Stocks fell on Tuesday pulled down by the mega-cap stocks and uncertainty over interest rate cuts. Economic data released today included factory orders for January and the ISM Services PMI for February. According to the Commerce Department, factory orders fell 3.6% in January following a 0.3% decline in December. The ISM Services PMI reading for February came to 52.6%, down from 53.4% in January and below the 53% forecast. Meanwhile, Bitcoin has hit a record high. The Dow fell 0.8%, the S&P 1.0%, and the Nasdaq 1.8%. Crude oil traded near $79 per barrel, while gold rose $9 to $2135 per ounce.

Growth sectors soared on spiking AI interest in the May-through-July period, stumbled in the August-through-October period, and roared again in November-December. No sector was spared in the August-October selling, and the recovery in November-December was equally broad. Because many sectors did not have the performance "cushion" that growth sectors carried into the market correction, all but three sectors were down year-to-date as of the end of October. That improved meaningfully to seven positive sectors as of the end of November. And for the full year, nine of 11 sectors landed in the win column. In broad terms, the year 2023 for stocks was positive, but it was also narrow. Three sectors -- Communication Services, Technology, and Consumer Discretionary -- accounted for most of 2023 market advance. None of the other eight sectors beat the overall market for 2023. The Street is divided as to whether the AI-driven "Magnificent Seven" can remain magnificent in 2024. Bears point out that valuations such as absolute and relative P/Es for these stocks are stretched. Bulls respond that margins and growth rates for these stocks are also two-times or more the market average. Given that the age of generative AI has only just started, Argus believes these names and other perceived AI winners could lead the market over the next several years. In 2022, investors became accustomed to buying cyclical, defensive, interest-rate-sensitive, and inflation-beneficiary stocks. Although Argus had expected to see a more broad-based advance from a sector perspective in 2023, we have not given up hope for additional sector breadth in 2024.

Here is the list of the Top Picks for 2024 from the Argus team of analysts. The team is deeply experienced, as each analyst has spent ,on average, 25 years on Wall Street and 15 years at Argus Research. As such, our analysts are extremely well-versed in our proprietary fundamental six-point system and the sectors they cover. They also have solid relationships with many of the management teams they cover. But they do not operate in a vacuum. An Investment Policy Committee (IPC) comprised of Director of Research Jim Kelleher, CFA; President John Eade; Chief Compliance Officer & Senior Financial Analyst Kevin Heal; and Director of Financial Institutions Research Steve Biggar provide macro outlooks for the economy, interest rates, earnings, and the stock market. The IPC reviews all proposed ratings changes. Our list below is organized by sector.

The top-level inflation rate in the U.S. fell to the lowest level since September 2021 on a year-over-year basis last month, as most price increases appear to be easing. The rate of core inflation also continued to tick lower. The CPI numbers generally were in line with consensus expectations and Argus forecasts. The Bureau of Labor Statistics reported a 3.1% increase in overall inflation year-over-year through November, compared to a 3.2% rate through October and a 9.1% rate back in June 2022. The core rate, excluding the impact of food and energy, was steady versus the prior month at 4.0%. Month-over-month, the all-items CPI ticked higher by 10 basis points, and the core CPI increased 30 basis points. Segments of the economy with stable/easing prices year-over-year included Energy (-5.4%), Used Cars & Trucks (-3.8%), and Medical Care Services (-0.9%). New Vehicles and Apparel prices increased at annual rates of 1.3% and 1.1%, respectively. Inflation rates continue to be propped up by Transportation Services (10.1% yoy) and Shelter (6.5%). These categories tend to have stickier prices. We continue to think the June 2022 CPI rate was the peak reading for the index this cycle, as the housing market cools off, supplies of new vehicles are replenished, and the price of oil stays below $90 per barrel. The Fed has lifted the feds fund rate from 0.0% to above 5.25% over the past 18 months, and the rate hikes appear to be reducing inflationary pressures. The next question is whether the rapid rate of increases will tip the economy into a recession as inflation continues to head toward 2.0%. We look for the U.S. central bank to be lowering rates in 2H24 as their concern shifts toward economic growth.

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

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 Equinix Inc (EQIX); Expedia Group Inc (EXPE); American Intl Grp In (AIG); Netflix Inc (NFLX) and the Focus List deletions are Arthur J. Gallagher & Co. (AJG); Comcast Corp (CMCSA); ProLogis (PLD); Royal Caribbean Group (RCL).

Stocks rose on Wednesday morning following a stronger-than-expected GDP report. The Commerce Department said that the U.S. economy expanded at a 5.2% annualized rate in 3Q, up from a prior estimate of 4.9% and above the Reuters consensus forecast of 5.0% growth. GM shares surged after the automaker announced a 33% dividend increase and a record stock buyback. The company also issued a new 2023 earnings forecast after withdrawing its guidance during the UAW strike. The Dow rose 0.1%, the S&P 0.3%, and the Nasdaq 0.4%. Crude oil fell to $76 per barrel, while gold traded near $2063 per ounce.

Stocks declined on Wednesday morning on rising oil prices as fears that persistent inflation will keep the rates higher. The ISM non-manufacturing Purchasing Managers' Index (PMI) came in at 54.5, compared with expectations of 52.5. In other news, Apple fell after a report that China has banned government officials from using iPhones for work. The S&P 500 fell 0.8%, the Dow 0.6% and the Nasdaq was down 1%. Crude oil traded near $87 per barrel and gold fell $11 to $1941.

Stocks declined on Wednesday morning on rising oil prices as fears that persistent inflation will keep the rates higher. The ISM non-manufacturing Purchasing Managers' Index (PMI) came in at 54.5, compared with expectations of 52.5. In other news, Apple fell after a report that China has banned government officials from using iPhones for work. The S&P 500 fell 0.8%, the Dow 0.6% and the Nasdaq was down 1%. Crude oil traded near $87 per barrel and gold fell $11 to $1941.

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Stocks have recovered thus far in 2023, but gains have been largely driven by only a handful of high-tech companies. Inflation remains high and the Fed continues to raise rates. Is a recession in the offing? With all the uncertainty, is it time for investors to cash in their chips? We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

Stocks rose on Monday morning as investors awaited earnings from major Tech companies and the Fed's interest rate decision later this week. Business activity data was mixed. S&P Global said that its flash Services PMI fell to 52.4 in July, down from 54.4 in June and below the Reuters consensus forecast of 54.0. At the same time, the Manufacturing PMI rose to 49.0 from 46.3 in June and came in above the consensus estimate. The Dow rose 0.5%, the S&P 0.4%, and the Nasdaq 0.3%. Crude oil rose more than 1% to $78 per barrel while gold fell $5 to $1962 per ounce.

Stocks rose on Monday morning as investors awaited earnings from major Tech companies and the Fed's interest rate decision later this week. Business activity data was mixed. S&P Global said that its flash Services PMI fell to 52.4 in July, down from 54.4 in June and below the Reuters consensus forecast of 54.0. At the same time, the Manufacturing PMI rose to 49.0 from 46.3 in June and came in above the consensus estimate. The Dow rose 0.5%, the S&P 0.4%, and the Nasdaq 0.3%. Crude oil rose more than 1% to $78 per barrel while gold fell $5 to $1962 per ounce.

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower last year. Stocks have recovered so far in 2023, but gains have been driven largely by only a handful of high-tech companies. Inflation remains high and the Fed continues to raise interest rates. Is a recession in the offing? With all the uncertainty, is it time for investors to cash in their chips? Perhaps not yet. We note that investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes, such as fixed income and cash. As well, those returns are from eras when the 10-year Treasury bond yield was much higher than the current 3.8% level. So what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods. We have designed a portfolio of companies followed by Argus Research analysts that are BUY-rated and have impressive Min Vol characteristics of low beta, high yield, high market cap, strong balance sheets, and low risk profiles. Some of the stocks featured in the portfolio are listed below.

The first-quarter earnings season is wrapping up, with blended earnings (actual results and the consensus for those still to report) showing a 0.6% year-over-year decline, according to Refinitiv. That is considerably better than the 5.0% decline expected at the start of the earnings period, though still not enough to avoid a technical earnings recession following 4Q's 3.4% decline. Propelling the 1Q outperformance was a 74% beat rate (versus the long-term average of 62%), with strong gains in Consumer Discretionary (+55%) and Industrials (+26%), but drags from Basic Materials and Utilities (both -22%). Our analysts are always on the lookout for companies that boost their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst for market-beating returns in the quarters ahead. Here is an initial list of BUY-rated companies in Argus Coverage for which management has raised guidance or increased its outlook during the 1Q23 EPS reporting season.

Fed on the Sidelines: What's Next for the Market?

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 Alcon Inc. (ALC); Ulta Beauty Inc (ULTA); Comcast Corp (CMCSA); ProLogis (PLD) and the Focus List deletions are AstraZeneca PLC (AZN); Omnicom Group, Inc. (OMC); Target Corp (TGT); Equinix Inc (EQIX).

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.

Stocks were mixed on Wednesday morning amid new manufacturing data and hawkish comments from Fed officials that pointed to an extended rate hike campaign. The Institute for Supply Management said that its manufacturing PMI rose to 47.7 in February, up slightly from 47.4 in January but below the Reuters consensus forecast of 48.0. Readings below 50 indicate contraction in manufacturing. The Dow rose 0.2%, the S&P fell 0.2%, and the Nasdaq fell 0.3%. Crude oil traded near $77 per barrel, while gold rose $12 to $1848 per ounce.

Stocks were mixed on Wednesday morning amid new manufacturing data and hawkish comments from Fed officials that pointed to an extended rate hike campaign. The Institute for Supply Management said that its manufacturing PMI rose to 47.7 in February, up slightly from 47.4 in January but below the Reuters consensus forecast of 48.0. Readings below 50 indicate contraction in manufacturing. The Dow rose 0.2%, the S&P fell 0.2%, and the Nasdaq fell 0.3%. Crude oil traded near $77 per barrel, while gold rose $12 to $1848 per ounce.

Vickers Stock Research, a subsidiary of The Argus Research Group, tracks and analyzes insider trading and institutional stock ownership trends. Form 13-Fs, which institutions must file to report their holdings, are due 45 days after the end of calendar quarters, and have now come in for 4Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others, in order to determine their core holdings and new purchases. Activist investing has evolved in recent years and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Activists have made progress in the past quarter with high-profile investments into blue-chip companies such as Walt Disney and Salesforce. 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 such as Warren Buffet of Berkshire Hathaway and Ken Griffin of Citadel Advisors LLC.

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

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 NXP Semiconductors NV (NXPI); Equinix Inc (EQIX); HubSpot Inc (HUBS); Honeywell International Inc (HON) and the Focus List deletions are Flex Ltd (FLEX); Host Hotels & Resorts Inc (HST); AECOM (ACM); Splunk Inc (SPLK).

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 NXP Semiconductors NV (NXPI); Equinix Inc (EQIX); HubSpot Inc (HUBS); Honeywell International Inc (HON) and the Focus List deletions are Flex Ltd (FLEX); Host Hotels & Resorts Inc (HST); AECOM (ACM); Splunk Inc (SPLK).

On Friday morning, investors will be focused on the Labor Department's October employment report. The current Reuters consensus calls for the addition of 200,000 payroll jobs, down from 263,000 in September, and a slightly higher unemployment rate of 3.6%. Stocks fell sharply on Thursday amid continued concerns about rate hikes and a potential recession, a day after Fed Chairman Powell said that rates at the end of the cycle could be higher than previously expected. The Dow fell 0.46%, the S&P 1.06%, and the Nasdaq 1.73%. Crude oil fell more than 2% to $88 per barrel, while gold fell $18 to $1632 per ounce.

Recession Barometer: Struggling Consumers, Busy Business Economy

Stocks continued to fall on Friday morning after giving up early gains. The selloff was led by the Consumer Discretionary and Industrial Sectors, though all sectors were down. The S&P 500 remained on track for its seventh straight weekly loss. On the earnings front, Deere shares fell more than 11% despite the company's better-than-expected fiscal 2Q earnings and higher full-year guidance. The Dow fell 0.7%, the S&P 0.7%, and the Nasdaq 0.9%. Crude oil rose slightly to $113 per barrel, while gold traded near $1844 per ounce.

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.

The Russian invasion of Ukraine, and specifically fire at a nuclear plant, extended the stock market's losing streak last week. On Friday, the Dow Jones Industrial Average fell by 180 points, or 0.53%. The S&P 500 fell 0.79%, and the Nasdaq Composite dropped 1.66%. For the week, the DJIA was down 444 points, or 1.3%, while the S&P 500 was off 1.27%, and the Nasdaq Composite declined 2.78%. Year-to-date, the Dow is down 7.49%; the S&P 500 is off 9.18%. The Nasdaq Composite extended its relative underperformance and is now down 14.90% year to date.

Explosive growth in mobile and fixed-line traffic is driving demand for robust data centers that are enabled for artificial intelligence (AI) and can manage rising and increasingly-complex traffic flow. Two-thirds of the world will have internet access by 2023, while the number of connected devices is expected to grow to three-times the global population. IoT (machine to machine or M2M) connections are expected to grow at a 30% CAGR. Security is a top need, as "denial of service" attacks are set to double by 2023. To handle the challenges of managing, storing, and securing data amid this explosive traffic growth, data centers will need to harness the power of artificial intelligence. AI enhances data center capabilities though the power of machine learning, inference, and deep learning, all in an application-accelerated environment. The AI data center also makes use of non-traditional and emerging technologies that provide more computing power than traditional CPU-based architectures. These include GPU Compute from NVidia and Tensor cores from Google/Alphabet. As of mid-year 2021, about 600 hyperscale data centers were in operation around the world, up from about 500 at year-end 2019 and double the number from five years ago. The bulk of data center construction is by hyperscale providers including AWS from Amazon.com, Microsoft Azure, Google Cloud from Alphabet, as well as with Chinese companies including Baidu and Alibaba. Co-location companies are another major data center driver, including Equinix and Digital Realty Trust. International Business Machines is providing hybrid cloud services that bridge public and private clouds. Other data center suppliers include semiconductor companies Broadcom, Marvell Technology, Intel, and Advanced Micro Devices. Stocks on the Argus Research BUY list that are in position to benefit include the following.

At Tuesday's low, the S&P 500 had fallen 3.9% from its November 22 intraday high. With the recent volatile action, it sure feels like we've dropped more. The Nasdaq has dipped 4.7% on an intraday basis, while the Nasdaq 100 (QQQ) has dropped 4.6% (with the intraday low coming on Friday). The real damage has been in the smaller stocks -- and those declines started back on November 9. The Russell 2000 (IWM) has cascaded 11.7% on an intraday basis, while the S&P MidCap 400 has given up 7.6%. Both of the previous breakouts to all-time highs for those two indices have failed miserably.

Stocks fell on Tuesday morning, pulling back from new record highs on Monday amid more signs of persistent inflation. The Labor Department said that its producer price index for final demand rose 0.6% in October, up from 0.5% in September and in line with the Reuters consensus forecast. GE shares rose 4% after the company announced that it would split into three new publicly traded firms focused on healthcare, energy, and aviation. The Dow fell 0.6%, the S&P 0.5%, and the Nasdaq 0.5%. Crude oil traded near $83 per barrel, while gold fell $2 to $1826 per ounce.

Both gold and silver prices popped on Wednesday, with the SPDR Gold Shares (GLD) up 1.8% and the iShares Silver Trust (SLV) rising 1.9%. However, both closed off their intraday highs as GLD almost ran smack into its 21-week exponential average and almost hit its 200-day average. SLV almost hit its falling 50-day average.

Market breadth improved in the back half of August, as small- and mid-cap stocks joined large-caps to the upside. But the small- and mid-caps did not see follow through, have backed off since September 2, and have weakened breadth.

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.

The last run higher in West Texas Intermediate (WTI) hit our target when WTI reached an intraday high of $77 on July 6. That was followed by a sharp reversal, with WTI closing at $73.37 that same day. Crude then fell to $65 on July 20, rallied to $74.23, and tested the $65 level August 9. That was followed by a small rebound to the declining 13-day exponential average at $69.62 and another dip back to $67 on Monday. A break below $65 could elicit a fairly sharp downside move.

Last week, we detailed positive trends in insider sentiment, even in the face of light transaction volume (the result of trading restrictions during earnings season). This week, Vickers Stock Research reports that insider transaction volume has started to increase as earnings season comes to a close. Broadly put, the positive short-term trends from last week have not held, though the current data is not bad enough to damage longer-term trends.

The latest run-up in West Texas Intermediate (WTI) has reached our target in the high $70s/barrel, as WTI hit an intraday high of $77 on Tuesday. This was followed by a sharp reversal, with WTI closing at $73.37. On Wednesday, oil fell to $72. The level reached this week matches the prior high from October 2018. Gasoline futures hit $2.33/gallon on Tuesday, reversed, and closed at $2.20 on Wednesday. Maybe the summer driving season won't be that bad after all.

In early May, we talked about the Real Estate sector (XLRE). During April, this eclectic group beat out the other 10 S&P sectors, which is uncommon. Furthermore, the XLRE is up 23% in 2021, behind only Energy and Financials. How can this be? Aren't REITs dividend plays, susceptible to jumps in rates (as we saw in the first three months of the year)? Chartists tend to look the other way (ignore) when it comes to slower-growing, individual-dividend and sector plays. In some years (periods), that certainly is a mistake.

Stocks were mostly higher on Thursday morning, led by the Industrial and Financial sectors. On the employment front, the Labor Department said that first-time claims for state unemployment benefits fell to 406,000 for the week ended May 22, down from 444,000 a week earlier and below the Bloomberg consensus of 425,000. The Dow rose 0.6%, the S&P 0.3%, and the Nasdaq 0.1%. Crude oil fell slightly to $66 per barrel, while gold traded near $1897 per ounce.

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 rose on Friday morning amid strong earnings reports from Deere and Applied Materials and new housing market data. The National Association of Realtors said that U.S. existing home sales rose 0.6% to an annualized 6.69 million units in January, above the Reuters consensus forecast of 6.61 million. The inventory of previously owned homes available for sale also fell to a record low of 1.04 million last month, down nearly 26% from the prior year. The Dow rose 0.4%, the S&P 0.4%, and the Nasdaq 0.8%. Crude oil traded near $59.50 per barrel, while gold rose $10 to $1785 per ounce.

Stocks rose on Friday morning amid strong earnings reports from Deere and Applied Materials and new housing market data. The National Association of Realtors said that U.S. existing home sales rose 0.6% to an annualized 6.69 million units in January, above the Reuters consensus forecast of 6.61 million. The inventory of previously owned homes available for sale also fell to a record low of 1.04 million last month, down nearly 26% from the prior year. The Dow rose 0.4%, the S&P 0.4%, and the Nasdaq 0.8%. Crude oil traded near $59.50 per barrel, while gold rose $10 to $1785 per ounce.

The 3Q20 EPS season is mostly in the record books, with retailers the last group to report. The results were not pretty, but were better than 2Q20. Through mid-November, Refinitiv reported that S&P 500 earnings declined in 3Q at a 7.4% rate -- a vast improvement from the prior quarter's 30.5% decline. Excluding the Energy sector, earnings declined at a 3.2% rate. Of the 462 companies in the S&P 500 that have reported earnings to date for 20Q3, 84% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four-quarter average of 73%. Our analysts are always looking for companies that raise their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst to strong returns in the quarters ahead. There were not many in this most-recent period. Here are 12 BUY-rated companies in Argus Coverage for which management has raised guidance or increased its outlook during the recent EPS reporting season.