This is a big week for economic data (especially when assuming the data might support the belief that the Federal Reserve should cut the fed funds rate at the September 18 meeting). We have July PPI this morning; July CPI on Wednesday; July Retail Sales, Industrial Production, the Philly Fed, Empire State Manufacturing, and initial jobless claims on Thursday; and July Housing Starts and Consumer Sentiment on Friday. While the majority of S&P 500 companies have reported Q2 results, we have some big reports remaining, including AMAT, BABA, CSCO, DE, HD, and WMT. As expected, stocks did very little on Monday as market participants sat on their hands and waited for the news flow to dictate the next short-term direction of the market and interest rates. The small-caps did fall, with IWM down 0.9%, SML off 1.2%, and MDY down 0.6%. Information Technology rose 0.8% and Energy was up 0.5%, but Communication Services, Real Estate, Staples, Financial, Industrials, Discretionary, Healthcare, and Materials were all off from 0.4% to 0.7%. The three major indices all traced out doji candlesticks on Monday, a sign of indecision. They also all failed right at their flattening 13-day exponential averages. Some key short-term resistance levels for the S&P 500 include a 50% retracement of the recent decline at 5,395, the breakdown level at 5,400, the flat 50-day average at 5,449, and a 61.8% take-back at 5,460. For the Nasdaq, a 50% retracement sits at 17,190, which is also the breakdown level; the 50-day and a 61.8% take-back target 17,540. For the Nasdaq 100, a 50% retrace is at 463.50 and the 50-day and a 61.8% take-back are at 473. (Mark Arbeter, CMT)

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.

It's Christmas in July on Wall Street, the board is red and green. It's a heavy news week that will impact both overall markets and individual stocks. There's a Fed rate decision coming on Wednesday, though odds are at 99% for no rate move. The key Jobs report is due on Friday. And there's a mountain of earnings from many corporate giants.

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.

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 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 Southern Company (SO); AECOM (ACM); Itron Inc. (ITRI); Goldman Sachs Group, Inc. (GS) and the Focus List deletions are Dell Technologies Inc (DELL); Northrop Grumman Corp. (NOC); Raymond James Financial, Inc. (RJF); Sempra Energy (SRE).

Monday Tee Up: A Breather

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.

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.

Monday Tee Up: A Big Week

The Fed's favorite inflation indicator, the PCE Price Index, will be released by the Bureau of Economic Analysis (BEA) this morning. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and it is quicker to reflect real-time pricing fluctuations. In the October report, PCE inflation was reported at 3.0% (the latest CPI report, from November, had inflation at 3.1%). Core PCE, which removes volatile food and energy prices, was 3.5% in the latest month, down from 3.7% in the prior month. Our forecasts call for declines in both PCE rates: 3.4% for the headline number and 2.9% for the core. Overall, inflation in this cycle peaked in summer 2022 and has been on a downward trek. We track 20 inflation measures. On average, they are indicating that prices are rising at a 2.6% rate year-over-year, down from 2.8% a month ago. The numbers are distorted somewhat by a sharp decline in Producer Price Intermediate Goods, which are falling at a 13% 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 core GDP PCE Price Index, the five-year forward inflation expectation rate and the 10-year TIPs Break-even Interest Rate), our reading is 2.84%, down 13 basis points month-over-month. That's lower, largely because, at long last, sticky prices like shelter and transportation are starting to ease. Investors are expecting that the Fed's series of rate hikes ultimately will tame inflation, with the five-year forward expectation rate at 2.24%.

The Fed's favorite inflation indicator, the PCE Price Index, will be released by the BEA this morning. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and is quicker to reflect real-time pricing fluctuations. In the September report, PCE inflation was reported at 3.4% (the latest CPI report, from October, had inflation at 3.2%). Core PCE, which removes volatile food and energy prices, was 3.7% in the latest month, down from 3.8% the prior month. Our forecasts call for declines in both PCE rates: 3.5% for the headline number and 3.1% for the core reading. Overall, inflation in this cycle peaked in summer 2022 and is declining, though the rate of decline is stalling a bit. We track 20 inflation measures. On average, they are indicating that prices are rising at 2.8% year-over-year, down from 3.0% a month ago. The numbers are distorted somewhat by a sharp decline in Producer Price Intermediate Goods, which are falling at a 14% rate and likely point to easing prices across the inflation spectrum. Focusing on core inflation -- which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy, the core GDP PCE Price Index, the five-year forward inflation expectation rate and the 10-year TIPs Break-even Interest Rate -- our reading is 2.90%, down 14 basis points month-over-month. At long last, sticky prices like shelter and transportation are starting to ease. Investors are expecting that the Federal Reserve's series of rate hikes ultimately will tame inflation, with the five-year forward expectation rate at 2.3%.

Will the Fed spook the markets with their next call on interest rates this week? As well, the calendar flips to November -- so the October jobs report is equally (if not more) important news. Finally, investors face the ongoing release of earnings. Last week, the Dow Jones Industrial Average was down 2.1%, the S&P 500 shed 2.5%, and the Nasdaq lost 2.6%. Year-to-date, the DJIA is now down 2%, the S&P 500 is up 7%, and the Nasdaq is higher by 21%.

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 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 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. 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.

The Fed's favorite inflation indicator, the PCE Price Index, will be released today. The index differs from the better-known Consumer Price Index in that its composition is changed more frequently and is quicker to reflect real-time pricing fluctuations. In the report from June, PCE inflation was 3.0% (the latest CPI report, from July, had inflation at 3.2%). Core PCE, which removes volatile food and energy prices, was 4.1% in the latest month, down from 4.6% in the prior month. Our forecasts call for a slight tick higher on both rates: 3.2% for the headline number and 4.2% for the core. Inflation appears to be on a downward trek, though the rate of decline is stalling a bit. We track 21 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 2.75% rate YOY, up from 2.5% a month ago. The numbers are distorted by a sharp decline in Producer Price Intermediate Goods, which are falling at a 25% rate and likely point to easing prices across the inflation spectrum. Focusing on core inflation (which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy, the core GDP PCE Price Index, the five-year forward inflation expectation rate and the 10-year TIPs Break-even Interest Rate), our reading is 3.5%, up 20 basis points month-over-month. That's higher largely because sticky prices at the other end of the spectrum, like shelter and transportation, remain high. Investors are expecting that the Federal Reserve's series of rate hikes will ultimately tame inflation, with the five-year forward expectation rate at 2.4%.

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 Old Dominion Freight Line, Inc (ODFL); D.R. Horton Inc. (DHI); Northrop Grumman Corp. (NOC); Albemarle Corp. (ALB) and the Focus List deletions are Corteva Inc (CTVA); Sonoco Products Co. (SON); RTX Corp. (RTX); Cracker Barrel Old Country Sto (CBRL).

When looking at insider-sentiment data from Vickers Stock Research over the past few weeks, the significant talking point has been Vickers' one-week sell/buy ratio for stocks that trade on the Nasdaq. While Vickers' other indicators generally were in keeping with historical standards during earnings season, the sell/buy ratio for the Nasdaq bearishly skyrocketed three weeks ago to 13.20 (on a scale where a reading above 2.50 is bearish). Last week, the ratio improved significantly, but at 7.51 was still uncomfortably high. This week, the ratio is 6.68 and again has improved but again has more wood to chop. But the trend is positive -- and that trend, along with other sentiment barometers that are of little concern, has resulted in a stabilization in overall insider sentiment.

Dividend income is often overlooked amid gyrations in the stock market. Thus far in 2023, market bulls are boasting about first-half S&P 500 returns that may top 15%. No one is very focused on the broad market index's 1.6% current yield. But dividends are an important element of return. Dividend income accounted for 42% of the total return of the S&P 500 between 1930 and 2012, according to Hartford Funds. And that's just the average. In some of those decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for a smaller portion of returns, at around 15%-20%. In 2018, dividend payments softened the blow when most market indices declined as the Fed hiked rates. The pattern was repeated in 2022. 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.

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 successfully navigate the challenges. At Argus, an 88-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.

In the typically strong month of April, the stock market laid an egg -- with most of the major indices posting minimal returns, and the small- and mid-cap stocks losing minor ground. The S&P 500 rose 1.5%, the Nasdaq was flat, and the Nasdaq 100 gained 0.5%. The Dow Jones Industrial Average was the big winner, up 2.5%. The S&P MidCap 400 fell 0.80% and the Russell 2000 dropped 1.8%, thanks to heavy exposure to small- and mid-sized banks.

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 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 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. 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.

We are raising our intermediate-term technical outlook back to bullish from neutral. After breaking out of a bullish cup formation on February 1, and above chart resistance from the prior highs at 4,100, the S&P 500 (SPX) pulled right back to that level on Monday and again on an intraday basis on Tuesday. The index also fell right to short-term trendline support off the lows since January 20. The result was a picture-perfect bullish backtest of support and a very strong bounce.

Our bond/stock asset-allocation model indicates that bonds are very close to fair value, as rising yields have made fixed-income relatively more attractive over the course of the past year. Our model takes into account 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 from the model, going back to 1960, is a modest premium for stocks of 0.15 sigma, with a standard deviation of 1.0. The current valuation level is a 0.61 sigma premium for stocks, which is inside the normal range. T-bond yields are around 3.8%, by comparison, coming closer to our fair value target yield of 4.6%. The model has done a good job of highlighting asset class value, such as stocks in the late 1970s, bonds prior to the "dot-com" crash of 2001 and again at the depths of the financial crisis in 2009. Markets can manage with premiums and discounts for extended periods, as interest rates and stock prices fluctuate daily. Based on the current model input levels, we are expecting a recovery in stock prices from bear-market lows and have established a 2023 year-end S&P 500 target of 4,300. Our current recommended asset allocation for moderate accounts is 70% growth assets, including 65% equities and 5% alternatives; and 30% fixed income, with 200 basis points of the bond allocation in cash.

We all know where money was made in 2022, as well as the sources of relative and absolute performance. Energy (XLE) has had another stellar year, up 62% with six days left. Four sectors were basically flat (Utilities, Staples, Healthcare, and Industrials), with three of those sectors defensive. Financials and Materials are off 11%, but have beaten the S&P 500. Communication Services, Discretionary, Real Estate, and Technology all have given up 26% to 38%.

We are starting to see a little downside acceleration in the U.S. Dollar Index, as well as Treasury yields from five years and longer. At the same time, silver (SLV) and gold (GLD) have seen some upside acceleration. To some degree, the Fed probably doesn't want to see the greenback and market rates fall too far, as both are an obvious stimulant to the economy. On the other side, a falling dollar and yields could reflect the market's worry of a slower economy and possible recession in 2023.

Stocks were mixed on Friday morning following a generally strong October employment report. The Labor Department said that the U.S. economy added 261,000 nonfarm payroll jobs last month, down from a revised 315,000 in September but well above the Bloomberg consensus forecast of 195,000. The official unemployment rate ticked up to 3.7%, above the consensus of 3.6%. Average hourly earnings rose 0.4% from the prior month, above the consensus of 0.3% growth; however, the year-over-year increase of 4.7% was unchanged from September. While the report showed some signs of a slowing labor market, it appeared unlikely to alter the Fed's aggressive rate hike plans. The Dow rose 0.1%, the S&P was flat, and the Nasdaq fell 0.3%. Crude oil rose more than $3 to $91.50 per barrel, while gold jumped $43 to $1674 per ounce.

For a second straight week, the bulls were mostly in charge, as the bifurcation among indices, sectors, subindustries, and individual stocks continues. If the quarterly results from the mega-cap Technology names (and the stock-price reactions) were known by all ahead of time, it's a safe bet to say that about 99% of the investment community would have predicted that the stock market was going to fall to new bear-market lows. But once again, it's the reaction to news that's most important, and not the news itself.

The Consumer Price Index report released yesterday showed broad-based inflation pressures in the U.S. during September, initially disappointing investors who were looking for a sharp decline in prices. The Bureau of Labor Statistics reported an 8.2% increase in overall inflation year-over-year in September, compared to an 8.3% rate in August. The core rate excluding the impact of food and energy prices, however, increased to 6.6% in September, up from 6.3% in August. The overall rate benefited primarily from falling energy prices (down 2% month-over-month), as well as from lower prices for used cars, apparel, and medical care commodities. Food prices were steady (up 0.8% month-over-month). But shelter and new vehicle prices remained on the rise (both up 0.7% month-over-month), as did costs of transportation (up 14.6% year-over-year). Looking ahead, we continue to think that the July 9.1% CPI rate will prove to be the peak reading for the index in 2022, as gas prices slide and the housing market cools. Even so, the Federal Reserve still has a lot of wood to chop to bring core inflation down to its target of 2.0%. We continue to look for a 75-basis-point rate hike by the central bank at its meeting in November, and another 50-basis-point increase in December as Chairman Powell and company try to bring inflation to lower levels.

At least the major indices did not go down last week. But it sure felt like it after Friday's wipeout, which came after two very strong days to start the week. The S&P 500 rose 1.5% last week, the Nasdaq and the QQQs gained 0.7%, the S&P MidCap 400 (MDY) tacked on 3%, and IWM added 2%. Over the past three weeks, the S&P 500 has been clocked for almost 12%, the Nasdaq and the QQQs have plummeted 13%, and the MDY and IWM have fallen 12%.

Market sentiment, which turned quite bearish during the pullback from mid-August until early September, logically backed off somewhat during the recent four-day equity rally. Following the mini crash on Tuesday, we expected fear to explode (just as many portfolios did). Well, shockingly, it did not -- and that's a bit disconcerting. Fear and panic create intermediate- and long-term bottoms and almost always are associated with very big downside moves.

The Consumer Price Index report released Wednesday showed broad-based inflation pressures in the U.S. during July. But the pressures weren't as high as they were in June and consumer inflation may now be in a downtrend. The Bureau of Labor Statistics reported an 8.5% increase in overall inflation year-over-year in July, compared to 9.1% in June. The overall rate was lifted by high food prices (+10.9% year-over-year), energy prices (+32.9%) and new vehicle prices (+10.4%). Energy prices fell month-to-month, as gasoline prices dropped 7.7% during the period; this helped bring down the overall rate. Taking out volatile food and energy components, the core all-items index rose at a 5.9% pace over the past year through July, flat with last month. Prices for used cars, apparel, and transportation services all declined month-over-month. Medical care commodities and services inflation remains muted. We think the July 9.1% CPI rate will prove to be the peak reading for the index in 2022, as gas prices slide and the housing market cools. Even so, the Fed has a lot of work in front of it to bring core inflation down to the central bank's target of 2.0%. We look for a 50-basis-point rate hike by the central bank at its meeting in September and hikes at future meetings as it tries to wrestle inflation to lower levels.

Stocks rallied on Wednesday morning on signs of moderating inflation. The Labor Department said that its consumer price index rose 8.5% on a year-over-year basis in July, down from 9.1% in June with help from lower gasoline prices, and below the Bloomberg consensus forecast of 8.7%. The core CPI, excluding food and energy, rose at a 5.9% rate, unchanged from the June reading. The Dow rose 1.4%, the S&P 1.5%, and the Nasdaq 2.5%. Crude oil fell more than 2% to $88 per barrel, while gold traded near $1813 per ounce.

Looking at market breadth in the short- to intermediate-term, we have considered a few different indicators that have shown breadth thrusts. However, we have yet to see a series of 80% to 90% days with respect to breadth, and that clouds the entire thrust picture. All these thrusts are commonly seen coming out of major corrections and all sizes of bear markets.

June was ugly for the stock market, and followed the bad months of January, February, and April. The first and second quarters of 2022 were down -- and for the S&P 500, it was the worst first half of the year since 1970.

Last week featured an ugly finish, as the S&P 500 and the other major indices broke down and out recent tight trading ranges. The three-day rate-of-change (ROC) for the S&P 500 from Wednesday to Friday was -6.2%, while the Nasdaq and the Nasdaq 100 gave up almost 7%. The "500" closed right at its lowest close of the correction from back in May, while the Nasdaq and the QQQs closed just above their lows.

Yet another brutal day for stocks on Wednesday, with some of the major indices making minor corrective closing lows. The S&P 500 got clipped for 4% and is now down almost 18% in 2022. It was the largest one-day decline for the "500" since June 2020. The Nasdaq plummeted 4.7% while the Nasdaq 100 (QQQ) plunged 4.9%. NYSE breadth was -2,512, almost equaling the worst breadth day of -2,626 (from May 9) since the correction started. It was an 88% day when looking at declining volume/total volume and declining issues/total issues on the NYSE. Crude oil also took a big hit, with WTI falling 5% and Brent crude losing 2.6%.

Earnings, Economy Roll along through Market Wreckage

The U.S. Dollar Index (USD) just hit its highest level since late 2002, and only a whisper was heard. The USD is heavily weighted toward the euro (58%), yen (14%), British pound (12%), and Canadian dollar (9%). So, if you're bullish on the USD, you are bearish on the euro.

West Texas Intermediate crude oil (WTI) continues to be volatile. After yesterday's smackdown of almost 5%, WTI is sitting at $97/barrel. After going parabolic in March and reaching $130, crude oil pulled back to $93.50, rallied back to $116.65, and fell to an intraday low of $95.73 on Wednesday before rallying at the end of the day. So far, crude has retraced 50% of its entire rally off the lows from early December. A 61.8% giveback targets $88.

The stock market finally had a winning week, though January remains deeply in the loss column. On Friday, the Dow Jones Industrial Average rallied by 565 points, or 1.7%. The S&P 500 was up 2.43%, and the Nasdaq Composite surged 3.13%. For the week, the DJIA was up 460 points, or 1.34%, the S&P 500 was up 0.77%, and even the Nasdaq Composite eked out a gain of 0.01%. Year-to-date, the Dow is down 4.36%; the S&P 500 is off 6.93%; and the Nasdaq Composite is in correction territory, down 11.96%.

This is among our most-important themes for 2022, and stretches across industries. We think companies that raise their dividends consistently at a double-digit rate are sending off three important signals amid all the recent market volatility: 1) the company's balance sheet is strong enough to pay a dividend; 2) management is focused on providing shareholder returns; and 3) management is confident enough in the near-term outlook to raise the payout aggressively. This third factor is especially important as the pandemic upends the nation's recent record of long-term economic growth. Here are 12 stocks that meet our double-digit dividend test and are on the Argus BUY list. They are also holdings in our Dividend Growth Separately Managed Account and in the Dividend Growers Total Return Trust, sponsored by SmartTrust.

With major stock indices dancing around all-time highs (seemingly the result of a so-far solid earnings season), the volume of insider transactions is predictably low (also the result of earnings season, with associated trading restrictions). That said, the current low transaction volume is particularly low. Indeed, it is now six consecutive weeks that Vickers' Stock Research has processed fewer than 1,000 weekly insider trades that met the criteria for inclusion in the Weekly Insider Report. The last time we saw such a run was back in September of 2020. One can argue that insiders then and now were/are biding their time, with no sense of urgency to sell stocks but also no great reason to buy shares at lofty levels.

Second-quarter earnings announcements are nearly complete, with some 90% of S&P 500 companies having reported. The profit recovery from the depths of the pandemic low in 2Q20 was been swift, with earnings growth of 93% in 2Q21, according to Refinitiv. But earnings do not look good just on a relative basis -- the $53.93 projected to be earned by S&P 500 companies for the second quarter is the highest ever for the index. Investors can now turn their attention to the third quarter, when earnings are expected to rise a still-strong 30% year-over-year. Our analysts are always on the lookout for companies that raise their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst to strong returns in the quarters ahead. Here are 20 BUY-rated companies in Argus coverage for which management has raised guidance or increased its outlook during the 2Q21 EPS reporting season.

Our bond/stock asset-allocation model is indicating that stocks and bonds -- both of which are overvalued against their own metrics -- are near fair value against each other. Our model takes into account current levels and forecasts of short-term and long-term fixed-income yields, inflation, stock prices, GDP, and corporate earnings. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks (of 0.16 sigma), with a standard deviation of 1.0. The current valuation level is 0.23 sigma discount for stocks. Generally, the model has done a good job of highlighting asset class value. Stocks were very attractive compared to bonds in the late 1970s, when benchmark Treasury rates were in the high teens before heading consistently lower. The model indicated that stocks were at a sharp premium to fair value prior to the "dot-com" crash of 2001 and also at a premium prior to the Great Recession in 2007-2009. Starting in 2009, the model favored stocks -- another good call. As our chart shows, markets can manage with premiums and discounts for extended periods. But the high valuations on stocks (currently about 50% above fair value) leaves little room for disappointment on earnings, interest rates, or even the country's health.

Stocks rose on Thursday amid a new round of earnings reports along with 2Q GDP and weekly employment data. Investors also continued to assess the Fed's probable timeline for tapering its bond-buying program. The Commerce Department said that the U.S. economy expanded at a 6.5% annualized rate in 2Q, up from the prior quarter but well below the consensus forecast of 8.4%. On the employment front, first-time jobless claims fell to 400,000 for the week ended July 24, but exceeded the consensus of 380,000. Continuing claims rose slightly to 3.27 million from 3.18 million a week earlier. The Dow rose 0.44%, the S&P 0.42%, and the Nasdaq 0.11%. Crude oil rose to $73.50 per barrel, while gold rose $29 to $1828 per ounce.

The SPDR Gold Shares (GLD) popped 1.1% on Thursday -- back near the highs from mid-July in the $171 area. That represents 50% of the decline since early June. GLD is slightly above its 200-day average and right at the underside of its 50-day average. But moving averages in a sloppy environment (like the one that GLD has been in for almost a year) really don't mean a whole lot.

Typically, we don't try to predict what the U.S. Dollar Index (USD) will do because we have had no edge in the past. On occasion, we'll take a stab at a forecast if the Commitment of Traders (COT) data and/or market sentiment gives us a decent read. Since late 2014, the USD has traded in a volatile range, moving up to the 103 area twice, and down to the 90 region twice.

Often overlooked amid gyrations in the stock market is dividend income, which is an important element of total return. Between 1930 and 2012, dividend income accounted for 42% of 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. 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 1Q21 EPS season is mostly in the books, with retailers the last group to report over the next two weeks. The results were impressive -- but came against an easy comparison with last year's 1Q, when the world started to shut down to fight COVID-19. Through early May, Refinitiv reported that S&P 500 earnings rose 50.4% year over year -- the best quarter since 1Q2010. Some 87% of companies have come in ahead of expectations, up from the prior four-quarter average of 76%, according to Refinitiv. Where is the growth? Consumer Discretionary remains atop the list with a 170% earnings increase. Financials is second at 130%. Only Industrials is expected to remain negative -- with a 2% decline. Even the Energy sector, expected to have an earnings decrease at the start of the quarter, is now poised for 8% growth. Our analysts are always on the lookout for companies that raise their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst for strong returns in the quarters ahead. Here are 20 BUY-rated companies in Argus coverage at which management has raised guidance or increased its outlook during the 1Q21 EPS reporting season.

Stocks were mixed on Thursday morning following news that the Biden administration would support intellectual property waivers on coronavirus vaccines. Pfizer and Moderna shares were down sharply, though JNJ was flat. On the employment front, the Labor Department said that first-time claims for state unemployment benefits fell to 498,000 for the week ended May 1, down from 590,000 a week earlier and below the Bloomberg consensus of 538,000. The Dow rose 0.4%, the S&P rose 0.1%, and the Nasdaq fell 0.3%. Crude oil fell 1% to $65 per barrel, while gold traded near $1815 per ounce.