Stocks were flat to slightly higher on Thursday morning, the final trading day of the first quarter. This week's initial jobless claims were 210,000, down from a revised 212,000 last week. Ongoing unemployment was 1,819,000, an increase of 24,000 from the previous week's revised level. The third estimate of Q4 U.S. GDP came in at 3.4%, an increase of 0.2% from the prior estimate. The change reflects upward revisions to consumer spending and nonresidential fixed investment that more than offset a downward revision to private inventories. The S&P 500 rose 0.1%, while the Dow and the Nasdaq were both nearly flat. Crude oil traded above $82 per barrel and gold was up $21 to $2234 per ounce.

Management's ability to "raise guidance" can often be a catalyst for market-beating returns in the quarters ahead. The fourth-quarter earnings season has crossed the 95% mark and is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a year-over-year gain of almost 10%, according to Refinitiv. That is considerably better than the 4%-7% advance expected at the start of the earnings period. Leading the outperformance were strong gains in Communication Services earnings, up 53%. On the flipside, Energy (like last quarter) is performing the worst, down 22%. Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Here is an initial list of BUY-rated companies in Argus' Fundamental Universe of Coverage at which management raised guidance or increased its outlook during the 4Q23 EPS reporting season.

After a rough 2022, 2023 was a pleasant event, with all the indices posting gains and seven out of 11 S&P 500 (SPX) sectors posting nice to extraordinary gains. At the end of 2022, about 50% of SPX holdings were above their 50- and 200-day averages. At the end of 2023, 90% were over their 50-day and 78% were above their 200-day. The Nasdaq 100 (QQQ) finished 2023 with 93% of issues above their 50-day and 85% over the 200-day, versus 40% and 43%, respectively, in 2022.

Dividend income is often overlooked amid gyrations in the stock market. 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%. 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. High-yield stocks typically have dividends that pay out in the 5%-8% range. Though the income appears attractive, the share prices of high-yield stocks may be at risk. Dividend-growth stocks typically have lower yields, often in the 1.0%-2.5% range. But the lower-yielding dividends are not likely to be a huge component of cash flow, leaving management teams with other value-additive options for deploying cash. Further, while the yields are not as high, management teams may be more likely to boost the payouts over time, as earnings grow.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.

Management's ability to "raise guidance" can often be a catalyst for market-beating returns in the quarters ahead. The third-quarter earnings season is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a 6.3% gain, year-over-year, according to Refinitiv. That is considerably better than the 1.0% expected at the start of the earnings period, and should be enough to end the "earnings recession" that investors have endured over the past three quarters. Propelling the 3Q outperformance were strong gains in Communication Services, up 46%, while Energy again (like last quarter) is performing the worst, down 33%. Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Here is an initial list of BUY-rated companies in Argus Coverage at which management raised guidance or increased its outlook during the 3Q23 EPS reporting season.

Yesterday, we noted that the percentage of stocks trading above intermediate- and long-term trendlines (simple moving averages) had not yet tracked higher during the recent rally jag. Another indicator that this market is still "too thin to win" has been sector performance, which went from broad and healthy at the end of July to dangerously narrow at the end of October.

Stocks edged up on Thursday. Pending home sales fell nationwide by an average of 7.1% in August. Elevated mortgage rates, which reached a 23-year high this week, continue to keep most homeowners from relocating, thus reducing available inventory for prospective buyers. Turning to stocks, shares of Peloton Interactive (PTON) popped today on the announcement of a five-year partnership with Lululemon Athletica (LULU). Jabil Inc. (JBL) soared 19% after the contract manufacturer exceeded consensus non-GAAP EPS expectations for fiscal 4Q23 and provided above-consensus EPS guidance for fiscal 1Q24. The Dow rose 0.4%, the S&P 0.6%, and the Nasdaq 0.8%. Crude oil fell 1% to $91.80 per barrel, while gold traded fell to $1883 per ounce.

During earnings season, analysts focus on earnings growth, but also on the quality of the earnings that companies are generating. There are three drivers to EPS growth: higher sales, wider margins, and lower shares outstanding. The reduction in shares outstanding, which is caused by corporate share buybacks, is the lowest-quality driver of EPS growth. Higher sales -- as customers demand and pay for more products and services -- is the highest quality. Margin management is in the middle. Consistently wider margins often are a sign of good management teams, which are more often able to grow revenues faster than they are growing costs. But that's a tall order in periods of high inflation (which raises the prices of Cost of Goods Sold) and of rising interest rates (which result in higher financing costs). What's more, there's a cap to margins as they don't rise indefinitely. (That is one of those statistics for which the concept "reversion to the mean" is relevant.) Last year, operating margins for S&P 500 companies averaged 11.3%. That was high, but down from a 15-year peak of 13.3% in 2021 and compares to the long-run average of 10.2%. It is a fair bet that margins will be under pressure in coming quarters due to inflation and high rates. Investors will have to rely on revenue growth and share buybacks to drive EPS growth during this period. Given the challenges, we think the year will end with a low-single-digit growth rate for S&P 500 earnings.

Stocks rose on Thursday as investors weighed strong results from PepsiCo and Delta Airlines and awaited the first 2Q earnings reports from major banks on Friday. Inflation data was favorable, as both the headline and core PPI declined in June. On the employment front, first-time claims for state unemployment benefits fell by 12,000 to a seasonally adjusted 237,000 for the week ended July 8, below the Reuters consensus of 250,000. The Dow rose 0.14%, the S&P 0.85%, and the Nasdaq 1.58%. Crude oil rose 2% to $77 per barrel, while gold rose $3 to $1965 per ounce.

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.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. Performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights.

Stocks and bonds both rallied in March, and both asset classes are in positive territory for the year-to-date. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income, given the rise in yields since early 2022. We are now balanced on large- and small-caps. We favor large-caps for growth exposure and financial strength, while small-caps are selling at historical discounts relative to large-caps and offer value. Our recommended exposure to small- and mid-caps is now 15%-17% of equity allocation, in line with the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing five-year period, though international stocks have performed well recently. We expect the long-term trend favoring U.S. stocks to re-emerge, given volatile and difficult-to-predict global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Value outperformed in 2022 due to the negative impact of rising interest rates on growth valuations. As rates decline, growth stocks are recovering in early 2023. Over the longer term, we anticipate that growth, led by the Technology and Healthcare sectors, will top returns from value, led by the Energy and Materials sectors, this due to favorable secular, demographic, and regulatory trends.

Economy Chugging but Possibly Slowing as Earnings Season Approaches

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.

10 Investment Themes for 2023

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.

Stocks plunged to new lows on Thursday, with sharp losses in most sectors. The Commerce Department said that the U.S. economy contracted at a 0.6% pace in 2Q, unchanged from its previous estimate. Meanwhile, weekly employment data improved, with both initial and continuing unemployment claims coming in below consensus estimates. Carmax shares dropped more than 24% after the company posted much weaker than expected 2Q sales and earnings, citing the impact of inflation on used car sales. Airline stocks also fell sharply on concerns about canceled flights due to Hurricane Ian. The Dow fell 1.54%, the S&P 2.11%, and the Nasdaq 2.84%. Crude oil fell to $81.50 per barrel, while gold fell slightly to $1669 per ounce.

The U.S. economy generated an impressive 315,000 new jobs in August, ahead of consensus expectations that were in the 270,000 range and our forecast of 300,000. The unemployment rate ticked higher to 3.7% (to the pre-pandemic level) as the labor force participation rate increased by 30 basis points to 62.4%. Average hourly earnings increased 10 cents month-to-month and are now 5.2% higher year-over-year, in line with the month-ago rate. Revisions to the jobs totals in the two prior months cut 107,000 jobs from the economy. In August, jobs gains occurred in professional and business services, healthcare, government, retail, construction and manufacturing. The retail industry was relatively steady in terms of employment. The employment report, though lower month-over-month, suggests that the consumer segment of the economy is likely to remain on a growth track, despite the impact of Federal Reserve interest-rate hikes, the Russian invasion of Ukraine, and higher prices at the gas pump. Stock futures were negative ahead of the announcement, but are now higher as the report gives investors hope that the Fed can engineer a soft landing.

Monday Tee-Up: Housing and Earnings

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 is being 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.

This is among our most important themes for 2022, and stretches across industries. We think companies that consistently raise their dividends at a double-digit rate are sending off three important signals amid 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. The third factor is especially important as the pandemic upended the nation's recent record of long-term economic growth. Here are 19 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.

The U.S. economy added 428,000 jobs in April, in line with the number of jobs created in March and the Argus Research forecast of 425,000. Turning to other data points, the unemployment rate was steady at 3.6%, and the number of unemployed persons was down to 5.9 million from 6.0 million in the prior month. Average hourly earnings increased 10 cents month-to-month and are now 5.5% higher year-over-year, compared to 5.6% a month ago. Revisions to the two prior months subtracted 39,000 jobs from the economy. In April, jobs gains occurred in leisure and hospitality as well as retail, which points to strength in consumer spending in the months ahead; professional and business services; manufacturing; and construction. The report indicates that the economy remains on a growth track, despite the impact of the new COVID variants, the Russian invasion of Ukraine, and higher prices at the gas pump.

The U.S. economy added 431,000 jobs in March, down from the 750,000 jobs created in February and below the consensus expectation for 500,000 new jobs. Turning to other data points, the unemployment rate dropped two-tenths of a percent to 3.6%, and the number of unemployed persons was down to 6.0 million from 6.3 million in February. Average hourly earnings increased 13 cents month-to-month and are now 5.6% higher year-over-year, compared to 5.1% a month ago. Revisions to the two prior months added another 95,000 jobs to the economy. In March, jobs gains occurred in leisure and hospitality as well as retail, which suggests strength in consumer spending in the months ahead; professional and business services; manufacturing; and construction. The report indicates that the U.S. economy remains on a growth track, despite the impact of the new COVID variants, the Russian invasion of Ukraine, and higher prices at the gas pump.

Stocks rose strongly on Thursday as investors continued to assess the Fed's rate hike plans along with developments in Ukraine, where the war with Russia entered its second month. Employment data was better than expected. The Labor Department said that first-time claims for state unemployment benefits fell to 187,000 for the week ended March 19, down from 215,000 a week earlier and below the Bloomberg consensus of 210,000. Continuing claims of 1.35 million were also down from the prior week and below consensus. Core capital goods orders fell 0.3% in February after rising 1.3% in January, driven by lower orders for transportation equipment. The Dow rose 1.02%, the S&P 1.43%, and the Nasdaq 1.93%. Crude oil traded near $111 per barrel, while gold rose $25 to $1963 per ounce.

Stocks rose strongly on Thursday as investors continued to assess the Fed's rate hike plans along with developments in Ukraine, where the war with Russia entered its second month. Employment data was better than expected. The Labor Department said that first-time claims for state unemployment benefits fell to 187,000 for the week ended March 19, down from 215,000 a week earlier and below the Bloomberg consensus of 210,000. Continuing claims of 1.35 million were also down from the prior week and below consensus. Core capital goods orders fell 0.3% in February after rising 1.3% in January, driven by lower orders for transportation equipment. The Dow rose 1.02%, the S&P 1.43%, and the Nasdaq 1.93%. Crude oil traded near $111 per barrel, while gold rose $25 to $1963 per ounce.

The U.S. economy added 199,000 jobs in December, well below the consensus expectation for 450,000 new jobs. Turning to other data points, the unemployment rate dropped three-tenths of a percent to 3.9%, and the number of unemployed persons was down to 6.3 million from 6.9 million in November. Average hourly earnings increased 19 cents month-to-month and are 4.7% higher year-over-year. Revisions to the two prior months added another 141,000 jobs to the economy. In December, jobs gains occurred in leisure and hospitality, professional and business services, transportation and warehousing, construction, and manufacturing. The report was again a surprise to the Street, which was anticipating the economy would be building on previous gains as the impact of the Delta variant faded and before Omicron arrived. Indeed, there are some inconsistencies. How does the number of unemployed people decline more than 600,000 when only 200,000 new jobs were created? And why as the ADP report on private employment indicated average jobs gains of 650,000 over the past two months? We expect these issues to clear up over the next few months, as the economy continues to recover from and move beyond the pandemic.

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. But 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.

10 Investment Themes for 2022: Part 1 of 3

September more than lived up to its fearsome reputation, with a nearly 5% decline for the S&P 500. The Nasdaq suffered a worse decline as growth equities were slammed by rising rates and rekindled inflation fears.

With earnings season underway, the volume of insider transactions has slowed markedly. Overall insider sentiment remains frustratingly non-committal, with a bias toward caution yet certain trends slowly improving.

Stocks fell sharply on Thursday amid continued concerns about rising inflation and soaring bond yields, as the yield on the 10-year Treasury rose above 1.7%. On the employment front, the Labor Department reported that first-time claims for state unemployment benefits rose to 770,000, up 45,000 from the prior week and above the consensus forecast. Continuing claims fell slightly to 4.124 million, but were also above consensus expectations. The Dow fell 0.46%, the S&P 1.48%, and the Nasdaq 3.02%. Crude oil fell sharply to $59 per barrel, while gold rose $6 to $1733 per ounce.

Ten Investment Themes for 2021

The Argus Research Universe of Analyst 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, which we source from our sister company Vickers Stock Research, which collects institutional ownership data from the U.S. Securities & 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 continually adding stocks to coverage and often get great ideas from our clients. Here are five of our most-recent additions, all of which are rated BUY.

The Argus Research Universe of Analyst 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, which we source from our sister company Vickers Stock Research, which collects institutional ownership data from the U.S. Securities & 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 continually adding stocks to coverage and often get great ideas from our clients. Here are five of our most-recent additions, all of which are rated BUY.

Economic Recovery Continues, with Stutter-Steps

Economic Recovery Continues, with Stutter-Steps