Drivers continue to face the highest gas prices in three years, just in time for what is perhaps the most-meaningful summer driving season in a very long time. Propelling gas prices is West Texas Intermediate (WTI), which is now at $70/barrel, the highest point since October 2018. Gasoline futures are at $2.22, the highest level since May 2018 -- and not far from the highest since late 2014.

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.

Our rating on the Financial Services sector is Over-Weight. With market optimism rising on positive vaccine developments and the new administration in Washington, interest rates have started to move higher at the long end of the yield curve. We expect banks to benefit from wider net-interest margins and lower loan-loss provisions as the economy normalizes, and insurance companies to generate higher income in their investment portfolios. The sector now accounts for 11.4% of the S&P 500. Over the past five years, the weighting has ranged from 10% to 17%. We think the sector should account for 12%-15% of diversified portfolios. Here is how we use our analysts' Financial Services sector ideas in our Focus List and Model portfolios. All of the following stocks are rated BUY at Argus.

We try to stick to technical analysis in this space. But we do have some pretty solid fundamental and economic knowledge on which we can draw. And right now, we'll address the core subject of supply and demand, which is not that hard to understand even without much financial background.

Often overlooked amid gyrations in the stock market is dividend income, which is an important element of total return. Between 1930 and 2012, dividend income accounted for 42% of total return of the S&P 500, according to Hartford Funds. And that's just the average. In some decades, dividends accounted for more than 50% of total returns and even 100% of returns. More recently, dividends have accounted for 15%-20% of returns. Still, in 2018, dividend payments softened the blow when most market indices declined as the Federal Reserve hiked rates. Not all dividends are created equal, though, and it is important to understand the difference between the two main categories: high-yield stocks and dividend-growth stocks.

Back on April 14, we wrote about the bullish technical outlook for semiconductors, a key Technology industry. At the time, the iShares PHLX Semiconductor (SOXX) and the Van Eck Vectors Semi ETF (SMH) SOXX had just made all-time highs (ATHs). Additionally, nine of 10 major holdings in the SOXX were at or near ATHs.

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 kept the momentum going in April, and are now up almost 12%, including dividends, in the year-to-date. Our analysts have been progressing through earnings season, and have come across many stocks in coverage that have approached target prices. We set target prices through our valuation framework, which includes analysis of historical multiples, peer multiples, future dividends, and cash flows. After adjusting the models for the latest earnings and dividend information -- most of which has been good -- here are some of the stocks on which we have raised target prices over the past month. All stocks are rated BUY at Argus.

We are again addressing the issue of extreme sentiment, as fear remains absent from the stock market and has been missing in action since the COVID-19 collapse back in February and March of 2020.

Sustainable Impact Investing is gaining traction with the global investment community. In January 2020, BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced that his firm would be investing in companies that are making progress on sustainability. He doubled down in his January 2021 letter, calling on company managements to disclose their plans for making their businesses "compatible with a net-zero economy" by 2050. As assets have flowed in over the past 40 years, Sustainable Impact Investing has evolved. The discipline, originally known as Socially Responsible Investing, focused at first on excluding companies that conducted business in South Africa, or participated in industries such as tobacco, alcohol, and firearms. But the performance of these initial strategies lagged, and the approach has been modified. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across all industries that can have an "impact" on global issues such as the climate, hunger, poverty, disease, shelter, and workers' rights.

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 rose on Thursday morning, led by the Technology and Healthcare sectors, as investors weighed more 1Q earnings reports and weekly employment data. The Labor Department said that first-time claims for state unemployment benefits fell sharply to 576,000 for the week ended April 10, down from 769,000 a week earlier and below the Bloomberg consensus forecast of 700,000. Bond yields retreated, with the yield on the 10-year Treasury falling below 1.6%. The Dow rose 0.8%, the S&P 0.8%, and the Nasdaq 1.0%. Crude oil fell slightly to $63 per barrel, while gold traded near $1767 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!

This edition features optimism for Arkema; Seven & I's food-service strategy; the Fed's next moves for interest rates; and notes from Bank of America, FedEx, and American Express.

Thursday was another rough day for stocks, but some afternoon price strength cut the losses quite a bit. At the session low, the S&P 500 was off 97 points or 2.5%. But the index finished with a 1.3% loss. The Nasdaq finished down 2%, having been off 3.4% intraday. The Nasdaq 100 (QQQ) closed off 1.7%, but at the low was down 2.9%. Our primary concern remains the growth indices, as they have completed small topping formations. The Nasdaq and QQQs are very close to breaking their key 21-week exponential moving averages, which could suggest more damage.

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.