Stocks continued their rally on Friday morning amid strong earnings reports from American Express and Twitter. However, Intel shares fell more than 6%, despite solid second-quarter results, after the company projected declining gross margins over the remainder of the year. The Dow rose 0.5%, the S&P 0.8%, and the Nasdaq 0.8%. Crude oil traded near $72 per barrel, while gold fell $6 to $1799 per ounce.

Stocks rose on Tuesday morning, recouping some of Monday's sharp losses. IBM reported strong 2Q earnings and housing market data was mixed. The Commerce Department said that U.S. housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units in June, above the Reuters forecast of 1.590 million. However, building permits, a longer-range indicator, fell 5.1% to an annualized 1.598 million. The Dow rose 1.6%, the S&P 1.4%, and the Nasdaq 1.0%. Crude oil traded near $67 per barrel, while gold fell slightly to $1808 per ounce.

The Fed Calms the Markets: Our Monthly Survey of the Economy, Interest Rates, and Markets

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 U.S. Department of Commerce last week announced that its third estimate for 1Q20 GDP growth was a rate of 6.4%. This was in line with the previous estimates and with the consensus outlook, and represents a robust recovery. The report also includes an inflation gauge, the PCE price index. This index, excluding food and energy, rose at a 2.5% pace, well ahead the Federal Reserve's inflation target of 2.0%, though the Fed has said that it will allow inflation to run hot for a while before raising short-term interest rates. We expect above-trend GDP growth for the next few quarters. But there may be bumps along the way. Some segments of the economy are back to or above pre-pandemic highs. These include consumer spending on durable and nondurable goods as well as investment into residential and intellectual property products. Other segments continue to lag, such as consumer spending on services, investment into structures, and exports.

Stock Market at Midyear: Rotation, but an Old Favorite is Back

In our Wednesday comment, we noted that we don't often try to predict what the U.S. Dollar Index (USD) will do. We also mentioned that the direction of the USD was very important to the euro and to metals. The Fed proved that point on Wednesday, with results that ran into Thursday.

Stocks were mixed on Thursday morning as investors process the Fed's policy decision. Interest rates will remain near zero but 13 of the FOMC's 18 members expect at least one rate hike by the end of 2023. The central bank will continue to purchase at least $120 billion a month in agency mortgage-backed securities and U.S. Treasuries. In other news, initial jobless claims rose to 412,000 for the week ended June 12. The Dow fell 0.9%, the S&P was down 0.3% and the Nasdaq was up 0.6%. Crude oil traded near $70 per barrel, while gold fell $7 to $1774 per ounce.

Stocks rose on Thursday as investors looked past more signs of inflation in the government's May consumer price data. The Labor Department said that the CPI rose 5.0% year-over-year in May, up from 4.2% in April. The reading was above the Reuters consensus forecast of 4.7% and the sharpest annual increase since 2008. The core CPI, excluding food and energy, also rose 3.8% from the prior year. On the employment front, first-time jobless claims fell to a new pandemic era low of 376,000, down from the prior week but slightly above consensus. Continuing claims fell to 3.499 million, down from 3.757 million a week earlier and below the consensus forecast of 3.665 million. The Dow rose 0.06%, the S&P 0.47%, and the Nasdaq 0.78%. Crude oil rose slightly to $70 per barrel, while gold fell $6 to $1901 per ounce.

Sustainable Impact investing continues to grow. According to Opimas, a management consultancy focused on global capital markets, global assets under management in ESG strategies grew to $40.5 trillion in 2020, doubling in four years and tripling in eight. As assets have flowed in, SRI investing has evolved over the past 40 years. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all businesses that can have an "impact" on global issues such as workers' rights, poverty, hunger, and the climate. Based on numerous requests from clients, we have compiled a portfolio of companies followed by Argus Research that are in position to have this type of "sustainable impact" on the environment, workplace, and community. These firms have exemplary records not only in delivering on the bottom line, but also in improving the environment, contributing to community relations, and showing respect for their employees. We built our portfolio by identifying companies that are BUY-rated by Argus analysts and also score well on ESG (Environmental, Social and Governance) criteria established by the JUST Capital Foundation. JUST Capital utilizes a combination of polling, data-driven research, and strategic engagement to shift behaviors and activities in corporate America and the financial markets. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric, inclusive form of capitalism that reflects the priorities of the American public. JUST ranks the Russell 1000 on these criteria against a scale of 1-100. Here are company highlights from the Argus U.S. ESG Model Portfolio.

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.

In the early months of 2021, we detailed overall insider sentiment that was more bearish than we like to see, but not so bearish that we were calling for a meaningful correction. The bearishness was broad-based, but led by cautionary trading from insiders at companies that list on the Nasdaq (often technology firms).

Inflation Fears Shadow Reopening: Our Monthly Survey of the Economy, Interest Rates, and Markets

The stock market moved higher last week, with technology stocks outperforming blue chips. During Friday's session, the Dow Jones Industrial Average increased 65 points, or 0.19%. The S&P 500 was up 0.08%, and the Nasdaq Composite was up 0.09%. For the week, the DJIA was up 322 points, or 0.94%, the S&P 500 was up 1.16%, and the Nasdaq Composite was up 2.06%. Year-to-date, the DJIA is up 12.82%, the S&P 500 is up 11.93%, and the Nasdaq Composite is up 6.68%.

The approximately $1.7 trillion cryptocurrency market (Bitcoin, Etherium, Dogecoin, etc.) has been tumbling from a $2 trillion-plus level on a flurry of negative developments. These include Tesla's Elon Musk halting acceptance of Bitcoin for Tesla products due to environmental concerns; China saying it would not allow financial institutions to provide services related to crypto transactions; and Colonial Pipeline paying Bitcoin as ransom to hackers, furthering the notion that cryptocurrencies are ideal for enterprises seeking to evade laws. Prior to the headlines, cryptocurrencies were on a tear despite no clear path to widespread adoption by consumers or businesses, and amid uncertainty over regulation. We estimate that the global equity market capitalization is approximately $90 trillion. Gold is about $10 trillion. For crypto to make it on the radar for most investment managers' asset-allocation models, we expect it needs to at least triple in value, to approximately $5 trillion. By then, maybe there will be more uses for and regulations to define the asset, and more fundamentals to support valuation; this has worked for gold over the years. For the broader market, collapsing crypto prices also signal excessive liquidity in the system, and worries could spill over into other asset classes. Essentially, markets are in risk-off mode when Bitcoin tanks.

Stocks rose on Thursday morning after three days of losses, led by the Technology and Consumer Discretionary sectors. On the employment front, the Labor Department said that first-time claims for state unemployment benefits fell to 444,000 for the week ended May 15, down from 478,000 a week earlier and slightly below the Bloomberg consensus of 450,000. The Dow rose 0.6%, the S&P 0.8%, and the Nasdaq 1.4%. Crude oil fell to $63 per barrel, while gold traded near $1879 per ounce.

The April nonfarm payrolls report on Friday badly missed consensus expectations and signaled that the economic recovery is far from automatic, or even assured. Stocks rose, suggesting that the fundamental event of a major data report can have far-reaching technical impact in the market.

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.