The major benchmarks are all higher by more than 1%, after this morning's unemployment claims eased fears of weakness in the labor market. Jobless claims for the week ended August 3 came in at a solid 233,000, under the 240,000 consensus. Economists have been concerned after last week's jump in the Unemployment Rate and big decline in Nonfarm Payrolls. Stocks have been hyper-sensitive to labor market weakness and fears that the Federal Reserve is behind the curve in lowering interest rates.

U.S. stocks were slightly lower after the open today, but have since moved mostly into the green, with only the Russell 2000 down as of this writing. Still, the action is not robust, with the range for the indices a tight -0.48% to +0.19%. To paraphrase William Shakespeare, it seems 'neither a buyer nor a seller be' is the quote of the day.

Markets moved higher on Wednesday morning on ISM data. Services PMI increased to 51.4% in March. Prices paid hit the lowest level since March 2020. The focus will now be on Fed Chair Powell, who will speak later today. Treasury yields are rising. The S&P 500 rose 0.4%, the Dow was up less than 0.1% and the Nasdaq gained 0.3%. Crude oil traded above $85 per barrel and gold was up $23 to $2305 per ounce.

In the past week, we have had little economic and EPS data, but we have had some interesting price action across the stock, bond, commodity, and currency markets. That caught us, as well as others, by surprise. But it is a big world out there and we try to avoid missing the forest for the trees!

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 this edition, we explore the state of US auto market; margin of safety erased in US equity market rally; growing pains and growth in US equity market; and EOG Resources, Alnylam, and Pembina.

Well, that's out of the way for another three months. Nvidia reported much better-than-expected results after the close yesterday, and the stock is up 14% in pre-market action. What a surprise! Can the mega-caps continue to pull the stock market higher, even with stocks already so extended (in particular, the AI names)?

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.

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 could be the greatest week for "event risk" in many years -- or perhaps we could call it "event reward." To begin, MSFT and GOOGL report after Tuesday's close, while AAPL, AMZN, and META report after Thursday's close. These five mega-caps represent almost 23% of the S&P 500 (SPX) and 32% of the Nasdaq 100 (QQQ). As well, the Fed concludes its two-day meeting on Wednesday -- with a slight edge in probability that they will leave fed funds alone through their March 20 meeting and make a first rate cut on May 1. The market is looking for five or six 25-basis-point cuts this year. Finally, on Friday, the January employment report is released.

Price momentum on the major indices is pushing historical overbought levels, while breadth for the S&P 500 (SPX) and the Nasdaq 100 (QQQ) also is getting close to overbought levels. As well, certain sentiment indicators are at rarefied levels. Fortunately, these characteristics are much more common during the early to mid-phases of a bull market and are not seen together in a bear market.

Stocks rose on Wednesday morning following a stronger-than-expected GDP report. The Commerce Department said that the U.S. economy expanded at a 5.2% annualized rate in 3Q, up from a prior estimate of 4.9% and above the Reuters consensus forecast of 5.0% growth. GM shares surged after the automaker announced a 33% dividend increase and a record stock buyback. The company also issued a new 2023 earnings forecast after withdrawing its guidance during the UAW strike. The Dow rose 0.1%, the S&P 0.3%, and the Nasdaq 0.4%. Crude oil fell to $76 per barrel, while gold traded near $2063 per ounce.

Crude oil (WTI) has been in a steep decline since peaking at an intraday high of $95 on September 28. WTI hit an intraday low of $72.37 on November 16, its lowest level since early July. Oil has dropped into a potential strong area of chart support between $67 and $75 -- a zone that we highlighted for trading earlier this year. Seasonality is very weak in October and November, starts to improve in December, and is pretty strong during March, April, and May.

We have an Under-Weight rating on the Energy Sector. Companies in the sector saw their earnings crushed in the last quarter and things looks bad for this quarter as well. Still, there are individual names we like and there is a trend of consolidation in the sector, all of which has piqued our interest. Exxon Mobil is buying Pioneer Natural and Chevron is buying Hess. We think this might prompt other big oil companies to look around as well. We think Conoco Phillips could be in the market to scoop up a smaller company (possibly Devon, EOG, or Marathon Oil). We don't think there will be any regulatory hurdles, as consolidation could lead oil prices to retreat, which would help the overall U.S. economy as inflation is still high in many areas. So it would seem to be in the government's interest to allow these deals to go through. Energy accounts for only about 3%-4% of total S&P 500 capitalization, but the sector often acts as a hedge to the broader market -- so having exposure to the group is important. Energy tends to zigs when the S&P 500 zags. Indeed, in 2022, the S&P 500 declined 19.4% while the Energy sector advanced 59%. In the August-October period of 2023, the S&P 500 fell more than 8% while the Energy sector declined only 3%. The following is a list of names we like overall in both Oil and Energy.

When we take a step back and review the weekly charts, the major indices still look like they are tracing bullish flags back to important support. In addition, they all continue to look like they are in three-wave ABC pullbacks, despite price erosion late last week following some 10- and 30-year Treasury bond auctions that saw weak demand.

Stocks rose modestly on Monday morning as investors continued to assess Fed Chair Jerome Powell's speech on Friday and awaited key inflation and employment data later this week. 3M shares rose 4% after the company reportedly agreed to pay $5.5 billion, less than had been expected, to settle claims related to the sale of defective earplugs to the U.S. military. The Dow rose 0.5%, the S&P 0.4%, and the Nasdaq 0.5%. Crude oil rose slightly to $80.50 per barrel while gold traded near $1947 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.

One week does not make a trend. Two weeks may suggest a trend. Three weeks start to make the case that a trend is in place. But in looking at the insider-sentiment data this week from Vickers Stock Research (which is bullish for a third week), we don't think trend analysis is needed. We think the absolute data says it all.

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.

Dividend income, an important element of total return, is often overlooked amid gyrations in the stock market. Between 1930 and 2012, dividend income accounted for 42% of the total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. The pattern was repeated in 2022 as well. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

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 Corteva Inc (CTVA); Dell Technologies Inc (DELL); Exxon Mobil Corp. (XOM); Thermo Fisher Scientific Inc. (TMO) and the Focus List deletions are Linde Plc (LIN); Lilly(Eli) & Co (LLY); ASML Holding NV (ASML); EOG Resources, Inc. (EOG).

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 Tuesday morning amid more comments on rate hikes from Fed officials and earnings reports from major retailers. Best Buy shares rose 10% after the company posted above-consensus 3Q revenue and EPS, and raised its full-year sales outlook. Dollar Tree shares fell 10%, despite solid 3Q results, as the discount retailer said that 2022 earnings would come in toward the low end of its guidance range. The Dow rose 0.8%, the S&P 0.6%, and the Nasdaq 0.1%. Crude oil rose 2% to $81.50 per barrel, while gold traded near $1745 per ounce.

The stock market had a wild ride last week, with a big rally on Monday and early strength Tuesday, before the sellers moved in. Wednesday was a mild down day and Thursday wasn't a big downer -- but some nice early gains were lost. Friday, which has not been a good day for stocks for the past five weeks, helped push the market to a strong finish.

October is known as "the bear killer," and the first trading day of the month sure felt that way (although massive rallies are common during bear markets, as seen since March). There have been 11 post-WWII bears that ended in October: 1946, 1957, 1960, 1962, 1966, 1974, 1987, 1990, 1998, 2002, and 2011 (19.4% on closing basis, over 20% on an intraday basis). We do not count 2001 (as do others) because it was not the end of that bear market based on the September low.

The major indices passed a key test on Thursday when they all held important support. For the S&P 500, a 61.8% retracement of the rally off the June lows targeted 3,900 -- and the day's low was 3,904. As well, a measured move based on the head-and-shoulders from the 60-minute chart came in at 3,910. Adding to the importance of this retrace, a 61.8% giveback for the Nasdaq was 11,564 (the day's low was 11,547), and the same retrace for the QQQs targets 293.84 (with Thursday's intraday low at 293). You can't make this stuff up as the algos are running the show.

The Federal Reserve's favorite inflation indicator, PCE Price Index, is out today. The PCE 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 June, PCE inflation was reported at 6.8% (the same CPI report was 9.1%). At Argus, we forecast a rate of 6.5% for July PCE. Core PCE, which removes volatile food and energy prices, was 4.5% in June. We expect 4.6% in July. Overall, inflation may be starting to decline. We track 21 inflation measures on a monthly basis. On average, they indicate that prices are rising at a 6.7% rate year-over-year, down from 8.7% a month ago. Drilling down to core inflation, our reading is 4.01%, down from 4.05% last month. We note some movement among indicators deep in the production pipeline. The PPI for Final Demand is now 5.8%, down slightly from 7.0% at the beginning of the year. PPI Intermediate Demand gauges are lower as well. While consumers can't really detect differences in pricing at the producer level, we do note that the rate of increase in average hourly earnings last month was 6.2%, steady versus the prior month; and the three-year forward inflation expectation rate is now 3.2%, down from 3.6%. Investors are expecting that the Fed's rate hikes will corral inflation, with the five-year forward expectation rate now down at 2.4%.

Monday Tee-Up: Inflation, GDP, Retail Earnings, Jackson Hole

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 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 Research.

West Texas Intermediate (WTI) rallied to $95/barrel at midday on Thursday and finished the day near $94. Crude oil could be tracing out a false breakdown after falling to $87 last Friday and breaking below the bottom of its range at $93. WTI ran up to its 21-day exponential and 200-day simple averages on Thursday, and those averages stopped the advance -- at least for now.

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 Quanta Services, Inc. (PWR); Danaher Corp. (DHR); Expedia Group Inc (EXPE); EOG Resources, Inc. (EOG) and the Focus List deletions are Enbridge Inc (ENB); CVS Health Corp (CVS); Emerson Electric Co. (EMR); McDonald`s Corp (MCD).

Monday's ugly intraday reversal was (of course) followed by a "Turnaround Tuesday." But we all saw this coming, right? NOT! Just when it felt like the stock market was rolling over again and setting the stage for at least a retest of the June 16 lows, we have a massive upside-trend day (market trends in one direction all day) that could have some bullish implications, at least in the near term. The S&P 500 bolted higher by 2.8%, closing slightly above its 50-day average for the first time since March. In addition, the index broke marginally above trendline resistance off the peaks since late March and closed at its highest level since June 9.

Stocks stormed back after the Fed's decision to raise the fed funds rate by 75 basis points (bps), a move that was floated to the WSJ on Monday. It would have been interesting if the Fed had not shown their hand and still raised by 75 bps. Investors have been worried (and we have talked about this since last year) that the Fed was far (really far) behind the curve, so this move finally shows some grit. For many, many months, the whole Treasury curve has been screaming for the Fed to get in gear -- and it appears that message was finally heard.

We are raising our intermediate-term technical outlook to neutral from bearish. This reverses our April 22 intermediate-term downgrade from neutral to bearish. This action is not a green light and we are not saying the bottom is in and it's up, up, and away from here. But we do think the major indices are attempting to hammer out (via a candlestick pattern) a bottom because we have seen a few "sticks" in recent trading sessions. Simply put, we are seeing days where stocks trade significantly lower but then finish strong.

Stocks rose on Monday morning, led by the Financial and Energy sectors, as the S&P 500 pulled back from the edge of bear market territory. Speaking in Japan, President Biden said that he would consider easing tariffs on Chinese goods. At the same time, he surprised many by stating directly that the U.S. would defend Taiwan militarily if it were ever attacked by China. In M&A news, chipmaker Broadcom was reportedly in talks to acquire VMware. The Dow rose 2.0%, the S&P 1.5%, and the Nasdaq 0.8%. Crude oil rose slightly to $110 per barrel, while gold traded near $1853 per ounce.

This remains a key week for the stock market, as 1Q earnings season begins and important reports fill the economic calendar, including several inflation figures. The market fell slightly on Tuesday despite a 7% surge in WTI. On the flip side, and despite crude oil (which remains in a triangle), interest rates fell across the entire curve -- welcome news, if only for a day. Both the five- and 10-year Treasury's rose about 0.5%, but remain in strong downtrends.

With the strong rally last week, there has been improvement in certain indicators of market breadth -- although most remain in intermediate- to long-term downtrends. In the S&P 500, 57% of stocks are above their 50-day average (all breadth data as of the 3/18 close), up from a February low of 24%; 51% of the stocks are above their 200-day, up from a recent low of 36% (which was the weakest reading since June 2020). Large market declines generally happen when this measure falls and stays below 45%, so we would certainly like to see additional improvement in the average "500" stock.

We recently raised our rating on the Energy sector to Over-Weight from Market-Weight. Already strong demand for petroleum products (related to global reopening) is now exacerbated by the war in Ukraine, which has led to broad sanctions on Russia and may exclude this major supplier from the global energy markets. Although we expect other counties to add to supply, we expect energy prices to remain elevated at least through year-end. Energy accounts for 3.6% of S&P 500 market cap; over the past five years, the weighting has ranged from 2% to 10%. We think investors should consider allocating 4%-5% of diversified portfolios to the group. The sector is outperforming thus far in 2022, with a gain of 32.3%. It also outperformed in 2021, with a gain of 47.7%. It underperformed in 2020, with a loss of 37.3%, and in 2019, with a gain of 7.6%. Here are some of the Energy sector companies that are on our BUY List. Some also are featured in our model portfolios (Growth & Income, Equity Income, Growth, and Institutional) and in our Focus List.

Market breadth remains on the weak side, a bearish sign for stocks. However, some breadth indicators have reached oversold territory and levels that historically have preceded intermediate-term bottoms. There is one big assumption here: that the stock market is still in a bull market and the current decline won't turn into a bear market. As we have been saying, we think this is a correction in a bull market, and not something far worse.

Stocks were mixed in volatile trading on Monday morning amid continued fierce fighting in Ukraine, new sanctions on Russia, and President Putin's decision over the weekend to place Russian nuclear forces on 'special combat readiness.' The Treasury Department also froze the assets of the Russian Central Bank held in the U.S. Ukrainian and Russian representatives held talks in Belarus, though the Ukrainian government did not expect any progress toward ending the conflict. The Dow fell 0.7%, the S&P fell 0.4%, and the Nasdaq rose 0.2%. Crude oil rose more than 4% to $95 per barrel, while gold traded near $1913 per ounce.

Yesterday was just another normal Monday in January on Wall Street. The major indices all bottomed shortly after noon, having been thrashed in the morning -- and all finished with small gains. At the lows, the S&P 500 was off a whopping 175 points or 4%. The intraday bottom was the lowest level for the "500" since June 22, 2021. The Nasdaq was sliced intraday for 674 points and almost 5%, while the Nasdaq 100 (QQQ) also gave up 5%.

It was another robust year for the stock market, with the S&P 500 tacking on an impressive 27% in 2021. The Nasdaq 100 (QQQ) also added 27%, with the Nasdaq rising 21%, the S&P 400 (MDY) gaining 24.5%, and the Russell 2000 (IWM) up 14.5%.

The low close for the S&P 500 during the recent pullback was 4,513 on 12/1, while the low intraday level was 4,495 on 12/3. That represented a move into the second cluster of support we have been talking about for the "500" (between 4,488 and 4,542). Helping provide a backstop for the market in that region was the 50-day average, a 50% retracement of the rally that targeted the 4,512 level, the middle weekly Bollinger Band, and the 21-week exponential average. The averages have moved since we last discussed them, with the rising 50-day average now at 4,553 and the rising 21-week EMA at 4,503.

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 stock market moved slightly lower last week as investors eyed inflation metrics and earnings season slowed down. Tech stocks performed similarly to blue chips on the week. During Friday's session, the Dow Jones Industrial Average increased 179 points, or 0.50%. The S&P 500 was up 0.72%, and the Nasdaq Composite was up 1.00%. For the week, the DJIA was down 228 points, or 0.63%, the S&P 500 was down 0.31%, and the Nasdaq Composite was down 0.69%. Year-to-date, the DJIA is up 17.95%, the S&P 500 is up 24.67%, and the Nasdaq Composite is up 23.06%.

Volatile stock trading continued on "Fed Day," with the market ending on a strong note. The S&P 500 and the Nasdaq gained 1%, the Nasdaq 100 (QQQ) rose 0.9%, the S&P MidCap 400 tacked on 1.4%, and the Russell 2000 (IWM) jumped 1.5%. NYSE breadth was strong at +2,077. So is the pullback over? We can consider some positive events and some not-so-great developments, at least for the short term.