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.

In the eight weeks before the start of earnings season, insider-sentiment data from Vickers Stock Research was consistently positive. On a scale where any reading below 2.00 is bullish, Vickers' Total One-Week Sell/Buy Ratio never got higher than 1.99 and was as low as 1.06. That resulted in a peak bullish Total Eight-Week Sell/Buy Ratio of 1.71 on October 15, just as the earnings onslaught began.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes trends in insider trading and institutional ownership. Form 13Fs are due 45 days after the end of calendar quarters and have now come in from 2Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. 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.

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 have now come in from 1Q22. 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 the data from Vickers.

This edition features TripAdvisor's journey, Berkshire's burgeoning bank account, acquirers being a good bet, and Assa Abloy, Polaris, and ServiceNow.

Stocks rallied on Thursday, recovering from recent sharp losses as investors weighed more 1Q earnings from major companies and new GDP and employment data. The Commerce Department reported that the U.S. economy contracted at a 1.4% annualized rate in 1Q, below the consensus growth forecast of 1.1% and the first decline since 2Q20. Weekly employment data was better than expected. First-time claims for state unemployment benefits fell to 180,000 for the week ended April 23, down from 185,000 a week earlier and below the Bloomberg consensus of 184,000. On the earnings front, Meta shares rose more than 17%, despite mixed 1Q results, after the company reported better-than-expected growth in daily active users. The Dow rose 1.85%, the S&P 2.47%, and the Nasdaq 3.06%. Crude oil traded near $105 per barrel, while gold rose $8 to $1897 per ounce.

The current bull market, which began on March 21, 2020, is starting to falter. If the bull market did indeed peak back in early January of this year (with a gain of 108%), how would it compare to other bull markets? We studied the 12 bull markets that have occurred since the end of World War II. On average, the S&P 500 gained 163% during these 12 periods, which averaged 57 months in duration. Thus, the current bull market has achieved two-thirds of the average gain in about 40% of the average time. (Perhaps this is due to computer trading programs or the growth of passive investment vehicles such as ETFs.) Also, we note that recent bull markets have generated higher returns over a longer period of time. On average, the five bull markets since 1980 have seen stocks advance 240% over a period of 70 months. And the most-recent bull market (prior to the pandemic) carried on for 11 years, during which stocks rose 500%. It is worth pointing out, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks are above fair value in the current bull market as interest rates rise. If rates continue to head higher, the 2020-2022 bull market will likely be one of the shorter ones.

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 have now come in from 4Q21. 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 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.

Since the current bull market began on March 21, the S&P 500 has risen almost 110%. How does that compare to other bull markets? We have studied the 12 bull markets that occurred since the end of World War II. On average, the S&P 500 has gained 163% during these 12 periods, which have averaged 57 months in duration. Our current bull market has thus achieved two-thirds of the average gain in about 40% of the average time. (Perhaps this is due to computer-trading programs or the growth of passive investment vehicles such as ETFs.) We note that the recent bull markets have generated higher returns over a longer time. On average, the five bull markets since 1980 have seen stocks advance 240% over a period of 70 months. And the longest bull market prior to the pandemic carried on for 11 years, during which stocks rose 500%. It is worth pointing out, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks in the current bull market are already above fair value. Our message remains the same: focus on quality companies generating improving EPS.

Of the four years in a presidential term, the second year (the mid-term election year) has been one the worst for investors. Since 1980, returns in the second year of a presidential term have averaged 5.6%, compared to average returns of 14.4% and 15.8%, respectively, in years 1 and 3. Why? The likely reason is uncertainty. Investors favor continuity, and a mid-term election offers a real opportunity for a change in direction, whether its fiscal policy, antitrust philosophy, or a certain regulatory focus. We note that incumbent parties typically lose seats in mid-term elections, and even the loss of a few Democratic seats in either the Senate or the House could tip the chamber to the Republicans. Currently, President Biden's approval rating is low. According to the latest CNN/SSRS poll, President Biden has a net negative approval rating of -9 points on the economy, which is lower than the -4 point ratings for both President Obama and President Trump. The odds for a Republican-controlled House are currently 5-1. But a lot can happen over the next 12 months.

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.

Cash is no longer king for point-of-sale transactions, with only 12% market share compared to 38% for credit cards, 29% for debit cards, and 10% for the fast-growing digital wallet sector. We see a long secular road for growth, as digital payments are in the early stages of transition. Factors driving this trend include U.S. banks and the Federal Reserve encouraging digital over paper money; the pandemic, which has accelerated contactless payments as a safety step; and greater merchant acceptance for small dollar amounts. Importantly, the emerging generations (Millennials and Gen Z) embrace both mobile banking and digital payments. Forecasts call for digital-payment transaction value to grow at an 11% compound annual rate for the next five years and to reach $11 trillion from the 2020 level of $5.4 trillion. Several companies in the Argus Research fundamental universe of coverage are in position to take advantage of this opportunity. Each of the following stocks is rated BUY at Argus.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks insider trading and institutional ownership. Form 13-Fs have now come in from 2Q21. We review the 13Fs of major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved in 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 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.

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.

Stocks fell on Tuesday morning, led by a sharp drop in large Tech stocks. On the economic front, the Commerce Department said that U.S. factory orders rose 1.1% in March, up from a 0.5% decline in February but below the Reuters consensus forecast of 1.3% growth. The Commerce Department also reported that the U.S. trade deficit rose 5.6% to an all-time high of $74.4 billion in March on strong growth in imports. The Dow fell 0.9%, the S&P 1.3%, and the Nasdaq 2.5%. Crude oil traded near $65 per barrel, while gold rose slightly to $1794 per ounce.

By the close last Friday, the S&P 500 had notched another weekly gain, and opens today near all-time highs. Since the current bull market began on March 21, the S&P 500 has risen almost 80%. How does that compare to other bull markets? We have studied the 12 bull markets that have occurred since the end of World War II. On average, the S&P 500 has gained 161% during these 12 periods, which have averaged 56 months in duration. Our current bull market has achieved one-half the average gain in about 20% of the average time. (Perhaps this is due to computer trading programs or the growth of passive investment vehicles such as ETFs.) We note that recent bull markets have generated higher returns over a longer period of time. On average, the five bull markets since 1980 have seen stocks advance 230% over a period of 68 months. The most recent bull market carried on for 11 years, during which stocks rose 500%. We note, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks are already above fair value in the current bull market. Our message is unchanged. We recommend that investors focus on quality companies generating improving EPS.

Stocks fluctuated on Thursday in choppy trading as investors weighed weekly employment data, a continued decline in new U.S. coronavirus cases, and a warning from President Biden about challenges from China. The Labor Department reported that both first-time and continuing unemployment claims fell from the prior week, though both readings were above consensus forecasts. After the close, Disney posted an unexpected fiscal 1Q profit amid strong growth in Disney+ subscribers. The Dow fell 0.02%, the S&P rose 0.17%, and the Nasdaq rose 0.38%. Crude oil fell more than 1% to $58 per barrel, while gold fell $17 to $1826 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.

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.

The 3Q20 EPS season is mostly in the record books, with retailers the last group to report. The results were not pretty, but were better than 2Q20. Through mid-November, Refinitiv reported that S&P 500 earnings declined in 3Q at a 7.4% rate -- a vast improvement from the prior quarter's 30.5% decline. Excluding the Energy sector, earnings declined at a 3.2% rate. Of the 462 companies in the S&P 500 that have reported earnings to date for 20Q3, 84% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four-quarter average of 73%. Our analysts are always looking for companies that raise their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst to strong returns in the quarters ahead. There were not many in this most-recent period. Here are 12 BUY-rated companies in Argus Coverage for which management has raised guidance or increased its outlook during the recent EPS reporting season.

Stocks pared early losses and traded near breakeven on Friday morning, as Joe Biden moved closer to winning the presidency, with narrow leads in key swing states. October employment data was stronger than expected. The Labor Department said that the U.S. economy added 638,000 nonfarm payroll jobs in October, above the Bloomberg consensus forecast of 580,000 though down from a revised 672,000 in September. The official unemployment rate also fell to 6.9% from 7.9% and was lower than the consensus forecast. The Dow and the S&P were flat, and the Nasdaq was down 0.2%. Crude oil fell more than 3% to $37.50 per barrel, while gold rose $6 to $1953 per ounce.

Investors are nervous as the U.S. presidential election approaches. The S&P 500 is about 10% below its all-time highs. The VIX Volatility Index is back up near 30. The popular Wall Street wisdom is that the best outcome in Washington is gridlock. Investors perceive that when one party has hegemony -- which we define as controlling the presidency, House, and Senate simultaneously -- ideology supplants pragmatism and compromise; expensive and impractical legislation is passed; and the market suffers. Our analysis of S&P 500 performance since 1945 does not substantiate that widely held perception, however. Our work suggests that the market has actually outperformed in years in which one party prevailed, though the results fail to establish a clear pattern. We start with the base-line annual average market performance since 1945 of 10%. Political scenarios that topped this average included a Republican president and Congress (+11%), and Republicans controlling the White House and either the House or the Senate (+11%). But, in years in which the White House was occupied by a Democrat, stocks also outperformed (+11%). Heading into this election, current odds favor a Democratic president, a Democratic House and a toss-up for the Senate. At stake is a party's ability to set tax and fiscal policy and a trade and regulatory agenda, while also selecting the Cabinet and members of the Federal Reserve. Indeed, there's a lot on the line.

Investors are nervous as the U.S. presidential election approaches. The S&P 500 is about 10% below its all-time highs. The VIX Volatility Index is back up near 30. The popular Wall Street wisdom is that the best outcome in Washington is gridlock. Investors perceive that when one party has hegemony -- which we define as controlling the presidency, House, and Senate simultaneously -- ideology supplants pragmatism and compromise; expensive and impractical legislation is passed; and the market suffers. Our analysis of S&P 500 performance since 1945 does not substantiate that widely held perception, however. Our work suggests that the market has actually outperformed in years in which one party prevailed, though the results fail to establish a clear pattern. We start with the base-line annual average market performance since 1945 of 10%. Political scenarios that topped this average included a Republican president and Congress (+11%), and Republicans controlling the White House and either the House or the Senate (+11%). But, in years in which the White House was occupied by a Democrat, stocks also outperformed (+11%). Heading into this election, current odds favor a Democratic president, a Democratic House and a toss-up for the Senate. At stake is a party's ability to set tax and fiscal policy and a trade and regulatory agenda, while also selecting the Cabinet and members of the Federal Reserve. Indeed, there's a lot on the line.

Buy the rumor, sell the news. That seems to be the strategy for investors in election years. Our study of returns since 1980 found that in the third quarter of election years, stocks rise on average 1.4%. That compares to a non-election year change of 0.8%. In the fourth quarter of election years, we found that stocks slip 0.1%, compared to gains of 5.4% in non-election years. Why? Generally, investors favor continuity, and an election year offers a real opportunity for change. At the beginning of 2020, the odds were favoring another term for President Trump. But in the wake of the pandemic and recession, the odds now favor former Vice President Biden. Should Trump win, industries likely to benefit could include Aerospace & Defense (which have done well under his presidency) and Energy (which has not, despite favorable regulations). Our top picks in these groups include Lockheed Martin and Northrop Grumman, as well as Enbridge Energy and Valero Energy. Should Biden win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change. Our top picks in these groups include First Solar, Badger Meter, Honeywell, Tesla, Roper, Catalent, BioTechne, Automatic Data Processing, Fiserv, Xcel Energy and NextEra Energy.

Buy the rumor, sell the news. That seems to be the strategy for investors in election years. Our study of returns since 1980 found that in the third quarter of election years, stocks rise on average 1.4%. That compares to a non-election year change of 0.8%. In the fourth quarter of election years, we found that stocks slip 0.1%, compared to gains of 5.4% in non-election years. Why? Generally, investors favor continuity, and an election year offers a real opportunity for change. At the beginning of 2020, the odds were favoring another term for President Trump. But in the wake of the pandemic and recession, the odds now favor former Vice President Biden. Should Trump win, industries likely to benefit could include Aerospace & Defense (which have done well under his presidency) and Energy (which has not, despite favorable regulations). Our top picks in these groups include Lockheed Martin and Northrop Grumman, as well as Enbridge Energy and Valero Energy. Should Biden win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change. Our top picks in these groups include First Solar, Badger Meter, Honeywell, Tesla, Roper, Catalent, BioTechne, Automatic Data Processing, Fiserv, Xcel Energy and NextEra Energy.

Stocks were mixed on Monday morning as investors weighed new earnings reports and the details of President Trump's executive orders on coronavirus relief, which circumvent congressional authority and raise a range of legal and constitutional questions. The president's orders call for $400 per week in enhanced unemployment benefits, though these benefits would likely last for only a short period. Making the payments would also be logistically complex and require a $100 per week contribution from financially hard-pressed states. The Dow rose 0.9%, the S&P fell 0.1%, and the Nasdaq fell 0.9%. Crude oil traded near $42 per barrel, while gold rose $16 to $2044 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 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, ultimately, a vaccine. If U.S. corporations weren't innovating, creating new products and services and moving into new markets and applications, the domestic economy would not have recently completed a 10-year expansion phase before the coronavirus hit, and capital would not be flooding into the country. A couple of statistics should help illustrate our point. Consider that U.S. GDP was approximately $1 trillion in 1930 but nearly $22 trillion in 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 2018 was approximately $32 trillion, representing 41% of global equity market capitalization, while U.S. GDP represented only 25% of global GDP.

Stocks plunged on Thursday as investors weighed reports of rising coronavirus infections and the Federal Reserve's weak economic outlook. On Wednesday, the Fed projected a 6.5% decline in U.S. GDP this year and a year-end unemployment rate of 9.3%. Fed Chair Jerome Powell said that it would be a 'long road' to put millions of unemployed Americans back to work and again called for more fiscal support from the White House and Congress. The Dow fell 6.90%, the S&P 5.89%, and the Nasdaq 5.27%. Crude oil fell more than 9% to $36 per barrel, while gold rose $14 to $1734 per ounce.

Stocks plunged on Thursday as investors weighed reports of rising coronavirus infections and the Federal Reserve's weak economic outlook. On Wednesday, the Fed projected a 6.5% decline in U.S. GDP this year and a year-end unemployment rate of 9.3%. Fed Chair Jerome Powell said that it would be a 'long road' to put millions of unemployed Americans back to work and again called for more fiscal support from the White House and Congress. The Dow fell 6.90%, the S&P 5.89%, and the Nasdaq 5.27%. Crude oil fell more than 9% to $36 per barrel, while gold rose $14 to $1734 per ounce.

The Technology sector has led the market recovery from the COVID-19 depths of late March. Through April 30, the sector was flat for the year, compared to a 10% decline for the S&P 500. The sector is the largest in the U.S. market and now accounts for almost 26% 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 rating 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.

The S&P 500 is down 11% for the year to date, with the only bright spot of the major indices being the Nasgaq 100 and its 4% gain. Has anywhere else in the world provided any relative strength versus the U.S.? Last year, we wrote that the U.S. remained the place to be -- but that maybe, just maybe, we might see some rotation elsewhere. In a word, not!

The S&P 500 is down 11% for the year to date, with the only bright spot of the major indices being the Nasgaq 100 and its 4% gain. Has anywhere else in the world provided any relative strength versus the U.S.? Last year, we wrote that the U.S. remained the place to be -- but that maybe, just maybe, we might see some rotation elsewhere. In a word, not!

Fiserv is a leading provider of core processing and complementary services, such as electronic funds transfer, payment processing, and loan processing, for U.S. banks and credit unions. It serves 13,000 clients, with a focus on its legacy business with small and midsize banks.

The S&P 500, Nasdaq, and Nasdaq 100 all made all-time highs (ATHs) on February 10. The S&P 500 Equal Weighted Index (SPXEW), the NYSE Composite (NYSE), the Russell 2000 (IWM), and the S&P 400 MidCap (MDY) all failed to make either ATH's or new recovery highs. While it's definitely not to the point of 'Houston, we have a problem,' some of the breadth measurements under the surface are a bit disconcerting.

The S&P 500, Nasdaq, and Nasdaq 100 all made all-time highs (ATHs) on February 10. The S&P 500 Equal Weighted Index (SPXEW), the NYSE Composite (NYSE), the Russell 2000 (IWM), and the S&P 400 MidCap (MDY) all failed to make either ATH's or new recovery highs. While it's definitely not to the point of 'Houston, we have a problem,' some of the breadth measurements under the surface are a bit disconcerting.

Of the four years in a presidential term, the last year -- the election year -- has been the worst for investors. Since 1980, returns in the fourth year of a presidential term have averaged 4.9%, compared to average returns of 14.4%, 5.6% and 15.8%, respectively, in years one through three. The likely reason is uncertainty. Investors favor continuity, and an election year offers a real opportunity for a change in direction. We note incumbents typically win re-election, and the early odds out of the U.K. favor Trump by about 10/11. Should Trump win, industries likely to benefit could include Aerospace & Defense, which has done well under Trump's presidency, and Energy, which has not despite favorable regulations. Should a Democrat win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change, and defensive groups such as Consumer Staples and Utilities may be better at holding onto value.

Of the four years in a presidential term, the last year -- the election year -- has been the worst for investors. Since 1980, returns in the fourth year of a presidential term have averaged 4.9%, compared to average returns of 14.4%, 5.6% and 15.8%, respectively, in years one through three. The likely reason is uncertainty. Investors favor continuity, and an election year offers a real opportunity for a change in direction. We note incumbents typically win re-election, and the early odds out of the U.K. favor Trump by about 10/11. Should Trump win, industries likely to benefit could include Aerospace & Defense, which has done well under Trump's presidency, and Energy, which has not despite favorable regulations. Should a Democrat win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change, and defensive groups such as Consumer Staples and Utilities may be better at holding onto value.

Stocks were little changed on Wednesday morning ahead of the Federal Reserve's afternoon policy statement. The Fed is widely expected to leave its benchmark interest rate unchanged at its final meeting of the year and to hold rates steady in 2020. Meanwhile, the Labor Department reported higher consumer prices in November, with the consumer price index rising 0.3% from the prior month and 2.1% from the prior year, both slightly above consensus. The Dow fell 0.1%, the S&P rose 0.1%, and the Nasdaq rose 0.2%. Crude oil fell more than 1% to about $58.50 per barrel, while gold rose $8 to $1476 per ounce.

Investors are nervous as the U.S. presidential election approaches. The S&P 500 is about 10% below its all-time highs. The VIX Volatility Index is back up near 30. The popular Wall Street wisdom is that the best outcome in Washington is gridlock. Investors perceive that when one party has hegemony -- which we define as controlling the presidency, House, and Senate simultaneously -- ideology supplants pragmatism and compromise; expensive and impractical legislation is passed; and the market suffers. Our analysis of S&P 500 performance since 1945 does not substantiate that widely held perception, however. Our work suggests that the market has actually outperformed in years in which one party prevailed, though the results fail to establish a clear pattern. We start with the base-line annual average market performance since 1945 of 10%. Political scenarios that topped this average included a Republican president and Congress (+11%), and Republicans controlling the White House and either the House or the Senate (+11%). But, in years in which the White House was occupied by a Democrat, stocks also outperformed (+11%). Heading into this election, current odds favor a Democratic president, a Democratic House and a toss-up for the Senate. At stake is a party's ability to set tax and fiscal policy and a trade and regulatory agenda, while also selecting the Cabinet and members of the Federal Reserve. Indeed, there's a lot on the line.

Buy the rumor, sell the news. That seems to be the strategy for investors in election years. Our study of returns since 1980 found that in the third quarter of election years, stocks rise on average 1.4%. That compares to a non-election year change of 0.8%. In the fourth quarter of election years, we found that stocks slip 0.1%, compared to gains of 5.4% in non-election years. Why? Generally, investors favor continuity, and an election year offers a real opportunity for change. At the beginning of 2020, the odds were favoring another term for President Trump. But in the wake of the pandemic and recession, the odds now favor former Vice President Biden. Should Trump win, industries likely to benefit could include Aerospace & Defense (which have done well under his presidency) and Energy (which has not, despite favorable regulations). Our top picks in these groups include Lockheed Martin and Northrop Grumman, as well as Enbridge Energy and Valero Energy. Should Biden win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change. Our top picks in these groups include First Solar, Badger Meter, Honeywell, Tesla, Roper, Catalent, BioTechne, Automatic Data Processing, Fiserv, Xcel Energy and NextEra Energy.

Stocks were mixed on Monday morning as investors weighed new earnings reports and the details of President Trump's executive orders on coronavirus relief, which circumvent congressional authority and raise a range of legal and constitutional questions. The president's orders call for $400 per week in enhanced unemployment benefits, though these benefits would likely last for only a short period. Making the payments would also be logistically complex and require a $100 per week contribution from financially hard-pressed states. The Dow rose 0.9%, the S&P fell 0.1%, and the Nasdaq fell 0.9%. Crude oil traded near $42 per barrel, while gold rose $16 to $2044 per ounce.

Stocks plunged on Thursday as investors weighed reports of rising coronavirus infections and the Federal Reserve's weak economic outlook. On Wednesday, the Fed projected a 6.5% decline in U.S. GDP this year and a year-end unemployment rate of 9.3%. Fed Chair Jerome Powell said that it would be a 'long road' to put millions of unemployed Americans back to work and again called for more fiscal support from the White House and Congress. The Dow fell 6.90%, the S&P 5.89%, and the Nasdaq 5.27%. Crude oil fell more than 9% to $36 per barrel, while gold rose $14 to $1734 per ounce.

The S&P 500 is down 11% for the year to date, with the only bright spot of the major indices being the Nasgaq 100 and its 4% gain. Has anywhere else in the world provided any relative strength versus the U.S.? Last year, we wrote that the U.S. remained the place to be -- but that maybe, just maybe, we might see some rotation elsewhere. In a word, not!

The Technology sector has led the market recovery from the COVID-19 depths of late March. Through April 30, the sector was flat for the year, compared to a 10% decline for the S&P 500. The sector is the largest in the U.S. market and now accounts for almost 26% 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 rating 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.

The S&P 500, Nasdaq, and Nasdaq 100 all made all-time highs (ATHs) on February 10. The S&P 500 Equal Weighted Index (SPXEW), the NYSE Composite (NYSE), the Russell 2000 (IWM), and the S&P 400 MidCap (MDY) all failed to make either ATH's or new recovery highs. While it's definitely not to the point of 'Houston, we have a problem,' some of the breadth measurements under the surface are a bit disconcerting.

Of the four years in a presidential term, the last year -- the election year -- has been the worst for investors. Since 1980, returns in the fourth year of a presidential term have averaged 4.9%, compared to average returns of 14.4%, 5.6% and 15.8%, respectively, in years one through three. The likely reason is uncertainty. Investors favor continuity, and an election year offers a real opportunity for a change in direction. We note incumbents typically win re-election, and the early odds out of the U.K. favor Trump by about 10/11. Should Trump win, industries likely to benefit could include Aerospace & Defense, which has done well under Trump's presidency, and Energy, which has not despite favorable regulations. Should a Democrat win, sectors such as Clean-Tech, Med-Tech and Business Services may do well as regulations change, and defensive groups such as Consumer Staples and Utilities may be better at holding onto value.

Market breadth remains supportive of further gains in stocks. As has been the case since the secular bull began in 2009, breadth for the majority of indices continues to lead price. With the latest break higher in stocks, the major indices are playing catch-up with market breadth.

Market breadth remains supportive of further gains in stocks. As has been the case since the secular bull began in 2009, breadth for the majority of indices continues to lead price. With the latest break higher in stocks, the major indices are playing catch-up with market breadth.

The reset in market sentiment has all but stopped as the stock market flops around like a fish out of water. The five-day CBOE equity-only put/call (PC) ratio rose from overly optimistic territory of 0.57 on July 15 to overly pessimistic territory on Wednesday with a reading of 0.80. This is higher than the 0.75 level at the June bottom, when we witnessed a similar market decline. Over the past week, this PC has pulled a bit and is no longer in short-term buy territory. Since August 2, we have seen two daily readings near 0.85 -- right at the beginning of pessimistic territory.