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.

Monday Tee Up: Here Comes Walmart The focus this week flips back to inflation and the state of the consumer. Key inflation data will come out as will perhaps the most-telling earnings report related to the consumer -- Walmart. Wall Street is wondering if the Fed has been right on interest rates and can still achieve a soft landing and avoid recession. Last week, the Dow Jones Industrial Average ended down 0.6%, the S&P 500 lost 0.4%, and the Nasdaq fell 0.2%. Year to date, the Dow is higher by 5%, the S&P is up 12%, and the Nasdaq is higher by 12%. On the economic calendar, the big day is Wednesday, when inflation data comes out in the form of CPI. In June, CPI posted at 3.0%. Core CPI was 3.1%. We see July matching those rates. On Tuesday, wholesale inflation will grab the headlines when PPI is updated. On Thursday, Retail Sales, Industrial Production, and Capacity Utilization all will be released, and on Friday, Consumer Sentiment and Housing Starts come out. The earnings calendar is winding down but some big releases are due in this week. On Tuesday, Home Depot and On Holding report. On Wednesday, Cisco and UBS Group. And on Thursday, Walmart, Applied Materials, Alibaba, and Deere. Earnings are coming in 12.4% higher this quarter than a year ago (this after some 91% of S&P 500 companies have reported). Expectations were for 8%-12% earnings growth for 2Q. This follows 8% growth in 1Q and 10% in 4Q23. Last week, mortgage rates fell a big 26 basis points (bps) to 6.47% for the average 30-year fixed-rate mortgage. Gas prices fell four cents to $3.45 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 3Q and calls for expansion of 2.9%. The Cleveland Fed CPINow indicator forecasts 2.74% for August CPI. Looking ahead, the next Fed rate decision is on September 18, with odds at 100% for a rate cut. Of that, 51% expect a 25-bps cut and 49% expect a 50-bps cut. That data is according to the CME FedWatch Tool. There are then two more Fed rate meetings this year, on November 7, two days after the U.S. presidential election, and December 18.

Moving Forward from Inflation Even as the major indices keep hitting new all-time highs, the motivating factor - that the Fed is preparing to pivot to accommodative monetary policy - is proving ever more tenuous. The May inflation data released in mid-June was either in line with or slightly better than expected. Yet the response from the Federal Open Market Committee (FOMC) was to suggest that not two but one rate cut would be appropriate in the current year. The stock market is in good shape as the end of the first-half looms. History has shown that markets carrying double-digit appreciation into mid-year tend to finish the year with above-average gains. Yet the advance seems oddly fragile, predicated as it seems to be on the perception that the Fed will soon begin cutting rates for the first time since early pandemic days. The Usual Mixed Bag from Inflation, and the Fed The May inflation numbers released in the second week of June generally were seen as positive, enabling the stock market to rise to fresh new highs four times in one week. Yet the data also showed several components remaining stubbornly elevated. The May all-items consumer price index (CPI) was unchanged on a month-over-month basis from April; the prior month reading was a higher-than-expected 0.3% gain. The consensus of economists expected all-items CPI to be up 0.1%. On an annual basis, May all-items CPI at 3.3% was 0.1% better than expected and a tick better than in April. Economists focus on core CPI, which excludes food and energy. Given withering inflation in those two categories, consumers are much less likely to disregard the two components that are contributing to their pricing misery. Still, core CPI also showed moderate progress. On a month-over-month basis, May core CPI was up 0.2%, down from 0.3% in April (which was also the consensus call) and the lowest level since June 2023. The annual change in core CPI was 3.4%, beating both the 3.5% consensus call and the 3.6% level from April. The producer price index also contained good news from further up the pricing pipeline. The all-items PPI unexpectedly fell 0.2% from April levels, much better than expectations for a 0.1% increase. The year-over-year change in all-items PPI was 2.2%, again much better than the 2.5% consensus. Excluding food & energy, the monthly change in PPI was 0.0% (vs. 0.3% consensus); and the annual change was 2.3% (vs. 2.4% consensus). On June 12, the day of the CPI release and a day ahead of the PPI release, the Fed concluded its two-day FOMC event and released minutes from that meeting. To no one's surprise, the committee voted to hold the fed funds rate steady at the 5.25%-5.50% tendency, as it has done for seven straight meetings since July 2023. The subsequent FOMC statement had both positive and negative elements and as usual left the Fed plenty of wiggle room. In May, the FOMC statement noted 'a lack of further progress toward the Committee's 2 percent inflation objective.' The language in the June FOMC report, by contrast, noted 'modest further progress toward the Committee's 2 percent inflation objective.' On the downside, the Fed issued a new dot-plot that appeared to signal the likelihood of just one rate cut in 2024. Of the 16 voting members, eight projected two rate cuts for the year, seven favored one rate cut, and four projected zero rate cuts in 2024. Despite the Fed shifting from two projected cuts to possibly just one, Argus Fixed Income Strategist Kevin Heal believes the Fed is trying to balance the positive effects of restrictive policy on reducing overall inflation, with the negative effects of prolonged high prices on the low- to moderate-income population. Middle-class to lower-middle-class earners have been compelled to reduce goods purchases, and that may be contributing to actual price declines in categories including used cars. Everyone is being hit by skyrocketing inflation in services categories such as car insurance - unavoidable for most people trying to get to work. Shelter costs are also persistently running ahead of the general inflation trend, rising 5.4% annually in the May CPI. If you take the current annual change in CPI and subtract the shelter component, the current inflation rate would be right at the Fed's 2% target. Argus still expects the Federal Reserve to cut the fed funds and discount rates two times in 2024: once at the September meeting prior to the election, and again at the December meeting post-election. Each cut is expected to be 25 basis points, bringing the Fed's central tendency to the 4.75%-5.00% level by year-end. Despite packing in two rate cuts in the final four months of 2024, the Fed is expected to proceed cautiously next year, according to Income Strategist Heal, with just two additional quarter-point rate cuts in 2025. Stocks Log New All-Time Highs, Again As of the 6/14/24 close, the S&P 500 had delivered 2024 total return of 14.6%. Capital appreciation excluding dividends was a few ticks less, at 13.9%. As of the mid-June mark, the S&P 500 had hit new all-time highs about 30 times. Also at mid-June, the S&P 500 had ended higher in 25 of the preceding 32 weeks, for its best weeks-winning record since 1989. The Nasdaq has pulled away from SP5 in the past month and a half, after tracking the blue chip index through April. Total return for the Nasdaq Composite as of 6/14/24 was 18.3%. Wilshire Large-Cap Growth has done best, with 23.7% total return. The gap from Large-Cap Growth to Large-Cap Value (up 5.7%) continues to widen, and now stands at 18 percentage points. The DJIA continues to lag, hurt by laggards such as Boeing and legacy technology names that are being outshone by new tech giants. Sector-wise, Information Technology and Communication Services continue to lead, both with 20%-plus year-to-date gains. Utilities are the only other double-digit year-to-date gainer, but are now lagging the overall market. Seven sectors are up 3%-9%, while Real Estate remains the only losing sector in 2024. The stock market is still showing better breadth this year than in 2023. But growth sectors are now pulling away from the broad market, in an echo of last year. Every time Nvidia reports quarterly results, as it did in mid-May, the market responds with another round of AI-driven frenzy. We would like to see better sector breadth across the remainder of the trading year, but companies in non-growth sectors need to show stronger earnings trends. Conclusion We noted in our introduction that market strength through mid-year is a positive indicator for the full year. Yet there are some caveats. Since 1980, most years with double-digit gains as of mid-year occurred before the millennial turn. And presidential election years rarely deliver double-digit gains, at mid-year or for the full year. From 1980 through 2023, the S&P 500 has averaged an annual capital gain of 10.0%. That of course includes lots of good years, such as 1997, 2013, and 2019 - all up 28.9%-31.0% - and several bad years, such as 2002, 2008, and 2022 - all in the down 19.4% to down 38.5% range. Also since 1980, the S&P 500 has appreciated in double-digits as of the end of June a total of 16 times. Eleven of those 16 double-digit mid-year gains were concentrated in the years prior to the millennial turn, including six times in the 1983-1989 period. Also since 1980, the S&P 500 has never been up in double-digit percentages as of end-of-June in a presidential election year. Barring a market collapse by June-end, 2024 will represent the first double-digit mid-year gain in any presidential election year since 1980. That said, a double-digit win as of mid-year has predicted a much better-than-average full-year gain for stocks. For the 16 years between 1980 and 2023 in which the S&P 500 has been up more than 10% at mid-year, the average gain as of June 30 has been 15.8%. And for those same 16 years, the average full-year gain has been 23.3%, or more than twice the market's 10% average gain.

Innovation may be hard to define but, to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles, to a large degree - have moved overseas, where costs are lower. Yet the U.S. economy is at its largest point in history and still growing. If U.S. corporations weren't innovating, creating new products and services, and moving into new markets and applications, the domestic economy would be contracting, not expanding, and capital would not be flooding into the country. Particularly at this juncture of the market and economic cycles, when uncertainty is high due to high inflation and rising interest rates, we look to innovative companies to navigate the challenges. At Argus, a 90-year-old independent research firm that has innovated a time or two in its long history, we have focused on four types of innovative companies: Industry Disruptors; First to Market; New Product Specialists; and Product & Process Perfectors. Here are some examples of companies, featured in our Innovation Theme Model Portfolio.

Innovation may be hard to define -- but to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles, to a large degree - have moved overseas, where costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services (such as Zoom calls), and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. Consider that U.S. GDP was approximately $1 trillion in 1930, but was almost $28 trillion at the end of 2023. That's growth of almost 30x. Meanwhile, the U.S. population has grown less than 3x during that time span, to 332 million people from 120 million. The delta between the GDP growth and the population growth is in large part innovation. To take advantage of the key theme of innovation, Argus has identified approximately 30 companies within its universe of coverage that have been combined to form a diversified portfolio, featured in a recent edition of our Theme Model Portfolio series. Most of the companies in the portfolio, which is sponsored by Smart Trust Inc. as the Argus Modern Innovators Unit Investment Trust, are not start-ups -- but are mature companies. They innovate by disrupting industries, launching new products, being first to new markets, and improving existing products and processes.

The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from unrest in the Middle East, the Russian invasion of Ukraine, events related to China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps, with the P/E ratio on the Russell 2000 Small-Cap Index of 13 compared to a trailing P/E of 25 for the S&P 500. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. From 2003-2021, for example, the Russell 2000 Index had climbed 450%, compared to an advance of 330% for the S&P 500 index. Here are the stocks with market caps below $20 billion that are on the Argus BUY list and recently were added to Argus' Mid-Cap Theme Model Portfolio.

The Fed's favorite inflation indicator, the PCE Price Index, will be released on Friday even though the NYSE will be closed for Good Friday. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and is quicker to reflect the impact of real-time pricing fluctuations. In the most-recent report, through January, PCE inflation was reported at 2.4%; the latest CPI report, through January, had inflation at 3.2%. Core PCE, which removes volatile food and energy prices, was 2.8% in the latest month, down from 2.9% in the prior month. Our forecasts call for 2.5% for the headline number and 2.8% for the core reading -- roughly in line month-to-month as progress toward the Fed's 2% goal gets harder as the target gets closer. We track 20 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 2.3% rate year-over-year, up 30 basis points versus a month ago. The numbers are distorted somewhat by a sharp decline in Producer Price Intermediate Goods, which are falling at an 8% rate and likely point to easing prices across the inflation spectrum in the months ahead. Focusing on core inflation -- which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy, the five-year forward inflation expectation rate, and the 10-year TIPs Break-even Interest -- our reading is 2.8%, down five basis points month-over-month. That's lower largely because sticky prices like shelter and transportation are starting to ease. Looking down the road, investors are expecting that the Federal Reserve's rate hikes ultimately will tame inflation, with the five-year forward expectation rate at 2.22%.

The S&P 500 and Nasdaq have moved higher in 16 of the last 18 weeks, and the indices as well as many individual stocks are printing all-time highs on a regular basis. Yet insider-sentiment data from Vickers Stock Research continues to suggest that the major move higher in stock prices is overdone and that caution should be the order of the day.

Stocks edged higher on Wednesday morning, led by the Consumer Discretionary and Industrial sectors. Employment data was weaker than expected. Payroll provider ADP said that U.S. companies added 103,000 jobs in November, down from 106,000 in October and below the Reuters consensus forecast of 130,000. ADP also reported that year-over-year wage growth slowed to 5.6% in November, the smallest increase since September 2021. The Dow rose 0.1%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil fell sharply to below $70 per barrel, while gold traded near $2048 per ounce.

Weekly Tee Up: Back to Business

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 were mostly higher on Monday morning amid hopes for a debt ceiling deal, with negotiations between the White House and Republican congressional leaders set to resume on Tuesday. Investors will also weigh new retail sales data on Tuesday along with earnings from Walmart, Target, and other major retailers later this week. The Dow fell 0.1%, the S&P rose 0.1%, and the Nasdaq rose 0.5%. Crude oil rose nearly 2% to $71 per barrel while gold rose $2 to $2022 per ounce.

Stocks rose on Friday morning following cooler-than-expected inflation data. The Commerce Department reported that its personal consumption expenditures index, the Fed's preferred measure of inflation, rose 0.3% from the prior month in February, slowing from 0.6% growth in January. The year-over-year increase was 5.0%, down from 5.3% a month earlier. The Dow rose 0.5%, the S&P 0.6%, and the Nasdaq 0.7%. Crude oil rose 1% to $75 per barrel, while gold fell $2 to $1995 per ounce.

Last week in this space, we reported on weekly insider sentiment that suggested a pullback in stock prices was possibly in order, this after a very strong January. This week, the data on insider sentiment, reported by Vickers Stock Research, is again of concern.

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.

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.

Investors Concede High Likelihood of Lost 2022, Brace for 2023

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.

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky -- and large-caps outperformed SMID stocks in 11 of the 19 years in our test period. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

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 fell on Wednesday morning following weak retail sales data and disappointing second-quarter results from Target. The Commerce Department reported that U.S. retail sales were flat on a month-over-month basis in July after a 0.8% gain in June. The result was slightly below the Reuters consensus forecast. The Dow fell 0.9%, the S&P 1.1%, and the Nasdaq 1.7%. Crude oil fell slightly to $86 per barrel, while gold traded near $1776 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.

In this edition, Equifax Looking Good, Uber and Lyft Examined, PVH Makes Headway Among Headwinds , and Biogen, American Express, and Boston Beer.

Stocks have struggled in 2Q 2022, with the S&P 500 on its way to a double-digit drop for the period. Absent the rally in recent days, the decline would be closer to 20%. Growth stocks have again been the weakest performers, as sectors such as Technology, Communication Services, and Consumer Discretionary all have lagged the major market indices. The leading sectors were value-oriented, including Energy, Consumer Staples, Basic Materials, and Utilities. The average stock in the Argus Universe of Coverage has declined 13.1% thus far during the quarter, and the median stock declined 12.5%. The average BUY-rated stock dropped 12.6%, while the average HOLD-rated stock fell 14.4%. Will investors continue to favor value in 2022? Will high inflation drive continued outperformance in Energy and Basic Materials? Given interest rates that remain historically low, we expect growth stocks to resume outperformance over time, and think 2022 may be a "one-in-five year" that value leads. Investors seeking value are encouraged to focus on dividends and look for yields in the 3%-4% range. Concerning sectors, our current Over-Weights are Energy, Financial, Healthcare, Industrials, and Basic Materials. Here are the top-10 and bottom-five performers from the Argus Universe in 2Q.

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.

Looking for a Bottom

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky and large-caps outperformed SMID stocks in 11 of the 19 years in our test period. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Stocks rose strongly on Tuesday morning on signs that at least some Russian troops were pulling back from positions near the Ukrainian border. However, on the economic front, inflation data was again higher than expected. The Labor Department said that its producer price index rose 1.0% in January, above the Bloomberg consensus forecast of 0.5% and up from a 0.4% increase in December. The Dow rose 1.2%, the S&P 1.5%, and the Nasdaq 2.1%. Crude oil fell nearly 4% to $92 per barrel, while gold fell $17 to $1852 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.

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.

This edition features Box in the cloud, hailing Uber's potential, and Welltower building on the senior housing recovery.

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.

The stock market moved higher last week during a busy week that consisted of a steady stream of earnings reports and election results. Tech stocks far outperformed blue chips for a third straight week. During Friday's session, the Dow Jones Industrial Average increased 204 points, or 0.56%. The S&P 500 was up 0.37%, and the Nasdaq Composite was up 0.20%. For the week, the DJIA was up 508 points, or 1.42%, the S&P 500 was up 2.00%, and the Nasdaq Composite was up 3.05%. Year-to-date, the DJIA is up 18.69%, the S&P 500 is up 25.07%, and the Nasdaq Composite is up 23.92%.

Small- and mid-cap stocks (SMID stocks) soared in 2019. They have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are more widely distributed and the domestic service economy recovers. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. The Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

This edition features our second-quarter outlook on China; California's labor ruling; COVID-19 vaccine approval; and notes from Salesforce, First Solar, and GM.

The stock market was up slightly last week, owing its success to a positive jobs Friday report and solid earnings throughout. Tech stocks modestly outperformed blue chips. During Friday's session, the Dow Jones Industrial Average increased 144 points, or 0.41%. The S&P 500 was up 0.17%, and the Nasdaq Composite was down 0.40%. For the week, the DJIA was up 273 points, or 0.78%, the S&P 500 was up 0.94%, and the Nasdaq Composite was up 1.11%. Year-to-date, the DJIA is up 15.04%, the S&P 500 is up 18.12%, and the Nasdaq Composite is up 15.11%.

We recently identified a nascent trend that suggested corporate insiders at relatively out-of-favor technology firms on the Nasdaq were starting to buy the lull. Meanwhile, we saw other evidence that insiders at blue chip companies listed on the NYSE were starting to take some money off the table. But we cautioned that 'a few weeks has not a trend made.' And this week, data from Vickers Stock Research resoundingly legitimizes our caution.

Stocks fell on Monday morning amid continued concerns about inflation and potential action from the Fed. AT&T and Discovery announced that they would combine their media assets to create a new standalone company. On the housing front, the national Association of Homebuilders reported continued strong builder confidence, with a reading of 83 in May, unchanged from the prior month. The Dow fell 0.5%, the S&P 0.4%, and the Nasdaq 0.6%. Crude oil traded near $66 per barrel, while gold rose $22 to $1860 per ounce.

The stock market performed well last week, touching fresh highs with no clear-cut catalysts aside from relatively strong earnings. Tech stocks outperformed blue chips, though small-cap stocks outperformed both. During Friday's session, the Dow Jones Industrial Average increased 28 points, or 0.09%. The S&P 500 was up 0.47%, and the Nasdaq Composite increased 0.50%. For the week, the DJIA climbed 310 points, or 1.00%, the S&P 500 climbed 1.23%, and the Nasdaq Composite led the way, climbing 1.73%. Year-to-date, the DJIA is up 2.78%, the S&P 500 is up 4.76%, and the Nasdaq Composite is up 9.37%.

This edition features our annual automotive review; quarterly reports from Lyft and Uber; Pepsi's attractiveness; and notes from Sealed Air, Twitter, and Zillow.

Small- and mid-cap stocks (SMID stocks) surged in the past quarter. They also have outperformed large-caps over the past 12 months and may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are widely distributed and the economy recovers. As well, the prices of SMID stocks are generally lower than the prices of large-caps. While SMID stocks can be risky, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20%-25% of the U.S. stock market's capitalization is comprised of SMID stocks. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. We note that the Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Small- and mid-cap stocks (SMID stocks) surged in the past quarter. They also have outperformed large-caps over the past 12 months and may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are widely distributed and the economy recovers. As well, the prices of SMID stocks are generally lower than the prices of large-caps. While SMID stocks can be risky, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20%-25% of the U.S. stock market's capitalization is comprised of SMID stocks. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. We note that the Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

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 on Monday morning on more positive vaccine news after AstraZeneca reported that its coronavirus vaccine candidate, developed with the University of Oxford, was 70.4% effective in preventing infection in late-stage trials. The vaccine may have even higher efficacy under a different dosing regimen and also has less stringent storage requirements than those developed by Pfizer/BioNTech and Moderna. On the economic front, IHS Markit reported stronger-than-expected readings in both its manufacturing and services indices for October. The Dow rose 0.7%, the S&P 0.4%, and the Nasdaq 0.1%. Crude oil rose nearly 1% to $43 per barrel, while gold dropped 2% to $1834 per ounce.