0.4% growth. The personal consumption expenditures price index, the Fed's preferred measure of inflation, rose 4.4% on a year-over-year basis in April, up from 4.2% in March and above the consensus forecast of 4.3%. Excluding food and energy prices, the core PCE rose 4.7% from the prior year, up from a 4.6% rate in March and also slightly above consensus. The Dow rose 0.9%, the S&P 1.0%, and the Nasdaq 1.6%. Crude oil rose to $72.50 per barrel, while gold traded near $1941 per ounce.

Stocks rose on Friday morning, extending their Thursday rally. Services sector data was better than expected. The Institute for Supply Management said that its nonmanufacturing PMI slipped to 55.1 in February, down slightly from 55.2 in January but still indicating expansion. The reading also topped the Reuters consensus forecast of 54.5. On the earnings front, Costco shares fell more than 3% after the company missed the fiscal 2Q consensus sales estimate amid cautious consumer spending. The Dow rose 0.7%, the S&P 1.1%, and the Nasdaq 1.3%. Crude oil rose more than 1% to $79 per barrel, while gold rose $13 to $1853 per ounce.Stocks rose on Friday morning, extending their Thursday rally. Services sector data was better than expected. The Institute for Supply Management said that its nonmanufacturing PMI slipped to 55.1 in February, down slightly from 55.2 in January but still indicating expansion. The reading also topped the Reuters consensus forecast of 54.5. On the earnings front, Costco shares fell more than 3% after the company missed the fiscal 2Q consensus sales estimate amid cautious consumer spending. The Dow rose 0.7%, the S&P 1.1%, and the Nasdaq 1.3%. Crude oil rose more than 1% to $79 per barrel, while gold rose $13 to $1853 per ounce.

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 fell sharply on Thursday morning on interest rate concerns and weak retail sales data. On Wednesday, the Federal Reserve raised its benchmark interest rate by 50 basis points, as expected, though the 'dot-plot' forecast of Fed officials pointed to a higher than previously projected peak rate of 5.1% next year. The Commerce Department reported that U.S. retail sales fell 0.6% in November, down from a 1.3% increase in October. The decline was greater than the Reuters consensus, which called for a slight drop of 0.1%. The Dow fell 2.2%, the S&P 2.4%, and the Nasdaq 2.9%. Crude oil fell 1% to $76.50 per barrel, while gold fell $30 to $1789 per ounce.

Each December, Argus surveys its team of analysts, seeking their best ideas for the upcoming year. The Argus Research team draws on its experience (the average analyst has 18 years of Wall Street experience and 10 year at Argus), as well as the company's proprietary six-point research framework and earnings and valuation models to make the calls. Argus analysts cover the waterfront (every sector from Energy to Healthcare to Consumer to Technology), so each sector is represented. This year's list includes some long-time favorites, as well as some recent upgrades and new initiations. The list includes mostly large-caps and mid-caps, and both growth and value stocks. We will be going over the list in more detail during our January webinar and detailing why each stock has been selected by the covering analyst. In the interim, more information on each of these BUY-rated stocks is available on our website.

The Federal Reserve's favorite inflation indicator, the PCE Price Index, will be released by the BEA today. The index differs from the better-known Consumer Price Index in that its components are more variable and quicker to reflect real-time pricing fluctuations. In July, PCE inflation was reported at 6.3% (the same CPI report was 8.3%). At Argus, we forecast a rate of 6.3% for the August PCE Price Index. Core PCE, which removes volatile food and energy prices, was 4.6% in July. We expect the same reading in August. Overall, inflation seems to have peaked and may be starting to decline. We track 21 inflation measures on a monthly basis. On average, they indicate that prices are rising at a 7.1% rate year-over-year, down from 8.7% two months ago. Drilling down to core inflation, our reading is 3.99%, in line with a 4.01% reading last month. We note some interesting movement. For example, while PPI Intermediate Demand for Unprocessed Goods increased to 36% from 30%, the three-year Forward Inflation Expectation Rate declined to 2.8% from 3.2%. Investors are expecting that the Fed's rate hikes will ultimately corral inflation, with the five-year Forward Inflation Expectation Rate now down at 2.3%.

In the face of rapidly deteriorating stock prices, corporate insiders remain steadfast in their seeming belief that current prices offer long-term opportunities. After yet another week in which major indices fell hard and fast, the current data from Vickers Stock Research shows that insiders spent the same week buying stock more than usual and selling stock less than usual.

While stocks sank for seven weeks, several of the major indices hit key support levels. The S&P 500 hit a 38.2% retracement of the rally off the March 2020 lows on May 20 (down near 3,800) and bounced sharply. That carried into last week, with the index jumping 6.6% (the biggest one-week gain since March).

Historically, April is the best month of the year for stocks. The average gain for the S&P 500 in the month of April since 1980 is 1.95%. We note that market returns in April have exceeded 5% on eight occasions since 1980, including a 9.4% gain in 2009 as the market was beginning to recover from the financial crisis of 2007-2009, a 12.7% surge in 2020 as the market started to recover from the onset of the COVID-19 pandemic, and a 5.1% gain in 2021 as COVID-19 vaccines were rolled out. There have been clunkers, including 2002 (-6.1%), 2000 (-3.1%), and 1981 (-2.3%). April is a busy month on Wall Street, as companies report first-quarter results. This year, those results are expected to be solid, with low-double-digit gains for the S&P 500, based on positive economic growth and the ongoing focus of management teams on margin improvement. Interest rates will be in focus as well, as investors digest the latest readings related to inflation. We look for bond yields to drift higher -- but not so high that they derail the market recovery that began back in March 2020.

The overall Insider Index from Vickers Stock Research continues to reflect improving sentiment among corporate executives, directors, and beneficial owners. The index reading this week (at -12.45) solidifies a stance within the neutral zone that runs from +5.00 to -14.00.

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 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.

Stocks fell on Thursday, led by losses in the Consumer Discretionary and Technology sectors, as investors awaited consumer price data on Friday morning. On the employment front, first-time jobless claims fell to 184,000, down from the prior week and below the consensus forecast. However, continuing claims rose to 1.992 million, up from 1.954 million a week earlier and above the consensus estimate. The Dow finished flat, while the S&P fell 0.72% and the Nasdaq dropped 1.71%. Crude oil fell $2 to $70.50 per barrel, while gold fell $10 to $1775 per ounce.

Stocks were mixed on Monday morning as investors focused on prospects for the Biden administration's infrastructure and budget proposals, along with efforts to avert a government shutdown. Data on core capital goods was better than expected. The Commerce Department said that core capital goods orders rose 0.5% in August, up from 0.3% in July and above the Reuters forecast calling for 0.4% growth. The Dow rose 0.4%, the S&P fell 0.2%, and the Nasdaq fell 0.6%. Crude oil rose 2% to more than $75 per barrel, while gold traded near $1751 per ounce.

The stock market moved slightly higher last week, with outperformance from blue-chip stocks. During Friday's session, the Dow Jones Industrial Average increased 0.52%. The S&P 500 was up 0.88% and the Nasdaq Composite was up 1.47%. For the week, the DJIA rose 0.66%, the S&P 500 0.61%, and the Nasdaq Composite 0.48%. Year-to-date, the DJIA is up 13.56%, the S&P 500 12.61%, and the Nasdaq 7.19%.

Stocks were mixed on Wednesday morning amid a new increase in bond yields and weak employment data. Payroll provider ADP said that U.S. private companies added 117,000 jobs in February, well below the Reuters consensus forecast of 177,000 and down from a revised 195,000 in January. Services activity also slowed. The Institute for Supply Management said that its services index fell to 55.3 in February from 58.7 in January and missed the consensus forecast. The Dow rose 0.4%, the S&P fell 0.1%, and the Nasdaq fell 0.6%. Crude oil traded near $61 per barrel, while gold fell $25 to $1709 per ounce.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

Stocks were largely flat on Wednesday morning as investors weighed new retail sales data and awaited the latest policy statement and economic commentary from the Fed. News reports also suggested that Democratic and Republican leaders in Congress were close to an agreement on a roughly $900 billion stimulus package. The Commerce Department said that U.S. retail sales fell 1.1% in November following a 0.1% decline in October. The decline last month was sharper than the Bloomberg consensus forecast, which called for a drop of 0.3%. The Dow was flat, the S&P rose 0.1%, and the Nasdaq rose 0.2%. Crude oil traded near $47.50 per barrel, while gold rose $5 to $1860 per ounce.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

Stocks rose strongly on Monday morning on continued optimism about a fiscal stimulus deal. Investors also awaited the start of the 3Q earnings season on Tuesday, with the first reports from major banks. Apple shares rose nearly 5% amid expectations that the company would launch a new 5G-ready iPhone at an event on Tuesday. The Dow rose 1.0%, the S&P 1.5%, and the Nasdaq 2.2%. Crude oil traded near $39.50 per barrel, while gold rose slightly to $1927 per ounce.

Stocks rose strongly on Monday morning on continued optimism about a fiscal stimulus deal. Investors also awaited the start of the 3Q earnings season on Tuesday, with the first reports from major banks. Apple shares rose nearly 5% amid expectations that the company would launch a new 5G-ready iPhone at an event on Tuesday. The Dow rose 1.0%, the S&P 1.5%, and the Nasdaq 2.2%. Crude oil traded near $39.50 per barrel, while gold rose slightly to $1927 per ounce.

Major indices rebounded sharply on what would have been a "turnaround Tuesday" if not for the holiday, recouping some of the prior three-day day spanking. More importantly, the indices held support just where they needed to on Tuesday (that being the 50-day simple or 50-day exponential (EMA) averages). As such, the intermediate-term trend is still on the bullish side. The S&P 500 finished with a 2% gain, the Nasdaq rose 2.7% and the Nasdaq 100 (NDX) jumped 3%. The three-day "tech wreck" seemed to be a thing of the past.

Major indices rebounded sharply on what would have been a "turnaround Tuesday" if not for the holiday, recouping some of the prior three-day day spanking. More importantly, the indices held support just where they needed to on Tuesday (that being the 50-day simple or 50-day exponential (EMA) averages). As such, the intermediate-term trend is still on the bullish side. The S&P 500 finished with a 2% gain, the Nasdaq rose 2.7% and the Nasdaq 100 (NDX) jumped 3%. The three-day "tech wreck" seemed to be a thing of the past.