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.

March was another solid month for equity investors, as the S&P 500 advanced 3.1% compared to a 0.6% gain for the fixed-income benchmark ETF AGG. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income in light of the recent rally in equities. We are over-weight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one- and five-year periods. We expect this long-term trend favoring U.S. stocks to continue, given volatile global economic, political, geopolitical, and currency conditions, as well as the strength of the innovative Technology industry in the U.S. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. In terms of growth and value, growth rebounded in 2023 and outperformed value as interest rates stabilized. Over the longer term, we anticipate that growth, led by the Tech, Consumer and Healthcare sectors, will top returns from value, led by Energy, Real Estate and Materials, due to favorable secular and demographic trends.

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

The 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 Dell Technologies Inc (DELL); Autozone Inc. (AZO); Pinterest Inc (PINS); Oshkosh Corp (OSK) and the Focus List deletions are MongoDB Inc (MDB); Old Dominion Freight Line, Inc (ODFL); Tesla Inc (TSLA); Twilio Inc (TWLO).

U.S. stocks were lower on Wednesday morning ahead of the Fed's rate decision later this afternoon. ADP's latest employment report shows 107,000 jobs were added in January, down from 164,000 in December and lower than expected. Shares of Paramount Global are up on news that billionaire Byron Allen has made a $14.3 billion takeover offer for Paramount Global. Meanwhile, Microsoft, Advanced Micro Devices and Alphabet are all trending lower after reporting fourth-quarter results. The S&P 500 is down 0.9%, the Dow 0.1%, the Nasdaq lost 1.5% and the Russell 2000 fell 0.5%. Crude oil was down 2%, while gold rose $17.50 to $2068 per ounce.

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.

November was a blast for investors, as stocks jumped 9% and bonds rose 4%. Year-to-date, stocks still hold the performance lead over bonds, with a 19% gain in the benchmark S&P 500 compared to a 1% decline for fixed income through November. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income. However, equity valuations are improving. We are overweight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one-year and five-year periods. We expect this long-term trend favoring U.S. stocks to continue, given volatile and erratic global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. In terms of growth and value, growth has rebounded in 2023, outperforming value as interest rates have stabilized. Over the longer term, we anticipate that growth, led by the Tech and Healthcare sectors, will top returns from value, led by the Energy and Materials sectors, due to favorable secular, demographic, and regulatory trends.

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.

First Look at 3Q23 Earnings: The Beat Goes On

September was a difficult month for investors, as bonds dropped 2.8% and stocks gave back 4.9%. Year-to-date, stocks still hold the performance lead over bonds, with a 12% gain in the benchmark S&P 500 compared to a 3% decline for fixed income. Looking ahead, our Stock-Bond Barometer modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income, given the rise in yields to levels near 20-year highs. We are over-weight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing five-year period. We expect this long-term trend favoring U.S. stocks to continue, given volatile and erratic global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. In terms of growth and value, growth has rebounded in 2023, outperforming value as interest rates have stabilized. Over the longer term, we anticipate that growth, led by the Technology and Healthcare sectors, will top returns from value, led by the Energy and Basic Materials sectors, due to favorable secular, demographic, and regulatory trends.

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 approximately 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.

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).

Stocks started the second half on a strong note and are now up almost 20% through July. Bond prices dipped in July (as yields rose) and are modestly positive for the year. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income, given the rise in yields since early 2022. We are now over-weight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing five-year period. We expect the long-term trend favoring U.S. stocks to continue, given volatile and erratic global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. In terms of growth and value, growth has rebounded in 2023, outperforming value as interest rates have stabilized. Over the longer term, we anticipate that growth, led by the Tech and Healthcare sectors, will top returns from value, led by the Energy and Materials sectors, due to favorable secular, demographic and regulatory trends.

Stocks were mixed on Wednesday morning as investors weighed a new round of earnings reports and awaited the Fed's policy statement and follow-up comments from Fed Chair Jerome Powell. A 25-basis-point hike is widely expected. On the earnings front, Alphabet shares rose 6% following better-than-expected 2Q results, while Microsoft shares fell, despite strong fiscal 4Q earnings, after the company offered disappointing first-quarter sales guidance. The Dow rose 0.1%, the S&P fell 0.1%, and the Nasdaq fell 0.3%. Crude oil fell slightly to $79.50 per barrel, while gold rose $11 to $1974 per ounce.

Dividend income is often overlooked amid gyrations in the stock market. Thus far in 2023, market bulls are boasting about first-half S&P 500 returns that may top 15%. No one is very focused on the broad market index's 1.6% current yield. But dividends are an important element of return. Dividend income accounted for 42% of the total return of the S&P 500 between 1930 and 2012, according to Hartford Funds. And that's just the average. In some of those decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for a smaller portion of returns, at around 15%-20%. In 2018, dividend payments softened the blow when most market indices declined as the Fed hiked rates. The pattern was repeated in 2022. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

Stocks continued to rally in May, while bond prices dipped during the debt-ceiling debate. Even so, both asset classes are in positive territory year-to-date. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income, given the rise in yields since early 2022. We are now overweight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is now 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing five-year period, though international stocks have performed well more recently. We expect the long-term trend favoring U.S. stocks to re-emerge, given volatile and erratic global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 7%-8% of equity exposure to the group. Value outperformed in 2022 due to the negative impact of rising interest rates on growth valuations. As rates decline, growth stocks are recovering in early 2023. Over the longer term, we anticipate that growth, led by the Tech and Healthcare sectors, will top returns from value, led by the Energy and Basic Materials sectors, due to favorable secular, demographic, and regulatory trends.

Earnings Season: A Little Better than Expected, But...

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.

Stocks and bonds started 2023 on a positive note, with in-the-black performances for January. Looking ahead, our Stock-Bond Barometer Model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income, given the rise in yields in 2022. We are now balanced on large- and small-caps. We favor large-caps for growth exposure and financial strength, while small-caps are selling at historical discounts relative to large-caps and offer value. Our recommended exposure to small- and mid-caps is now 15%-17% of equity allocation, in line with the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing five-year period, though international stocks have performed well recently. We expect the long-term trend favoring U.S. stocks to re-emerge, given volatile and difficult-to-predict global economic, political, geopolitical, and currency conditions. Still, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Value outperformed in 2022 due to the negative impact of rising interest rates on growth valuations. Over the longer term, we anticipate that growth, led by the Tech and Healthcare sectors, will top returns from value, led by Energy and Materials, due to favorable secular and demographic trends, though the shift may not start until 2H23.

Stocks were mixed on Thursday morning, a day after the Fed's 25-basis-point rate hike and comments from Fed Chair Jerome Powell drove a strong afternoon rally. Mr. Powell boosted sentiment by stating that 'the disinflationary process' had started, though he also cautioned that further rate hikes were forthcoming and that he did not expect the Fed to cut rates this year. Following the Fed's increase, the European Central Bank raised its benchmark interest rate by 50 basis points to 2.5% and said that it would raise rates by a similar amount at its next meeting in March. The Dow fell 0.3%, the S&P rose 1.5%, and the Nasdaq rose 3%. Crude oil fell 0.5% to $76.04 per barrel, while gold fell $5 to $1937 per ounce.

Dividend growth is among our most-important investment themes in 2023, and stretches across industries. At this stage of the economic and market cycles, Argus recommends that investors pay close attention to dividend growth. We think consistent -- and accelerated -- dividend growth at a company gives three important signals to investors: 1) the company's balance sheet is strong enough to pay a dividend; 2) management is mindful of shareholder returns, which include dividends; and 3) a significant dividend increase can be a message from management that the near-term outlook for the company is promising, even during a pandemic. In particular, we like companies that have grown their dividends at an average double-digit pace over the past five years. Stocks on our BUY list that meet this test include the following.

Dividend income, an important element of total return, is often overlooked amid gyrations in the stock market. Between 1930 and 2012, dividend income accounted for 42% of the total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. The pattern was repeated in 2022 as well. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

Stocks finished mixed on Thursday as investors weighed earnings reports from a range of major companies, including Caterpillar, Merck, and McDonald's, along with new GDP and employment data. The Commerce Department said that the U.S. economy expanded at a 2.6% rate in the third quarter, a reversal after two quarters of declines, helped by stronger-than-expected net exports. On the employment front, first-time claims for state unemployment benefits rose by 3,000 to 217,000 for the week ended October 22, but were below the Reuters consensus estimate of 223,000. Continuing claims rose to 1.438 million, up from 1.383 million a week earlier and above the consensus forecast. The Dow rose 0.61%, the S&P fell 0.61%, and the Nasdaq fell 1.63%. Crude oil rose 1% to $89 per barrel, while gold fell $3 to $1666 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 innovative U.S. economy.

Stocks stumbled again in August and remain sharply lower for the year. Bond prices turned lower as well, but, as with stocks, remain lower year-to-date. Our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income. We are now balanced on large- and small-caps. We favor large-caps for growth exposure and financial strength, while small-caps are selling at historical discounts relative to large-caps and offer value. Our recommended exposure to small- and mid-caps is now 15%-17% of equity allocation, in line with the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one- and five-year periods. We expect this long-term trend to continue, given volatile global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Value has taken an early lead in 2022 due to the negative impact of rising interest rates on growth valuations. Over the longer term, we anticipate that growth, led by Tech and Healthcare, will continue to top returns from value, led by Energy and Materials, due to favorable secular and demographic trends.

As of the close on July 25, the major indices were sitting at key short-term spots -- either at recent breakout areas or just above. The S&P 500 fell back to its breakout area near 3,950 and was just above its 50-day average. The Nasdaq was slightly above its breakout at 11,700 and a few hundred points above its 50-day. The QQQs were above the breakout point at 297; the S&P MidCap 400 was very close to breakout; and the Russell 2000 had pulled right back to key short-term chart support.

As we start the second half of 2022, we remain disciplined by looking at stocks and sectors in which we have confidence. Stocks took a beating in the first half, and at times like this, investing principles are critical. We focus on fundamentals, diverse portfolios, strong managements, and growth stocks trading at reasonable prices. This week we look at Industrials, having examined Basic Materials last week. These are perhaps the two least flashy sectors -- and while Basic Materials and Industrials may seem boring, we don't consider the stocks on this week's list to be dull. The companies we've selected within Industrials have solid fundamentals and growth outlooks. Challenges in the supply chain persist, but have eased, and the U.S. trade deficit signaled some shifting in the last report. Exports rose 1.2% in May to $255 billion. This is a great opportunity for U.S. companies, as international buyers look towards American products. The Industrials sector accounts for 8% of the S&P 500, and includes industries such as aerospace and defense, construction and building products, heavy equipment and machinery, and transportation. Over the past five years, the sector weighting has ranged from 7% to 12%. We think investors should Over-Weight the sector and consider allocating about 8% of their diversified portfolios to stocks in the group. The sector is slightly outperforming the S&P 500 thus far in 2022, with a loss of 16.5% compared to the S&P's loss of 18%. The following are some of our BUY-rated Industrials companies, all of which are rated BUY, have a Financial Strength rating of Medium-High or higher, and pay a dividend. We feel these companies are best in class for the sector.

Stocks resumed their downward 2022 trend in June, and finished the first half with the worst performance in 50 years. Bond prices slipped as well, and both asset classes remain lower year-to-date. Our Stock-Bond Barometer model slightly favors bonds over stocks for long-term portfolios. In other words, the asset classes should be near their target weights in diversified portfolios, with a modest tilt toward fixed income. We are balanced on large- and small-caps. We favor large-caps for growth exposure and financial strength, while small-caps are selling at historical discounts relative to large caps and offer value. Our recommended exposure to small- and mid-caps is 15%-17% of equity allocation, in line with the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one- and five-year periods. We expect this long-term trend to continue, given difficult-to-predict global economic, political, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Value has taken an early lead in 2022 due to the negative impact of rising interest rates on growth valuations. Over the longer term, we anticipate that growth, led by Tech and Healthcare, will continue to top returns from value, led by Energy and Materials, due to favorable secular and demographic trends.

Dividend income, an important element of total return, is often overlooked amid gyrations in the stock market. Between 1930 and 2012, dividend income accounted for 42% of the total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. The pattern is being repeated in 2022 as well. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

Market Slumps as Earnings Roll On

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.

We have a series of lower lows and lower highs on the indices, failed rally attempts, an absence of strong market breadth, key technical levels acting like ceilings, major indices below their long-term 200-day averages, 53% of the S&P 500 stocks below their 200-day averages, 63% of "500" stocks below their 50-day averages, 54% of the S&P 100 stocks below their 200-day, and 63% of Nasdaq 100 stocks below their 200-day. That is not the definition of a healthy stock market.

Stocks got off to a slow start in 2022, as rising interest rates compressed valuations. Bond prices also slumped on inflation concerns. Looking ahead, our Stock-Bond Barometer model is close to equally balanced between stocks and bonds for long-term investors. In other words, these asset classes should be near their normal weights in diversified portfolios. We have looked for large-cap companies with strong balance sheets and experienced managements to be the leaders during the recovery from COVID-19. This has played well, and now, with vaccines being distributed, small-cap risks are reduced and values are attractive. Our recommended exposure to small- and mid-caps is now 15% of equity allocation, in line with the benchmark weighting. U.S. stocks have outperformed global stocks over the trailing one- and five-year periods. We expect this to continue over the long term, given volatile global economic and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 5%-10% of equity exposure to the group. Value took an early lead in 2021, but growth ultimately outperformed. We anticipate that growth, led by Tech and Healthcare, will once again outperform value in 2022, led by Energy and Materials, as long as interest rates remain low.

January Jitters: Our Monthly Survey of the Economy, Interest Rates, and Markets

The onset of the coronavirus in 2020 knocked stocks into a bear market. Though equities recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did three times in 2021 when stocks dropped 4%-5% in a matter of a few days. 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 returns are from eras when the 10-year Treasury bond yield was not sub-2.0%. 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. 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.

Often overlooked amid gyrations in the stock market is dividend income, which is an important element of total return. Between 1930 and 2012, dividend income accounted for 42% of total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. But not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

Our rating on the Industrial sector is Over-Weight. After enduring the challenges of the pandemic, the cyclical stocks in the Industrial sector appear well-positioned within the changing political environment. Specifically, we believe that Industrial stocks will benefit from enhanced infrastructure investment and more-lenient trade policies during the Biden administration. The Industrial sector accounts for 8% of S&P 500 market capitalization. Over the past five years, the weighting has ranged from 7% to 12%. We think that investors should allocate 9%-10% of their diversified portfolios to the group. The sector includes industries such as transportation, aerospace & defense, heavy machinery, and electrical equipment. The sector is underperforming the market thus far in 2021, with a gain of 13.5%. It also underperformed in 2020, with a gain of 9.0%, and slightly underperformed in 2019, with a gain of 26.8%. Here are some of our top picks, all of which are rated BUY at Argus.

At Tuesday's low, the S&P 500 had fallen 3.9% from its November 22 intraday high. With the recent volatile action, it sure feels like we've dropped more. The Nasdaq has dipped 4.7% on an intraday basis, while the Nasdaq 100 (QQQ) has dropped 4.6% (with the intraday low coming on Friday). The real damage has been in the smaller stocks -- and those declines started back on November 9. The Russell 2000 (IWM) has cascaded 11.7% on an intraday basis, while the S&P MidCap 400 has given up 7.6%. Both of the previous breakouts to all-time highs for those two indices have failed miserably.

Companies talked about it during 3Q conference calls. Consumers are complaining about it as packages are not delivered and prices rise. Everyone is affected by the current delay in the supply chain, caused at first by trade wars and exacerbated by the pandemic. How bad are things? According to the U.S. Census Bureau, the value of unfilled manufacturers' orders is 11% above the 10-year average, while the value of unfilled consumers' orders is 63% above average. The general trend in unfilled orders has been higher over the past 20 years in manufacturing and over 10 years for consumers, as companies have adopted just-in-time inventory practices and have kept shelves lean in order to keep costs low. Problems started to in 2018, as the adoption of tariffs encouraged companies to begin rebuilding domestic supply chains. The shock from the pandemic has lengthened wait times and pushed up prices. As the economy continues to return to normal, and as workers continue to re-enter the workforces, we expect the level of unfilled orders will decline and pricing pressures will abate. This may take into 2023.

Over the weekend, the House of Representatives approved the largest public works bill since the 1950s. The bipartisan trillion-dollar bill, which was passed by the Senate in August, now goes to President Biden's desk for signing. The plan focuses on improving the country's infrastructure, from roads and bridges to water systems and electricity grids. It also targets the auto industry, with a focus on electric vehicles and charging stations. In the power sector, Biden's goal is to achieve a carbon-free power industry by 2035. To improve energy efficiency in buildings, he is looking to retrofit four million buildings in the four years. Elsewhere, business Services companies also stand to benefit; bond issuance should pick up given that the infrastructure spending plan will be financed at least in part by bonds; and payroll companies could get a boost processing more paychecks as the infrastructure plan creates "millions of good paying jobs." All-in-all, some of the companies that we think may benefit include the following.

October Surprise: Recouping September's Losses

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 stock market has come ripping back, with the S&P 500 and the S&P 100 (OEX) hitting marginal all-time highs (ATHs) on Thursday. The NYSE Composite made an ATH on Tuesday after trading sideways since late April, or for about six months. The S&P MidCap 400 (MDY) closed at an ATH Wednesday after also trading sideways for about six months. Generally, breakouts by an index or individual stock after a lengthy consolidation are not bearish.

No matter how you slice it, Monday was ugly and one of the worst days of the year for stocks. Fortunately, a pretty strong late-day rally cut into the losses. The S&P 500 was clocked for 1.7% or 75 points, one of the larger daily losses in 2021. At the lows, the index was down 127 points or 2.9%. In the process, the index lost its 50-day average for the first time since October 2020. It was also the first time that the index fell to its middle weekly Bollinger Band (BB) since October. NYSE breadth was -2,359, the fourth-worst reading in 2021.

Stocks were mixed on Wednesday morning as investors weighed earnings reports from Alphabet, Apple, and Microsoft, and awaited the Fed's policy statement and comments from Fed Chair Jerome Powell this afternoon. Investors will be closely scrutinizing Mr. Powell's comments regarding the state of the economy, the impact of the Delta variant, and the timing of any reduction in the central bank's bond buying program. The Dow fell 0.1%, the S&P rose 0.1%, and the Nasdaq rose 0.7%. Crude oil traded near $72 per barrel, while gold fell $3 to $1797 per ounce.

The onset of the coronavirus in 2020 knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did during two consecutive days in mid-July when the Dow Jones Industrial Average plummeted more than 1,000 points. Yet 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. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate and can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.