Stocks fell on Monday morning on valuation concerns, led by a 2% decline in the Tech sector, though Energy stocks rose amid rising oil prices. Treasury Secretary Janet Yellen said that she would judge the success of the government's planned $1.9 trillion stimulus program on its ability to restore pre-pandemic levels of unemployment, and noted that the resulting increase in debt would be manageable given current low interest rates. The Dow was flat, the S&P fell 0.6%, and the Nasdaq fell 1.7%. Crude oil traded near $61 per barrel, while gold rose $32 to $1810 per ounce.

Stocks were largely flat on Friday morning as investors weighed new consumer sentiment data and awaited further progress on the Biden administration's stimulus plan. The University of Michigan said that its consumer sentiment index fell to 76.2 in the first half of February, down from a final January reading of 79 and below the Reuters consensus forecast of 80.8. The Dow fell 0.1%, the S&P rose 0.2%, and the Nasdaq rose 0.2%. Crude oil traded near $59 per barrel, while gold fell $2 to $1825 per ounce.

There's nothing like a week-long selling jag to get the bullish juices flowing once again. After the S&P 500 set a new all-time closing high at 3,855 on 1/25/21, GameStop hysteria seized the market. A relatively small set of retail investors, embracing YOLO (you only live once), pushed GME to unsustainable highs in the mid-$300s. Although this occurred among a small group of investors in a small set of stocks, fear grew that an equity asset bubble had been discovered, and broad selling took over. By 1/29/21, the final trading day in January, the S&P 500 had fallen 3.7% or by about 140 points.

Stocks fell on Monday morning, giving up early gains amid concerns about congressional opposition to the Biden administration's $1.9 trillion stimulus plan and the impact of new coronavirus variants. Moderna shares rose more than 7% after the company said that it was developing a new version of its COVID-19 vaccine to better target a rapidly spreading South African variant of the disease. Meanwhile, Merck said that it would halt the development of its COVID vaccines after disappointing clinical trial data. The Dow fell 1.1%, the S&P 0.7%, and the Nasdaq 0.2%. Crude oil traded near $52 per barrel, while gold fell $4 to $1852 per ounce.

Growth stocks outperformed value, again, in 2020. But in an environment of historically low interest rates (and with the coronavirus and a high unemployment rate seemingly poised to keep them low for a long time), many investors are searching for high levels of income, often be found in value stocks. During recent years, the performance record has favored growth. Since 2010, the Russell 1000 Growth Index has climbed more than 400%, compared to an advance of 200% for the Russell 1000 Value Index. In eight of the past 10 years, growth stocks topped value. That hasn't always been the case. In the previous decade, including the Great Recession, value stocks were better performers, advancing a low 8%, but still better than growth, which declined 15%. Value investors trace their roots to the famous "Security Analysis" textbook, written by Ben Graham, an economics professor at Columbia University. The tide may now be turning. Progress on COVID-19 vaccines has given a lift to some of the cyclical companies (energy companies and banks) that have lagged in recent quarters, and value stocks have kept pace with growth stocks in the past quarter. In any event, value is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.5%, compared to the 1.0% current yield on the iShares Russell 1000 Growth Index ETF. This is not unimportant, as the current yield on the 10-year Treasury bond is 0.95%. For our list this week, we have screened our coverage universe for stocks that are BUY-rated by Argus Research analysts, have a Financial Strength rating of at least Medium, and have a yield of 3.0% or higher.

ARGUS ANALYSTS' TOP PICKS FOR 2021

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 Director of Research Kelleher typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus.

Core prices are starting to increase, though we don't think the U.S. Federal Reserve is overly worried. Currently, most inflation measures remain below the Fed's target of 2.0%, though on average they are up month-over-month. We track 14 inflation measures on a monthly basis. On average, they indicate that prices are rising at a 1.14% rate, ahead of last month's reading, which was 1.04%. Looking at core inflation -- which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy and the 10-year TIPs Breakeven Interest Rate -- our reading is 1.16%, lower month-to-month. With this inflation backdrop, we expect the Fed will focus on other issues (backstopping financial markets) and keep short-term rates close to zero until at least 2022. That's not to say there aren't threats that inflation may surge at some point. For example, as Western and Asian populations age and if globalization reverses, there may be a shortage of workers. Further, aging populations and their healthcare needs may encourage politicians to increase deficit spending. Given current government debt levels and central bank liabilities, central banks that are forced to raise rates to stem inflation will do so at high cost.

Stocks rose on Tuesday morning amid continued optimism about new coronavirus vaccines and movement in Congress to both avert a government shutdown and compromise on a new stimulus package. Apple shares rose more than 3% on news that the company planned to increase iPhone production by 30% in the first half of next year. The Dow rose 0.5%, the S&P 0.5%, and the Nasdaq 0.4%. Crude oil traded near $47.50 per barrel, while gold rose $17 to $1849 per ounce.

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 Trane Technologies plc (TT); Linde Plc (LIN); Western Digital Corp. (WDC); Peloton Interactive Inc (PTON) and the Focus List deletions are PPG Industries, Inc. (PPG); Roper Technologies Inc (ROP); Snap Inc (SNAP); TJX Companies, Inc. (TJX).

The U.S. economy soared at a 33.1% annual rate in 3Q20, rebounding from a 31.4% annualized drop in 2Q20 and a 5.0% annualized slide in 1Q20. The numbers are a bit hard to grasp, reflecting the unique approach of the U.S. Bureau of Economic Analysis. Using simple math (going from absolute GDP level quarter-to-quarter, instead of annualizing) we note that the value of U.S. GDP in 3Q20 of $21.157 trillion was 8.4% higher than the $19.52 trillion value in 2Q20. That 2Q20 value was 9.5% lower than the 1Q20 value of $21.56 trillion. The high-water mark for U.S. GDP was $21.75 trillion in 4Q19. So the current GDP, which grew both 33% and 8% in 3Q, is still about 3% below the pre-pandemic level. In our view, 3Q20 represents a substantial (but not complete) recovery in GDP, and we think the numbers are going to improve. How rapidly that happens depends on the health of the country. Right now, as another wave of COVID-19 strikes many regions of the U.S., the outlook for a continued sharp recovery is at risk. Our forecasts call for a 1.5% increase in absolute GDP in 4Q from 3Q, which translates in our model to an annualized gain of 6.0%. We expect further absolute improvement into 1H21, before the economy stabilizes near pre-pandemic levels in 2H21. Our GDP model now calls for overall GDP growth of 1% in 2020 and 3.6% in 2021.

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 traded mostly lower on Tuesday morning, a day after rallying strongly on news of positive clinical trial results for the Pfizer/BioNTech coronavirus vaccine. Technology and Communication Services stocks fell as investors turned away from companies that have benefited from remote working and stay-at-home restrictions during the pandemic. On the earnings front, Beyond Meat shares fell more than 20% after the company posted sharply lower revenue and a wider-than-expected third-quarter loss. Eli Lilly shares rose more than 3% after the drug maker received FDA emergency use authorization for its COVID-19 antibody treatment. The Dow was flat, the S&P fell 1.0%, and the Nasdaq fell 2.2%. Crude oil traded near $41 per barrel, while gold rose $26 to $1881 per ounce.