Was that a case of quarter-end buying by institutions? Over the last 50 minutes of the trading session on Wednesday, the S&P 500 (SPX) took off like a rocket, surging 30 points and finishing 0.9% higher on the day and at another all-time high. But the biggest winners on the day were small-caps, with the Russell 2000 (IWM) surging 2.2% and the S&P 600 (SML) spiking 2.4%. The IWM is breaking out of a more-than two-year base and closed at its highest level since December 2021.

Stocks rallied on Thursday, extending yesterday's gains on rate-cut optimism. Turning to stocks, shares of Apple (AAPL) are down after the U.S. Department of Justice filed a lawsuit accusing the company of engineering a monopoly in the smartphone market. Bank stocks are up today as investors are optimistic that the anticipated rate cuts this year will drive more transactions. The S&P 500 is up 0.3%, the Dow is up 0.7%, the Nasdaq is up 0.2%, and the Russell 2000 is up 1.16%.

The FOMC maintained the target range for the fed funds rate at 5.25 to 5.50%. The FOMC does not expect it will be appropriate to reduce the range until it has gained greater confidence that inflation is moving sustainably toward 2%. The FOMC will continue reducing its holdings of Treasury securities and agency debt and agency MBS, but said that the central bank will begin to slow its balance sheet runoff soon. Recent indicators suggest that the economy has been expanding solidly. Job gains have remained strong and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The S&P 500 (SPX) and S&P 100 (OEX) closed at minor all-time highs (ATHs) on Tuesday, while the rest of the major indices were near that mark as the relentless push higher continues. The leadership over the past month has shifted from AI and Technology to cyclical sectors -- which is what happens in a strong bull market. Rotation is really starting to gain some footing in 2024 and is critical to a long and enduring uptrend. We have seen addditional cyclical sectors join the party over the past month, as Energy (XLE +8.6%), Materials (XLB +6.8%), and Industrials (XLI +4.5%) have taken some of the load off the Technology gains.

We see what we believe are some great opportunities right now in Healthcare -- and we like the sector overall. Argus Director of Research Jim Kelleher, CFA, recently completed his quarterly sector review and raised Healthcare sector to Over-Weight from Market-Weight. The healthcare environment is undergoing rapid transitions, and we now see an unfolding period of significant promise and opportunity. Our newly-favored stance is based on resumption of deferred medical procedures and significant new quality-of-life drugs and treatments. The category is broad and has underperformed the S&P 500 over the past year. The Healthcare sector ETF (XLV) is up 15% over the past year compared to a gain of 31% for the S&P 500. We see opportunity here to pick up some steady companies, with big brands and solid financials. These companies are science-focused and enhance lives. They are innovators. In our list this week, we look across several subsectors within the Healthcare sector and pull out some leaders we like. These stocks also are included in our Focus List and Model Portfolios, as noted below.

Stocks were mixed on Wednesday intraday as investors await new inflation data. Tomorrow, retail sales and PPI releases will be closely watched to gauge consumer spending and for another read on inflation. The Dow rose 0.4%, while the S&P 500 was down 0.1%, and the Nasdaq lost 0.5%. Crude oil traded above $79 per barrel, while gold rose $15 to $2172 per ounce.

The Bureau of Labor Statistics (BLS) reported that the U.S. economy generated 275,000 new jobs in February, well above our forecast of 185,000 and the consensus of 200,000. January's result was revised lower to 229,000 from 353,000, and job gains in January and December combined were revised lower by 167,000. February's increase in payrolls and the revisions to January and December took the three-month average to 265,000, which is still above the 12-month average of 230,000 and signals robust hiring. The unemployment rate rose to 3.9% from 3.7%. While this uptick is a sign that the job market is not invincible, our calculations suggest this increase is not enough to trigger the Sahm Rule recession indicator. Average hourly earnings increased five cents month-to-month and are now 4.3% higher year-over-year (compared to 4.4% in January). The average workweek rose to 34.3 hours in February from 34.2 hours in January. Job gains occurred in healthcare, government, food services and drinking places, social assistance, and transportation and warehousing. Employment showed little change over the month in mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; professional and business services; and other services. After this morning's report, S&P 500 stock futures rose slightly from pre-release levels. The yield on the 10-year Treasury was little changed at 4.07%. Before the release, futures contracts suggested a 96% probability that the Fed will keep the funds target at 5.25%-5.50% when it meets on March 19 and 20. After the release, the probability dropped, but only to 95%. The chance that the funds rate will be lower after the May meeting (either by 20 or 50 basis points) rose to 31% from 26%.

We are one session away from making it 17 out of 19 weeks in which stocks have moved to the upside. We've been throwing grenades at this move for a while, based on overbought and divergent momentum readings and excessive sentiment readings -- and it just does not matter. Yes, price is the final arbiter!

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 Capital One Financial Corp. (COF); Dominos Pizza Inc (DPZ); Novo Nordisk (NVO); Shell Plc (SHEL) and the Focus List deletions are Alcon Inc. (ALC); Expedia Group Inc (EXPE); Morgan Stanley (MS); Exxon Mobil Corp. (XOM).

As if the stock market needed more help, now we have declining Treasury yields across the entire yield curve. Treasury yields fell consistently from October 19, 2023, until their most-recent bottom on December 27. That move certainly helped stocks rally off their October 27 low. Yields popped from 12/27/23 until 2/22/24 and stocks ignored the increase. Since their closing peaks of 4.33% a few weeks ago, both the 5- and 10-year yields have dropped to 4.1% while the 2-year has declined to 4.56% from 4.7%.

Rallying Market Ignores Warning Signs: Our Monthly Survey of the Economy, Interest Rates, and Stocks

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.

On Friday, the Bureau of Labor Statistics (BLS) likely will provide further evidence that the U.S. job market is healthy. The bigger question is whether the Employment Situation is strong enough to match the 333,000 nonfarm jobs created in December and the 353,000 in January. We believe the job market is strong, but not that strong. In a speech at Princeton University last month, Fed Governor Lisa Cook said that "a range of indicators suggest continued strength in the labor market but also areas worth monitoring for softening demand." The layoffs that make occasional headlines really aren't showing up in the numbers. The four-week average of initial jobless claims is running at 212,500, below the 300,000 that might signal a critical weakening in the job market. The Layoffs and Discharges series in the BLS Job Openings and Labor Turnover Survey (JOLTS) was 1.6 million for December, below the average of 1.925 million since late 2000. "Layoffs and claims for unemployment insurance remain low, implying that all the slowing in labor demand thus far has been along the hiring margin," Dr. Cook said. Job openings and hires, in the JOLTS report, and average weekly hours, in the employment situation report, have declined. Dr. Cook also noted there were signs of "gradual cooling" in the employment cost index for the private sector, which rose 4.1% on a 12-month basis in December, down from 5.1% over the previous 12 months. The January ADP National Employment Report, which tracks private sector hiring, also noted that pressure on wages continues to ease. We expect the employment report on Friday will show that February payroll growth moderated to 185,000, while the unemployment rate remained at 3.7%. We expect growth in average hourly earnings fell by one-tenth to 4.4%, and average hours rose to 34.3 from 34.1, which may have been depressed by January weather.

The stock market has been on hold this week, as investors await the Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures Price Index (PCE). The report tends to show inflation trends that are less affected by short-term price changes. Stocks threw a bit of a tantrum when the January CPI and PPI were released a few weeks ago, but the market has since shaken off these single data points. There are at least four Fed governor/president speeches as well today -- and more on Friday.

Value stocks -- a market segment that includes high-yield stocks -- outperformed growth stocks in 2022. That's a recent rarity, as for the past decade-plus, the performance record has favored growth. But the tide turned in 2022. The rollout of COVID-19 vaccines gave a lift to some of the cyclical companies (energy and regional banks) that had lagged in recent quarters, and value stocks outpaced growth stocks that year. While growth stocks have retaken the lead since 2023, the Federal Reserve continues to keep interest rates high to fend off inflation. This could possibly cap multiple expansion for growth companies in coming quarters. In any event, the value sector is the place to achieve income.

Tuesday was a solid day for biotechnology stocks -- and not the large-cap names that dominate some ETFs, but rather smaller issues, some of which are unknown to many. First off, we have talked about how important ETF selection is -- as even names in the same industry can be vastly different. The two main biotech ETFs, the iShares Biotech (IBB) and the SPDR S&P Biotech (XBI), are about the same size, with over $7 billion in net assets. But that is where the similarities end.

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.

Value stocks -- a market segment that includes high-yield stocks -- outperformed growth stocks in 2022. That's a recent rarity, as for more than a decade, the performance record favored growth. Since 2010, the Russell 1000 Growth Index has climbed more than 575%, compared to an advance of almost 200% for the Russell 1000 Value Index. In 10 of the past 13 years, growth stocks have topped value stocks. That hasn't always been the case. In the 2000-2010 decade, including the Great Recession, value stocks were better performers than growth stocks, advancing an admittedly low 8% (but still better than growth, which declined 15% during the decade). Value investors trace their roots to the famous "Security Analysis" textbook, written by Ben Graham, an economics professor at Columbia University. Warren Buffett was one of his students. Why the recent deviation in performance? Several reasons, including changes in the make-up of the economy, growth in intangible assets, and the current level of interest rates. But the tide turned back in 2022, at least for a while, as the rollout of COVID-19 vaccines gave a lift to some of the cyclical companies (energy and regional banks) that had lagged in recent years. While growth stocks have recaptured the lead since 2023, the Federal Reserve continues to keep interest rates high to fend off inflation. This could possibly cap multiple expansion for growth companies in coming quarters. In any event, the value sector is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.0%, compared to the 0.7% current yield on the iShares Russell 1000 Growth Index ETF. For our list this week, we have screened our coverage universe for stocks that are BUY-rated by Argus Research analysts, have an Argus Financial Strength Rating of at least Medium, and have a yield of 3.0% or higher. Here's a baker's dozen that meet the criteria. These stocks are also featured in our High-Yield theme model portfolio.

Monday Tee Up: Back to Inflation

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.

U.S. markets rallied on Thursday morning on stellar Nvidia results. On the housing front, existing home sales rose 3.1% to an annual rate of 4 million, this up from 3.8 million in December. The median home sales price was $379,100, 5.1% higher than a year ago, but down from $381,400 in December. As for economic trends, S&P Global's flash readings for February's PMI show expansion in both services and manufacturing. Services activity slowed to 51.3, down from 52.5 in January, but remained in expansion territory. Manufacturing PMI expanded more quickly in February with a reading of 51.7, up from 50.7 in January. The tech heavy Nasdaq rose 2.6%, the S&P 500 was up $1.8% and the Dow gained 0.8%

Stocks are trading lower on Wednesday morning ahead of the release of the Federal Reserve minutes. Turning to stocks, shares of Nvidia (NVDA) are down today, with the company reporting earnings today after market close. The S&P 500 fell 0.1%, the Dow was down $0.2% and the Nasdaq lost 0.5%. Crude oil traded near $77.50 per barrel, while gold fell nearly $4 to $2036 per ounce.

Stock indices dipped in October 2023, with the S&P 500 falling a sharp 10% off summer highs. Looking at 13F filings of big institutional portfolios, we see that the big guns were busy last quarter taking advantage of that dip. Citadel Advisors went on a buying spree, adding to its $100 billion portfolio across a range of sectors. As did D.E. Shaw, adding to its $67 billion portfolio. Vickers Stock Research, a subsidiary of Argus Research Group, analyzes insider trading and institutional stock ownership. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters and have come in for 4Q24. We review 13Fs of major activists to determine core holdings and new purchases. Activist investing is now less about generating a short-term return and more about achieving long-term returns through an active management/investor partnership. Based on data from Vickers, here are some recent new purchases and key holdings of activist investors, as well as other high-profile money managers.