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.

Bumps in the Soft Landing

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.

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 fell on Tuesday morning as investors weighed results from major retailers and awaited earnings from Nvidia after the close. Lowe's shares fell after the company cut its full-year guidance, citing weaker purchases of big-ticket items and reduced spending on DIY projects. Best Buy shares also fell following mixed 3Q results and a lower full-year sales forecast. On the housing front, the National Association of Realtors said that U.S. sales of existing homes fell 4.1% in October to a seasonally adjusted annual rate of 3.79 million units, below the Reuters consensus forecast of 3.90 million. The Dow fell 0.2%, the S&P 0.4%, and the Nasdaq 0.8%. Crude oil fell slightly to $77.50 per barrel, while gold jumped $27 to trade near $2007 per ounce.

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.

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.

As of the close on Friday, August 18, the major indices had fallen in three consecutive weeks for the first time since December 2022, when they all fell four weeks in a row. The Nasdaq fell to its key 21-week exponential average (EMA) on that Friday and bounced, while the S&P 500 was within 10 points of its 21-week EMA before bouncing. The Nasdaq 100 (QQQ) got within four points of the average and popped. Rebounds on Friday did nothing to erase the short-term downtrends, as the 10- and 21-day EMAs for the indices are above declining price and the indices all undercut their 50-day.

The major indices continue to march higher and are all at or approaching important resistance levels, while sentiment continues to get more overheated. The S&P 500 broke above trendline resistance off the peaks since mid-December on a minor basis on Thursday, with the next resistance a 78.6% Fibonacci retracement of the bear market at 4,535. The next piece of chart resistance is up at 4,632 from the high back in late March. The current SPX formation looks like a bearish rising wedge, but to complete this pattern, the lower trendline needs to give way. This line comes in around 4,370 when projecting out two weeks.

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.

Dividend growth is among our most important themes for 2023, and stretches across industries. We think companies that raise their dividends consistently 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 clearly 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 during periods of economic weakness and an outright earnings recession. Here are 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.

New Market Highs in 2023

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 recently raised our rating on the Technology sector to Over-Weight from Market-Weight. As interest rates start to fall, IT demand in enterprise and data center markets is holding up. And mounting interest in ChatGPT could herald the age of AI, which could be a huge industry driver. Over the long term, we expect the Technology sector to benefit from pervasive digitization across the economy, greater acceptance of transformative technologies, and the development of the Internet of Things (IoT). Healthy company and sector fundamentals are also positive. For individual companies, these include high cash levels, low debt, and broad international business exposure. The sector is outperforming the market thus far in 2023, with a gain of 12.4%. Tech underperformed the market in 2022, with a loss of 28.9%, and outperformed in 2021, with a gain of 33.4%. The P/E ratio on projected 2023 earnings is 23, above the market multiple. Earnings are expected to grow 14.5% in 2023 after having fallen 3.3% in 2022. Earnings rose 37.9% in 2021 and 7.7% in 2020. The sector's debt ratios are below the market average, as is the average dividend yield of 0.5%. Here is how we use our analysts' Technology sector ideas in our Focus List and Model Portfolios.

The S&P 500 broke below some important intermediate-term support late last week, while some of the other indices fell off a cliff -- including the NYSE Composite, the Dow Industrials, the S&P 400, and the Russell 2000. The bullish breakouts by the NYSE and S&P 400 were destroyed, and we have a very specific feeling about false breakouts: they are not good. The majority of weakness was caused by issues in the banking industry, both here and abroad, and pushed major indices back below their 200-day averages. If market participants knew the banking news before events unfolded, most -- if not all -- would have predicted a trip back to the October lows, or worse.

Well, the Valentine's Day massacre came two days late. Yes, we are exaggerating -- but some recent and some former market leaders (with certain stocks on both lists) did have an ugly Thursday. The PPI report came in hotter than expected and knocked stocks lower, but the market seemingly settled down. But investors then considered that St. Louis Federal Reserve President James Bullard and Cleveland Fed President Loretta Mester wanted the Fed to raise the funds rate by 50 basis points at the FOMC meeting earlier this month. We have heard this many times from Bullard, and it seemed like the market was finally getting tone death to his proclamations. Neither Bullard nor Mester are voting members of the FOMC.

February Fumble

The major blue-chip indices (SPX, OEX, NYSE, INDU) as well as the S&P 400 MidCap (MDY) and the small-cap Russell 2000 (IWM) all remain in nice bullish channels off their respective October lows. The Nasdaq as well as the Nasdaq 100 (QQQ) have traced out higher highs and higher lows, but continue to have a difficult time generating a lot of upside.

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 innovative U.S. economy.

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.

GDP Negative for Two Consecutive Quarters

Year-to-Date Review and 2022 Outlook

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, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services 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 more than $24 trillion at the end of 2021. That's growth of 24-times. Meanwhile, the U.S. population has grown less than three-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven, in large part, by innovation.

Economy Keeps Chugging as Inflation Whittles away Confidence

Raising Earnings Estimates for 2021 and 2022

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, has expanded to record levels. If U.S. corporations weren't innovating, 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 nearly $23 trillion at the end of 1H21. That's growth of 23-times. Meanwhile, the U.S. population has grown less than three-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven, in large part, by innovation. In addition, the value of listed corporations on U.S. stock exchanges at the end of 2020 was approximately $41 trillion, according to SIFMA, representing 38% of global equity market capitalization, while U.S. GDP represented only 26% of global GDP. The current low level of interest rates and the relatively high level of the dollar both attest to the confidence that global investors have in the innovative U.S. economy.

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 edged higher on Thursday morning following new weekly employment data. The Labor Department said that first-time claims for state unemployment benefits fell to 310,000 for the week ended September 4, down from 345,000 a week earlier and below the consensus forecast of 335,000. Continuing claims fell to 2.783 million, down from 2.805 million a week earlier but slightly above consensus. The Dow rose 0.2%, the S&P 0.1%, and the Nasdaq 0.3%. Crude oil rose slightly to nearly $70 per barrel, while gold traded near $1790 per ounce.

The Technology sector started slowly in 2021 as investors focused on value stocks. But the sector has come on strong in recent months (up 22% year-to-date) and now is outperforming the market (up 20.7%) as well as value sectors such as Consumer Staples (+8%), Utilities (+10%), Materials (+17%), and Industrials (+18%). The sector is the largest in the U.S. market and now accounts for more than 28% of the S&P 500. Over the long term, we expect the sector to benefit from pervasive digitization across the economy, greater acceptance of transformative technologies, and the development of the Internet of Things (IoT). Healthy company and sector fundamentals are also positive. For individual companies, these include high cash levels, low debt, and broad international business exposure. We have an Over-Weight ranking on the Tech sector and think investors should look to allocate up to 30% of their diversified portfolios to the group. Here is how we use our analysts' Tech sector ideas in our Focus List and Model Portfolios.

Argus Outlook for Growth Sectors

We talk often about market breadth, which is a summation of how all stocks are doing within an index. This would include advance/decline lines, the percentage of stocks in an index that are above a certain moving average, the percentage of stocks in an index that are making new 52-week highs or lows, and the percentage of stocks that are on point & figure buy signals or the Bullish Percent Index (BPI).

For the month of May, the S&P 500 managed to eke out a 0.6% gain; the Nasdaq made a nice comeback, cutting its loss to 1.5%; the Nasdaq 100 (QQQ) dropped 1.2%; the S&P 400 rose 0.2%; and the Russell 2000 (IWM) rose 0.3%. Once again, action was seen in all 11 S&P sectors as well as in individual names.

Inflation: Out of the Bag?

We are again addressing the issue of extreme sentiment, as fear remains absent from the stock market and has been missing in action since the COVID-19 collapse back in February and March of 2020.

March was an interesting month, to say the least. Some indices got slammed in the beginning of the month, rebounded until mid-month, headed lower again until about March 25, and then rebounded to close the month. Sector leadership was tilted toward defensive stocks, and even though some higher-beta sectors barely rose, the indices either eked out small gains or actually had a nice month. But it certainly didn't feel like 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, prior to the pandemic, had expanded to record levels. And now, the U.S. Healthcare industry is mobilizing to improve COVID-19 testing, treatments and vaccines. Consider that U.S. GDP was approximately $1 trillion in 1930 but nearly $22 trillion at the end of 2019. That's growth of 22-times. Meanwhile, the U.S. population has grown less than 3-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven in large part by innovation. In addition, the value of listed corporations on U.S. stock exchanges at the end of 2020 was approximately $32 trillion, representing 41% of global equity market capitalization, while U.S. GDP represented only 25% of global GDP. The current low level of interest rates (the benchmark 10-year Treasury bond yield is 1.1%) and the relatively high level of the dollar both attest to the confidence that global investors have in the innovative U.S. economy.

With earnings season drawing to a close, the volume of weekly insider transactions is returning to normal. As such, there is increased relevance in the signals being thrown off by corporate executives, directors and beneficial owners. And those signals are little changed from what we've seen over the past several weeks. Insider sentiment remains broadly cautious, with the caution led by insiders at companies that list on the tech-heavy Nasdaq.

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 Technology sector has led the market recovery from the COVID-19 depths of March 2020. Through November 20, the sector was up 31% for the year, compared to a 10% gain for the S&P 500. The Tech sector is the largest in the U.S. market and now accounts for more than 27% of the S&P 500. Over the long term, we expect the Tech sector to benefit from pervasive digitization across the economy, greater acceptance of transformative technologies, and the development of the Internet of Things (IoT): Healthy company and sector fundamentals are also positive. For individual companies, these include high cash levels, low debt, and broad international business exposure. We have an Over-Weight ranking on the Tech sector and think investors should look to allocate up to 30% of their diversified portfolios to the group. Here is how we use our Tech sector ideas from our analysts in our Focus List and Model Portfolios.

Earnings: Better than Expected, but Still Down

Markets rallied sharply to open the 11/9/20 trading week. The rally partly reflected the fact that legal challenges (and associated likely chaos) to the Biden presidency were failing to gain traction, and mainly because Pfizer announced highly positive news about the efficacy of its COVID-19 vaccine.

While nothing seems normal these days, the current dataset from Vickers Stock Research indicates a neutrality in insider sentiment that is entirely appropriate and expected as summer winds down. Dare we say it, even with all the uncertainties of the day, corporate executives, directors and beneficial owners seem little inclined to worry. Of course, hand-in-hand with that premise, this same group seems unable to find opportunities as well.

While nothing seems normal these days, the current dataset from Vickers Stock Research indicates a neutrality in insider sentiment that is entirely appropriate and expected as summer winds down. Dare we say it, even with all the uncertainties of the day, corporate executives, directors and beneficial owners seem little inclined to worry. Of course, hand-in-hand with that premise, this same group seems unable to find opportunities as well.