There are many ways to check the breadth, or underlying strength, of major stock indices. The easiest is to look at the advance-decline line of an index in relation to price. Another way is to look at the McClellan Oscillator and the McClellan Summation Index of each index. A third path is to look at the Buying Percent Index (BPI) of each index and see what percent of issues are on point & figure buy signals.

The Importance of Dividends

Stocks fell on Thursday morning on diminishing hopes for a fiscal stimulus deal before the election and an unexpected increase in weekly unemployment claims. The Labor Department said that initial claims for state unemployment benefits rose to 898,000 for the week ended October 10, up from 845,000 a week earlier and above the Bloomberg consensus forecast of 825,000. The Dow fell 0.4%, the S&P 0.6%, and the Nasdaq 0.9%. Crude oil traded near $40 per barrel, while gold fell $9 to $1891 per ounce.

Stocks were largely flat on Wednesday morning following mixed earnings from major banks. Goldman Sachs posted much better-than-expected 3Q revenue and earnings, driven by strength in asset management and fixed-income trading. Bank of America posted mixed results, missing on revenue but with EPS slightly above consensus. Wells Fargo posted better-than-expected revenue but fell short on EPS. The Dow rose 0.1%, the S&P 0.1%, and the Nasdaq 0.2%. Crude oil traded near $41 per barrel, while gold rose $17 to $1911 per ounce.

This edition features the U.S. election's impact on energy infrastructure; a coronavirus update on the auto sector; the generic drug market; and notes from AMD, Morgan Stanley, and Disney.

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 posted modest gains during the week, but gave back some gains on Friday. Riskier stocks performed slightly worse than blue chips, mainly due to a tech sell-off at the end of the week. On Friday, the Dow Jones Industrial Average fell 134 points, or 0.5%. The S&P 500 fell 1.0% and the Nasdaq Composite dropped 2.2%. For the full week, the Dow was up 1.9%, and the S&P 500 and the Nasdaq were both up 1.5%. Last week's gains snapped a four-week losing streak for the broader market. For the year-to-date, the DJIA is down 3.0%, the S&P is up 3.6%, and the Nasdaq is up 23.4%. Over the past 52 weeks, the Dow is up 4.2%, the S&P 500 is up 13.4%, and the Nasdaq is up 38.7%.