The stock market moved higher last week as earnings season picked up steam. Tech stocks outperformed blue chips, though the margin of outperformance was slim owing to disappointing earnings from some tech names. During Friday's session, the Dow Jones Industrial Average increased 74 points, or 0.21%. The S&P 500 was down 0.11%, and the Nasdaq Composite was down 0.82%. For the week, the DJIA was up 382 points, or 1.08%, the S&P 500 was up 1.64%, and the Nasdaq Composite was up 1.29%. Year-to-date, the DJIA is up 16.57%, the S&P 500 is up 21.00%, and the Nasdaq Composite is up 17.08%.

This edition features a framework for measuring human capital risk; Asia reporting; inflation and supply chain issues in upcoming earnings; and notes from Verizon, VMware, and new coverage EML Payments.

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.

Stocks finished mostly higher on Thursday as investors weighed earnings reports from a range of major companies along with new employment data. First-time unemployment claims fell to 290,000, down from the prior week and below consensus. Continuing claims dropped to 2.481 million from 2.603 million a week earlier, and were also below the consensus forecast. Housing data was strong. The National Association of Realtors said that sales of existing homes rose 7% in September to a seasonally adjusted annual rate of 6.29 million, up from a decline of 2% in August and above the consensus estimate calling for 3.7% growth. The Dow fell 0.02%, the S&P rose 0.30%, and the Nasdaq rose 0.62%. Crude oil fell 1% to $82.50 per barrel, while gold fell slightly to $1784 per ounce.

After September's nearly 5% decline, the S&P 500 is off to the races in October. Heading into last week's final session, the index was already up 3%, before padding its gain on Friday.

This edition features the continuing shift to software; biopharma capital allocation; rising ransomware attacks; and new coverage of Stem, Keysight, and Carlyle Group.

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 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.

The Market's Big Test

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 edition features digital adversiting and regulatory risk; our quarterly telecom outlook; new coverage of backup power leader Generac; and notes from Continental, Goldman Sachs, and Boston Beer.

Everyone is wondering when the Federal Reserve will start to wind down its asset-purchase program -- but few are discussing U.S. debt levels, which have grown over the past 10 years. Total U.S. debt is now more than 125% of GDP, according to the Office of Management & the Budget. This is the highest level since World War II. In the 1970s and 1980s, the debt/GDP ratio was in the 30%-40% range, and moved up toward the 60% level by 2000. The debt level soared around 2010, as the government spent aggressively to halt the Great Recession and rekindle growth. (According to Keynes, that's what the government is supposed to do). Still, despite more than 10 years of economic growth prior to the pandemic, debt only increased as a percentage of GDP. And now, in light of the fiscal spending to fight the impact of COVID-19, debt levels have surged. This is not a problem that has to be fixed today. After all, interest rates are low on an historical basis and policies to change the trajectory (less spending, more taxes) could push the economy back into decline. But politicians should start to establish a plan to address the issue in the next 10-15 years. If the problem is not solved, the situation could result in hyperinflation and a weak dollar, which would send interest rates higher and cut into equity valuations.

Stocks were mixed on Wednesday morning on continued concerns about slowing economic growth and potentially higher corporate tax rates. Manufacturing data was weak. The Federal Reserve said that U.S. manufacturing output rose just 0.2% in August, down from 1.6% in July and below the Reuters consensus forecast of 0.4% growth. The Dow rose 0.2%, the S&P rose 0.3%, and the Nasdaq fell 0.1%. Crude oil traded near $73 per barrel, while gold fell $11 to $1796 per ounce.