Stocks were mostly higher on Friday morning following more bank earnings reports and new housing market data. Morgan Stanley posted strong 1Q earnings that topped consensus expectations, despite a nearly $1 billion loss from the collapse of Archegos Capital. Bank of New York Mellon also reported above-consensus results, though both EPS and revenue declined from the prior year. On the housing front, the Commerce Department said that U.S. housing starts jumped 19.4% to a seasonally adjusted annual rate of 1.739 million units in March, above the Reuters consensus forecast of 1.613 million. In China, the National Statistics Bureau reported first-quarter GDP growth of 18.3% from a depressed 1Q20; however, on a quarter-over-quarter basis, growth slowed to 0.6% from 3.2% in 4Q20. The Dow rose 0.4%, the S&P rose 0.2%, and the Nasdaq was flat. Crude oil traded near $63 per barrel, while gold rose $11 to $1778 per ounce.

Stocks rallied on Thursday following better-than-expected retail sales and employment data, along with earnings from Bank of America and BlackRock. The Commerce Department said that U.S. retail sales rose a strong 9.8% in March, helped by government stimulus checks and supplemental weekly unemployment benefits. The reading was above the consensus of 5.9% growth and up from a 2.7% decline in February. First-time jobless claims fell to 576,000, a post-pandemic low and well below the consensus forecast of 700,000. Continuing claims rose to 3.731 million, up slightly from 3.727 million a week earlier and above the consensus of 3.7 million. The Dow rose 0.90%, the S&P 1.11%, and the Nasdaq 1.31%. Crude oil traded near $63 per barrel, while gold rose $29 to $1765 per ounce.

Stocks were mixed on Wednesday morning following the first 1Q earnings reports from major banks. JPMorgan Chase posted solid earnings as strong capital markets activity, along with reserve releases, more than offset weakness in its lending business. Wells Fargo also reported much stronger-than-expected results with help from reserve releases. The Dow rose 0.6%, the S&P rose 0.1%, and the Nasdaq fell 0.2%. Crude oil traded near $63 per barrel, while gold fell $11 to $1736 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.

The big banks are typically the first to report earnings, and those announcements are about to begin. The accelerating trend in vaccines, successful passage of the Biden administration's $1.9 trillion stimulus package, and optimism on infrastructure investment are all pushing consensus earnings expectations higher. Although the pandemic appears to be easing, the economy has undergone fundamental changes that appear to be permanent. Work and education have shifted to a hybrid model, and we anticipate continued accelerated investment in digitization. The year 2021 should also feature a reversal in 2020's "deadweight" sectors, such as Industrials and Energy, which were subtractive to overall prior-year earnings. Based on our multi-input model, we recently increased our estimate of S&P 500 earnings from continuing operations for 2021 to $176 from $171. Our revised 2021 EPS model assumes 28% growth from our static 2020 estimate; we had previously modeled 24% growth. Off the higher 2021 base, and on the assumption that positive economic momentum can be carried forward, we raised our estimate of S&P 500 earnings from continuing operations for 2022 to $201 from $195. Our revised 2022 EPS model assumes 14% growth from our 2021 estimate, in line with earlier expectations.

March was an interesting month, to say the least. Some indices got slammed in the beginning of the month, rebounded until mid-month, headed lower again until about March 25, and then rebounded to close the month. Sector leadership was tilted toward defensive stocks, and even though some higher-beta sectors barely rose, the indices either eked out small gains or actually had a nice month. But it certainly didn't feel like it!

Maybe Monday -- when all indices, small and large, and all 11 S&P sectors rose in unison -- was just a mirage. Or as a sportscaster used to say, "the fans rise as one." On Wednesday, we were back to what has been the norm in late 2020 and early 2021: weakness primarily in the Nasdaq and Nasdaq 100 (QQQ) pulling the S&P 500 down with it, but continued relative strength in small-caps and mid-caps.

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.