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.

How High Is Up?

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

Stocks rose on Thursday morning as investors awaited the November employment report on Friday. Weekly unemployment claims were largely in line with expectations. The Labor Department said that first-time claims rose by 1,000 to a seasonally adjusted 220,000 for the week ended December 2, slightly below the Reuters consensus forecast of 222,000. Continuing claims fell by 64,000 to 1.861 million. Meanwhile, outplacement firm Challenger, Gray & Christmas said that U.S. employers announced 45,510 layoffs in November, up 24% from October but down 41% from November 2022. The Dow was flat, the S&P rose 0.5%, and the Nasdaq rose 0.7%. Crude oil rose 1% to $70 per barrel, while gold fell $5 to $2043 per ounce.

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.

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.

Dimming Optimism on Possible Rate Cuts

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).

In this edition, Westpac going in right direction; Morningstar retiring moat trend rating; Corteva on right path; and Guardant Health, Fresenius SE, and Intellia Therapeutics.

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.

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Stocks have recovered thus far in 2023, but gains have been largely driven by only a handful of high-tech companies. Inflation remains high and the Fed continues to raise rates. Is a recession in the offing? With all the uncertainty, is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

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.

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 finished mostly lower on Thursday amid more signs of weakness at regional banks, continued debt ceiling concerns, and new inflation and employment data. The Labor Department's producer price index showed progress against inflation, as prices rose at a slower annual rate in April. First-time claims for state unemployment benefits also rose from the prior week, pointing to a tighter labor market. On the earnings front, Disney shares dropped nearly 9% after the company reported disappointing earnings and a decline in Disney+ subscribers. The Dow fell 0.66%, the S&P fell 0.17%, and the Nasdaq rose 0.18%. Crude oil traded near $71.50 per barrel, while gold fell $17 to $2021 per ounce.

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 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 Monday morning as investors reassessed the outlook for further Fed rate hikes in the wake of the hot January employment report released on Friday. On the earnings front, Tyson Foods fell 4% after the meat producer reported disappointing fiscal 1Q earnings, driven by higher livestock costs and declining margins. Dell Technologies fell more than 3% after announcing the latest in a series of job cuts by major Tech companies. The Dow fell 0.2%, the S&P 0.5%, and the Nasdaq 0.6%. Crude oil traded near $73.50 per barrel, while gold rose $5 to $1881 per ounce.

Rapidly rising inflation 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. As well, those fixed-income returns are from eras when the 10-year Treasury bond yield was much higher than the current 3.5% level. So what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate.

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 over 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.

Each December, Argus surveys its team of analysts, seeking their best ideas for the upcoming year. The Argus Research team draws on its experience (the average analyst has 18 years of Wall Street experience and 10 year at Argus), as well as the company's proprietary six-point research framework and earnings and valuation models to make the calls. Argus analysts cover the waterfront (every sector from Energy to Healthcare to Consumer to Technology), so each sector is represented. This year's list includes some long-time favorites, as well as some recent upgrades and new initiations. The list includes mostly large-caps and mid-caps, and both growth and value stocks. We will be going over the list in more detail during our January webinar and detailing why each stock has been selected by the covering analyst. In the interim, more information on each of these BUY-rated stocks is available on our website.

Runaway inflation -- an 85% rate -- has sent Turkish 10-year bond rates soaring above 10%. A relatively high inflation rate of 13% is also propping up 10-year bond rates in Brazil. But interest rates around the rest of the world generally are much lower, as they are in Europe and the U.K., or are even flat at 0.0%, such as in Japan. We would avoid over-weighting foreign-government fixed-income securities at this time, given their volatile yields, sovereign risks, and repatriation issues. In the U.S., the Federal Reserve is in the later innings of its fight against inflation, and most likely will be batting/battling for the next 1-2 quarters. As such, we look for long-term U.S. interest rates to remain relatively stable over the next few months, but then move lower as unemployment rises and the economy teeters near recession. Our advice to fixed-income investors seeking current returns is to focus on short to intermediate (two-year to seven-year) U.S. Treasuries and floating-rate securities. We recommend paring back positions in inflation-protected securities as inflation rates may have peaked. For specific ideas among closed end funds, exchange traded funds, preferred stocks, and common stocks, please see our Fixed Income Strategy Report.

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 Corteva Inc (CTVA); Dell Technologies Inc (DELL); Exxon Mobil Corp. (XOM); Thermo Fisher Scientific Inc. (TMO) and the Focus List deletions are Linde Plc (LIN); Lilly(Eli) & Co (LLY); ASML Holding NV (ASML); EOG Resources, Inc. (EOG).

ESG (Environmental, Social, Governance) investing continues to grow. According to the Global Sustainable Investment Association, global assets under management in ESG strategies had grown to $40 trillion in 2020, up from $23 trillion in 2016 and on track for $50 trillion by 2025. 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. In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others. 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 the climate, hunger, poverty, disease, shelter, and workers' rights. At Argus Research, we track ESG developments at specific companies as part of our Management analysis - one of the six points in our proprietary Six-Point Fundamental Approach. In addition to reviewing and measuring the ESG proclamations from the companies under coverage, we partner with an ESG research firm, the JUST Capital Foundation, and leverage its analysis and insights on the topic as well. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric, inclusive form of capitalism that reflects the priorities of the American public. JUST utilizes a combination of data-driven research and strategic engagement in an attempt to shift norms and practices in corporate America and the financial markets. JUST ESG Custom Ratings rank stocks in the Russell 1000 on criteria using a scale of 1-100. Drawing on the JUST Capital rankings, we have compiled focused lists of companies followed by Argus Research that are in position to have this type of "sustainable impact" on the environment, workplace, community, and marketplace. These firms have exemplary records not only in delivering on the bottom line, but also in improving the environment, contributing to community relations, and showing respect for their employees. We also have a Theme Model Portfolio based in part on the ESG criteria. To build the Argus U.S. ESG Model Portfolio, we applied financial concepts such as industry diversification, income generation, risk reduction and growth at a reasonable price to our various lists. In addition, all stocks must be on the Argus BUY list. Here are the new stocks that have been added to the Argus U.S. ESG Model Portfolio. For more JUST Score details on these companies, and others in the portfolio, please visit the JUST Capital website, www.justcapital.com.

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.

Crude oil (WTI) had quite a day on Monday, falling all the way to $75.27 early on -- which was a bit lower than the level hit in late September. But oil then stormed back, closing near $80 and setting up a very interesting potential double bottom -- and maybe even the end of the correction that has been in play since June (when crude was up at $123). Yes, we are a bit over our skis in suggesting an end to the correction. But it's possible that oil is tracing out a large cup pattern.

Stocks fell on Monday morning at the start of the holiday-shortened week, led by sharp losses in Energy and Consumer Discretionary stocks. Disney shares rose 7% after the company announced that former CEO Bob Iger would return to the top job, replacing Bob Chapek, who had served as CEO for less than three years. The Dow fell 0.3%, the S&P 0.6%, and the Nasdaq 1.0%. Crude oil fell $5 to $75 per barrel, while gold fell $18 to $1736 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.

This year is turning into one of the worst for the S&P 500. At Monday's close, the year-to-date (YTD) return excluding dividends was an abysmal -24.2%. Over the past 30 years, this loss was exceeded only in 2008, when the "500" collapsed 38.5% during the financial crisis. The index is just a tick worse than 2002, when it declined 23.4%. Even after all these losses this year, we still do not know whether we are even in a recession yet -- and corporate earnings estimates for 2022 and 2023 have not been cut very much.

We are starting to see both relative as well as absolute strength from Financial sector stocks, as the S&P Financial Sector Fund (XLF) has been outperforming the S&P 500 since August 4. While a month of outperformance isn't a whole lot to hang your hat on, it is interesting for several reasons that may give this early trend some time to play out.

Stocks fell on Friday morning, led by sharp declines in the Consumer Discretionary, Materials, and Financial sectors. On the earnings front, Deere shares fell 2% after the farm equipment maker posted mixed fiscal 3Q results and lowered its full-year earnings forecast. Bed Bath & Beyond plunged 40% after meme stock investor Ryan Cohen sold his 9.8% stake in the company. The Dow fell 0.8%, the S&P 1.2%, and the Nasdaq 2.0%. Crude oil rose slightly to $91 per barrel, while gold fell $10 to $1761 per ounce.

West Texas Intermediate (WTI) dipped below $87/barrel in recent days, the lowest level since January. We thought crude oil was tracing out a false breakdown after falling to $87 a few weeks ago and then breaking above the last breakdown point of $93. WTI ran up to its 200-day simple and 50-week averages near $95 late last week, but ran out of gas.

Commodity prices have reversed an upward trend that had been in place since the early days of the pandemic, based on concerns that global economic growth will be slowing as central banks raise interest rates to quell inflation. Copper prices are down more than 25% from springtime highs, while soybeans are off by 6%. Crude oil prices are down 25% since peaking in March. Even given the sell-off, the commodity price rally post-pandemic has lifted many prices above their historical averages. Copper at $7,500 per ton is about 10% above the historical average, while soybeans at $680 per ton are 50% above the historical average price. Oil at $90 per barrel is 25% above the historical average of $72. We anticipate continued above-average pricing for both soybeans and copper, based on geopolitical-related shortages (soybeans) and secular global demand trends (copper, which is important in electric vehicles and communications equipment). We think oil prices may soon resume their long-term downtrend based on continued focus on EVs and clean energy. Our rating on the Basic Materials sector is Over-Weight and we recommend well-managed, financially strong industry leaders that are able to take market share during challenging periods for the Chemical, Metals, Ag and Paper industries.

The S&P 500 broke out of what looked like a bearish wedge, rising 1.2% and 3.9% over the past two days. The next piece of chart resistance is from the prior high and breakdown level at 4,180. Even after the spike, the 14-day relative strength index (RSI) remains in the bear-market zone and has not cycled into overbought territory (a sign of consistently strong price) since November.

Crude oil has been one of the more-volatile markets since the middle of June. WTI peaked at $123.68 on June 14, and traced out an ABC decline to $95.10 as of July 6. It rebounded Thursday, finishing at $102.26, up 3.8%. As we have said, key chart support as well as the 200-day average sits in the low $90s. On the upside, there is significant chart resistance overhead starting in the $110 region.

Gold and silver have been in the doghouse over the past three months, following gold's peak at $2,079/oz. and silver's top at $27.50/oz. We think there were two key reasons for the weakness: a strong rally in the U.S. Dollar Index and the spike in interest rates. The greenback was at $97 in early March and ripped to $105 by May 12. The five-year yield was at 1.6% in early March. By late April/early May, the note had exceeded 3%. That is called a "perfect storm" in intermarket technical analysis. We thought the metals were supposed to be an inflation hedge. No! They are a hedge against a falling currency.

Reading the Tea Leaves on Consumers

Maybe, just maybe, we could see a counter rally in the bond market, with rates finally heading lower after a torrid run since late 2021/early 2022. The entire yield curve, from two-year to 30-year, has fallen a bit over the past couple of weeks. While the uptrend for yields remains unbroken, we could see some relief for the stock market, and especially the higher-beta names and indices that were in danger of seeing further bear-market losses.

Tuesday saw more carnage on Wall Street, with the Nasdaq, QQQs, and Russell 2000 (IWM) all closing at bear-market lows. Three S&P sectors finished at new closing lows: Technology (XLK), Financials (XLF), and Communication Services (XLC). The S&P 500 finished with a 2.8% thrashing, and is off 6.4% in the past four days, the largest such decline since the pandemic began. Both the Nasdaq and QQQs lost about 3.9%.

This edition features ESG pitfalls amid mineral resources, the outflow of nurses from the healthcare industry, growth in agriculture, and Liberty Global, Sanofi, and BT Group.

Crude oil (WTI) seems to be the talk of town, soaring to an intraday high of $130/barrel on Monday. But on Wednesday, oil fell all the way to $104 intraday, and by the close had given up 12% or $15 a barrel. WTI settled down Thursday, falling a little over 2% to $106.

Since the pandemic lows of April 2020, commodity prices generally have been rising, fueling inflation, with a few swings along the way. Copper prices had doubled from April 2020 lows by May 2021, but then dipped 7% before rising back to highs. Soybean prices rose almost 80% from the pandemic lows, before also easing 7% and then recovering. Oil prices are still defying gravity, due to the global economic recovery and concerns over oil supplies in Russia, while gold prices have steadied as inflation has perked up. Commodities investors are accustomed to the volatility. Pre-pandemic, the last time the commodities market bottomed was in January 2016, when oil prices were below $30 per barrel and copper was below $4,500 per metric ton, according to the World Bank. We think underlying long-term economic fundamentals are favorable for most commodities (except oil), but project ongoing volatility from the pandemic and geopolitics. A stable/falling dollar helps provide a fundamental foundation for the group. We recently raised our sector recommendation on the Basic Materials group to Over-Weight. The current market weighting of the sector is 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 Chemical, Metals, Ag, and Paper industries.

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.

Market breadth has deteriorated a bit over the past seven trading sessions, as the major indices try to hammer out an intermediate-term bottom. On the S&P 500, 40% of stock are above their 50-day average (all breadth data as of 2/11 close), while 48% are above their 200-day. The recent low reading of 42% was the weakest since 10/2020. Major market declines generally happen when this measure falls below 45%.

The stock market returned to its bearish ways last week, as the January CPI posted its highest annual increase in 40 years and the 10-year Treasury yield pushed up almost to 2%. On Friday, the Dow Jones Industrial Average dropped 504 points, or 1.43%. The S&P 500 fell 1.90%, and the Nasdaq Composite plunged 2.78%. For the week, the DJIA was down 351 points, or 1.00%, the S&P 500 was down 1.82%, and the Nasdaq Composite was off by 2.18%. Year-to-date, the Dow is down 4.40%; the S&P 500 is off 7.29%; and the Nasdaq Composite is back in correction territory, down 11.85%.

Our proprietary Treasury Bond Yield Model is signaling that bond yields are still too low (despite the recent move higher) based on the investment fundamentals. Our model takes into account factors such as current yields, GDP growth, long-term inflation, stock prices, and earnings, in order to make an asset-allocation recommendation between stocks and bonds. We smooth trends out over a five-year period to avoid short-term momentum swings. Our current 10-year T-bond fair value yield is 4.0%. The normal valuation range has a floor of 2.8% and a ceiling of 5.3%. The current 10-year bond yield is around 1.75%, below the low end of the fundamental range and about 55% below fair value. Why is this the case, especially given recent GDP growth and inflation trends (not to mention aggressive fiscal stimulus spending from Washington during the pandemic)? In our view, low U.S. yields more likely reflect technical factors such as heavy buying from overseas investors seeking safety (or at least, yields that are not below zero), rather than the economic fundamentals. From an asset-allocation standpoint, we think bonds remain fully valued compared to stocks and recommend that long-term investors modestly favor equities in their diversified portfolios.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

Since pandemic lows in April 2020, commodity prices generally have been rising, fueling inflation, with a few swings along the way. In May 2021, copper prices had doubled from April 2020 lows, but have since dipped 7%. Soybean prices rose almost 80% from pandemic lows, before easing 7% in recent weeks. Oil prices are still defying gravity, while gold prices have been slipping since August 2020, though have rebounded a bit as COVID fears reignite across the globe. Investors in commodities are accustomed to volatility. Pre-pandemic, the last time the commodities market bottomed was in January 2016, when oil prices were below $30 per barrel and copper was below $4,500 per metric ton. We think underlying long-term economic fundamentals are favorable for most commodities (except oil), but project ongoing volatility from the pandemic. A stable/falling dollar helps provide a fundamental foundation for the group. We recently raised our sector recommendation on Basic Materials to Over-Weight. The current market weighting of the sector is 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 Chemical, Metals, Ag and Paper industries.

Stocks fell on Wednesday morning following more signs of accelerating inflation. The Labor Department reported that U.S. consumer prices rose 6.2% year-over-year in October, up from 5.4% in September and above the consensus forecast of 5.9% growth. On the employment front, first-time claims for state unemployment benefits fell to 267,000 for the week ended November 5, down from 271,000 a week earlier but above the consensus forecast of 260,000. The report was released on Wednesday this week due to the Veterans Day holiday on Thursday. The Dow fell 0.1%, the S&P 0.1%, and the Nasdaq 0.4%. Crude oil traded near $83.50 per barrel, while gold rose $28 to $1859 per ounce.

We recently raised our rating on the Basic Materials sector to Over-Weight. Despite challenges presented by the Delta variant and the tenacity of COVID-19, the global economy continues to reopen, spurring demand for goods and underscoring scarcity across the supply chain. In this environment, we look for demand for commodities to remain robust and pricing to remain strong. The sector accounts for 2.5% of the S&P 500, and includes industries such as chemicals, paper, metals and mining. Over the past five years, the weighting has ranged from 2% to 4%. We think investors should consider allocating 3% of their diversified portfolios to stocks in this sector. The sector is underperforming thus far in 2021, with a gain of 17.7%. It outperformed in 2020, with a gain of 18.1%, and underperformed in 2019, with a gain of 21.9%. Here is how we use our analysts' Materials sector ideas in our Focus List and Model Portfolios.

Recovery Continues Even as Delta Casts Shadow

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13Fs are due 45 days after the end of calendar quarters, and are just now coming in from 1Q21. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of activist investors, according to Vickers.

The trade wars hammered commodities during 2018-2019 and then the coronavirus piled on. But since the lows of April 2020, commodity prices generally have been rising. For example, copper prices were down 28% in April 2020 from 2018 highs as construction stalled, but have since risen more than 80%. Oil prices plunged more than 70% in April 2020 from year-end 2019, but now have more than tripled from historic lows. Meanwhile, soybean prices have risen more than 60% over the past 12 months. Commodity investors are accustomed to volatility. Pre-pandemic, the last time the commodities market bottomed was in January 2016, when oil prices were below $30 per barrel and copper was below $4,500 per metric ton. But recoveries tend to be sharp -- copper is now selling for $9,325 per metric ton. We think underlying long-term economic fundamentals are favorable for most commodities (except oil), but project ongoing volatility from the pandemic. A stable/falling dollar helps provide a fundamental foundation for the group. Yet with the virus still spreading, risk remains high and our sector recommendation to the Basic Materials group is Market-Weight.

The stock market was volatile last week as inflation concerns whipsawed stocks, ultimately pushing them lower on the week. During Friday's session, the Dow Jones Industrial Average increased 361 points, or 1.06%. The S&P 500 was up 1.49%, and the Nasdaq Composite was up 2.32%. For the week, the DJIA was down 397 points, or 1.14%, the S&P 500 was down 1.39%, and the Nasdaq Composite was down 2.34%. Year-to-date, the DJIA is up 12.34%, the S&P 500 is up 11.12%, and the Nasdaq Composite is up 4.20%.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and are now coming in from 4Q20. We review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of activist investors, according to Vickers.