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. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

The Same, Only Different: Our Monthly Survey of the Economy, Interest Rates, and Stocks

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

Stocks rose strongly on Friday morning after lower-than-expected employment growth raised the likelihood of an end to the Fed's rate hike campaign. The Labor Department said that the U.S. economy added 150,000 payroll jobs in October, down from a revised 297,000 in September and below the Reuters consensus forecast of 180,000. In other signs of a cooling labor market, the unemployment rate edged up to 3.9% from 3.8% a month earlier and annual growth in average hourly earnings slowed to 4.1% from 4.3%. The Dow rose 0.7%, the S&P 0.9%, and the Nasdaq 1.2%. Crude oil traded near $82 per barrel, while gold rose $8 to $2002 per ounce.

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. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine, high European inflation or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but 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.

Most commodity prices are lower over the past 12 months, as a global campaign by central bankers to raise rates and reduce inflation has reduced expectations for global GDP growth. By our calculations, the price of wheat is down 10% over the past year, the price of soybeans is down 6%, and the price of nickel is off by 2%. One of the few commodities bucking the price trend is copper. Copper is a light metal and a key component in electric vehicles as well as an important element of power transmission, telecommunication, and HVAC systems. Copper prices of almost $8,500 per metric ton are 25% higher than the long-run average; and are higher by 12% in the past 12 months in the wake of China's decision to drop its Zero Covid policy and focus on economic growth. Despite recent declines, wheat and soybean prices are at 35% and 38% premiums to average prices, respectively, driven in part by market disruption caused by the Russian invasion of Ukraine. Nickel prices are 17% above historic averages as demand increases for EVs that rely on batteries that include the commodity. We think underlying long-term economic fundamentals are favorable for most commodities as global standards of living improve, but project ongoing volatility from inflation, the pandemic, and geopolitical developments. Our sector recommendation on the Basic Materials group is Over-Weight. The current market weighting of the sector is about 2.5%%, and we think investors should consider exposure of 3%-4% in diversified portfolios. We recommend well-managed, financially strong industry leaders that are able to take market share during challenging periods for the Metals, Ag, Chemicals and Paper industries.

Economy and Earnings Send Mixed Signals

Stocks rallied on Thursday as investors weighed strong earnings from Meta Platforms and new GDP and employment data. The Commerce Department said that the U.S. economy expanded at a 1.1% rate in 1Q, helped by strong consumer spending but hurt by weak business investment. Meanwhile, employment data pointed to a still tight labor market. First-time claims for state unemployment benefits fell by 16,000 to a seasonally adjusted 230,000 for the week ended April 22, below the consensus forecast of 248,000. Meta shares jumped after strong first-quarter results, reaching their highest levels since January 2022. Amazon also reported stronger-than-expected sales and earnings after the close, sending the shares up in after-hours trading. The Dow rose 1.57%, the S&P 1.96%, and the Nasdaq 2.43%. Crude oil traded near $75 per barrel, while gold rose slightly to $1997 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.

Despite swings in prices -- copper prices have jumped almost 30% in the past six months, while wheat prices are down 12% -- the current state of commodity prices indicate the world economy generally is in a high-cost environment. By our calculations, these two commodities, along with urea (a proxy for fertilizer and chemical prices) and soybeans, are on average selling for prices that are 20% higher than their individual 20-year averages. The most expensive, on a relative basis, is copper. Copper is a light metal and a key component in electric vehicles as well as an important element of power transmission, telecommunications, and HVAC systems. Copper prices of almost $10,000 per metric ton are 47% higher than the long-run average; and are higher by 29% in the past six months in the wake of China's decision to drop its "zero Covid" policy and focus on economic growth. Wheat and soybeans are selling at 46% and 38% premiums to the average prices, respectively, driven in part by market disruption from the Russian invasion of Ukraine. Urea prices, however, are 4% lower than the long-run average, and are down by 54% in the past six months due to weak demand and declines in natural gas prices, which are an important cost of goods. We think underlying long-term economic fundamentals are favorable for most commodities as global standards of living improve, but we project ongoing volatility from inflation, the pandemic, and geopolitics. We recently raised our sector recommendation to Basic Materials to Over-Weight. The current market weight of the sector is 3.0%, and we think investors should consider exposure of 3%-4% in diversified portfolios. We recommend well-managed, financially strong industry leaders that are able to take market share during challenging periods for the Metals, Ag, Chemicals and Paper industries.

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. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine, high European inflation or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but 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 $15 billion to define a SMID stock.

Stocks fell sharply on Thursday as investors weighed new inflation, employment, and housing market data. Producer prices rose more than expected, raising concerns about continued aggressive rate hikes, while weak housing starts and building permits showed the impact of high mortgage rates. Meanwhile, weekly unemployment claims pointed to a still strong labor market. The Labor Department said that first-time claims for state unemployment benefits fell by 1,000 to 194,000 for the week ended February 11, below the Reuters consensus forecast of 200,000. The Dow fell 1.26%, the S&P 1.38%, and the Nasdaq 1.78%. Crude oil traded near $78 per barrel, while gold rose $3 to $1848 per ounce.

Stocks were mixed on Wednesday morning as investors weighed earnings reports from Tech heavyweights Alphabet and Microsoft. Alphabet shares fell 7% after the company reported much lower 3Q earnings that came in below the consensus forecast, reflecting weakness in digital advertising. Microsoft shares also fell, despite above-consensus fiscal 1Q results, as growth in the company's cloud business slowed sharply from the prior year. The Dow rose 0.5%, the S&P fell 0.2%, and the Nasdaq fell 1.0%. Crude oil rose nearly 2% to $87 per barrel, while gold rose $16 to $1674 per ounce.

Washed Out, Part 2. As the S&P 500, Nasdaq, and Nasdaq 100 test their June bear-market lows and teeter on another major breakdown, we are starting to see some signs that at least a short-term bounce is near. Can we still see a mighty capitulation that gives up another 10%? Absolutely. And that might be what is needed to end the carnage. Another possibility is that the market continues lower over the next few months, never capitulates, and simply takes its time to find new lows.

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.

Monday Tee-Up: Fed, Inflation Data, GDP, and Earnings

Stocks have struggled this year, with the S&P 500 now down over 12% (excluding dividends) so far in 2022. But not every stock has tumbled. Our analysts have been working through earnings season and have come across several stocks in Argus coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, and future dividends and cash flows. After adjusting the models for the latest earnings and dividend information -- most of which has been good -- here are some of the stocks for which we have raised target prices over the past month. All of the following stocks are rated BUY at Argus.

Stocks have struggled in 2022, but insider-sentiment readings from Vickers Stock Research have not at any time suggested a full-on dash to the exits is in order. In general, insiders have bought the dips.

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.

With the majority of companies having reported fourth-quarter earnings, the volume of weekly insider transactions is returning to normal. Almost 1200 insider buy and sell orders met the criteria for inclusion in the latest Weekly Insider Report from Vickers Stock Research. Still, the current level of activity falls short of the robust volumes at this point in the third-quarter earnings-release cycle -- when more than 2100 trades were placed.

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

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

The stock market moved higher last week as earnings season picked up steam. Tech stocks outperformed blue chips, though the margin of outperformance was slim owing to disappointing earnings from some tech names. During Friday's session, the Dow Jones Industrial Average increased 74 points, or 0.21%. The S&P 500 was down 0.11%, and the Nasdaq Composite was down 0.82%. For the week, the DJIA was up 382 points, or 1.08%, the S&P 500 was up 1.64%, and the Nasdaq Composite was up 1.29%. Year-to-date, the DJIA is up 16.57%, the S&P 500 is up 21.00%, and the Nasdaq Composite is up 17.08%.

Of all the small- to mega-cap indices we follow, there are only two that are above their 50-day moving average: the Russell 2000 (IWM) by $0.30 and the S&P SmallCap 600 (SML). Yes, of late we have seen some relative outperformance from small-caps versus mega-caps. But it is certainly not enough to get us excited. Both the IWM and the SML remain in trading ranges going all the way back to March, about seven months ago.

The Argus Research Fundamental Universe of Coverage includes approximately 500 leading U.S. and international companies. We cover the waterfront -- from Technology to Utilities, from Energy to Healthcare. We generally follow the Top 200 most widely held stocks, sourced from our sister company Vickers Stock Research, which collects institutional ownership data from the US Securities and Exchange Commission. From there, we look to identify the next 200-300 leading U.S. and international companies to add to our list. Our Universe of Coverage is dynamic and growing. We are adding stocks to coverage continually and often get ideas from our clients. Here are five of our most-recent additions.

Stocks continued their rally on Friday morning amid strong earnings reports from American Express and Twitter. However, Intel shares fell more than 6%, despite solid second-quarter results, after the company projected declining gross margins over the remainder of the year. The Dow rose 0.5%, the S&P 0.8%, and the Nasdaq 0.8%. Crude oil traded near $72 per barrel, while gold fell $6 to $1799 per ounce.

The Fed Calms the Markets: Our Monthly Survey of the Economy, Interest Rates, and Markets