Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

Stocks were mixed on Thursday morning following new economic data. For the week ending February 3, initial jobless claims were 218,000, down from the previous-week's revised 227,000. Ongoing unemployment was 1,871,000, a decrease of 23,000 from the previous-week's revised 1,894,000. On the earnings front, shares of Arm Holdings (ARM) are up 58% on positive 4Q earnings and forward guidance. The Walt Disney Co. (DIS) rose 12% on an earnings beat and dividend raise. The S&P 500 was trading just below the flatline, the Dow was down 0.3%, while the Nasdaq was up 0.3%. Crude oil traded near $76 per barrel and gold fell $5 to $2046 per ounce.

Stocks rose on Friday morning as investors continued to weigh comments from Fed Chair Powell and other central bank officials, along with new consumer confidence data. The University of Michigan said that its preliminary consumer sentiment index for November fell to 60.4, down from a final October reading of 63.8 and below the Reuters consensus forecast of 63.7. On the earnings front, Illumina shares fell 13%, despite above-consensus 3Q EPS, after the company projected substantially lower shipments of its NovaSeq X gene-sequencing system. The Dow rose 0.5%, the S&P 0.8%, and the Nasdaq 1.2%. Crude oil traded near $77.50 per barrel, while gold fell more than 1% to $1943 per ounce.

Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine, high European inflation or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Stocks Hit Early August Speedbump as Earnings, Economy Roll On

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.

Earnings, Employment, Economy: Three Es Keeping Recession at Bay

Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine, high European inflation or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky, but diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $15 billion to define a SMID stock.

Stocks gave up most of their early gains on Thursday morning as investors weighed earnings from Disney and PepsiCo, along with weekly employment data. Disney shares rose after the company reported better-than-expected fiscal 1Q results and announced substantial cost cuts, including the elimination of 7,000 jobs. The company is also likely to restore its dividend by the end of the year. PepsiCo shares rose following above-consensus 4Q earnings and the announcement of a 10% dividend hike. The Dow rose 0.3%, the S&P 0.3%, and the Nasdaq 0.4%. Crude oil fell 1% to $77.50 per barrel, while gold fell $6 to $1885 per ounce.

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.

Give the stock market some credit. It is trying to turn, in spite of a barrage of bad news and persistently high interest rates. At least the U.S. Dollar Index stopped going up, for now. The S&P 500 jumped 2.7% on October 17, which followed a 2.4% loss the session prior but a 2.6% spike the session before that. Yes, price volatility generally is seen at market bottoms and market tops. The '500' tried to get going at the beginning of this month, when we saw a two-day surge of 5.7% (which ultimately failed). While there is a long way to go to turn the corner, at least the consistent weakness has stopped.

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. As well, the prices of SMID stocks generally are lower than the prices of large-caps. SMID stocks can be risky -- and large-caps outperformed SMID stocks in 11 of the 19 years in our test period. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Stocks rose strongly on Wednesday morning as investors weighed earnings reports from AMD, Starbucks, and CVS along with new U.S. service sector data. The Institute for Supply Management said that its nonmanufacturing index rose to 56.7 in July, up from 55.3 in June and above the Reuters consensus forecast of 53.5. The reading marked the first increase after three straight monthly declines. The Dow rose 0.9%, the S&P 0.9%, and the Nasdaq 1.8%. Crude oil fell 2% to $92 per barrel, while gold fell $19 to $1771 per ounce.

Stocks continued to fall sharply on Monday morning amid a range of economic and geopolitical negatives, as investors awaited new inflation data later this week. On the earnings front, Tyson shares rose modestly after the company posted better-than-expected fiscal 2Q results, helped by soaring meat prices, and raised its full-year sales guidance. The Dow fell 1.8%, the S&P 2.7%, and the Nasdaq 3.5%. Crude oil fell more than 4% to $104.50 per barrel, while gold traded near $1862 per ounce.

Small- and mid-cap stocks (SMID stocks) have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from the Russian invasion of Ukraine. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky and large-caps outperformed SMID stocks in 11 of the 19 years in our test period. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 12%-15% of the U.S. stock market's capitalization is comprised of SMID stocks. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Stocks rose strongly on Wednesday morning, led by the Technology and Basic Materials sectors. On the earnings front, Chipotle Mexican Grill rose nearly 9% following strong 4Q results, while CVS Health fell 5%, despite a solid fourth quarter, after offering disappointing guidance for 2022. The Dow rose 0.8%, the S&P 1.2%, and the Nasdaq 1.5%. Crude oil traded near $90 per barrel, while gold rose $5 to $1833 per ounce.

Stocks rallied on Friday morning following a strong October employment report. The Labor Department said that the U.S. economy added 531,000 payroll jobs last month, up from a revised 312,000 in September and above the Reuters consensus forecast of 450,000. The official unemployment rate fell to 4.6% from 4.8% in September. The Dow rose 0.9%, the S&P 0.7%, and the Nasdaq 0.6%. Crude oil traded near $79.50 per barrel, while gold rose $8 to $1802 per ounce.

Small- and mid-cap stocks (SMID stocks) soared in 2019. They have underperformed large-caps over the past 12 months, but still may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are more widely distributed and the domestic service economy recovers. As well, the prices of SMID stocks generally are lower than the prices of large-caps. That said, SMID stocks can be risky. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. The Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Year-to-date sector leadership remains with the rotation favorites of early 2021. With the long bond spiking from 0.9% at year-end 2020 to 1.75% by the end of the first quarter, growth favorites retreated. But investors wanted to remain invested in equities in a reopening economy, and rotational favorites filled the void.

Continuing the Process: Our Monthly Survey of the Economy, Interest Rates, and Markets

The stock market moved higher last week as earnings season got underway and volatility continued its downward trend. Tech stocks performed roughly in line with blue chips. During Friday's session, the Dow Jones Industrial Average increased 165 points, or 0.48%. The S&P 500 was up 0.36%, and the Nasdaq Composite was up 0.10%. For the week, the DJIA was up 400 points, or 1.18%, the S&P 500 was up 1.37%, and the Nasdaq Composite was up 1.09%. Year-to-date, the DJIA is up 11.74%, the S&P 500 is up 11.43%, and the Nasdaq Composite is up 9.03%.

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.

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.

Small- and mid-cap stocks (SMID stocks) surged in the past quarter. They also have outperformed large-caps over the past 12 months and may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are widely distributed and the economy recovers. As well, the prices of SMID stocks are generally lower than the prices of large-caps. While SMID stocks can be risky, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20%-25% of the U.S. stock market's capitalization is comprised of SMID stocks. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. We note that the Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Small- and mid-cap stocks (SMID stocks) surged in the past quarter. They also have outperformed large-caps over the past 12 months and may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be poised to rebound more quickly once COVID-19 vaccines are widely distributed and the economy recovers. As well, the prices of SMID stocks are generally lower than the prices of large-caps. While SMID stocks can be risky, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20%-25% of the U.S. stock market's capitalization is comprised of SMID stocks. Investors used to use a $2 billion market-cap threshold to define a small-cap stock and a $10 billion threshold for a mid-cap. We note that the Russell 2000 index now includes numerous companies with market capitalizations above $15 billion. For our purposes, we use a threshold of $20 billion to define a SMID stock.

Although the year has barely begun, 2021 seems packed with events, including the continued worsening of the COVID-19 pandemic, the Georgia run-off election that swung the Senate Democratic, and the 1/6/21 event in the Capitol Building (with promised further disruptions to the transfer of power). Much as they were able to sidestep the worst moments of the pandemic and economic shutdown, stocks have mainly ignored the unprecedented political disruption.

Stocks rose strongly on Wednesday morning despite the still uncertain outcome of a much closer-than-expected presidential election. Still, by mid-morning, Joe Biden had opened narrow leads in the swing states of Michigan and Wisconsin and stood to benefit from as yet uncounted mail-in ballots in these and other key states. Wall Street also focused on the Senate, where Republicans were likely to remain in control with a narrow majority. The Dow rose 2.1%, the S&P 2.6%, and the Nasdaq 3.7%. Crude oil traded near $39 per barrel, while gold fell $8 to $1903 per ounce.

Stocks rose on Friday morning following better-than-expected September retail sales data. The Commerce Department said that U.S. retail sales rose 1.9% last month, up from 0.6% growth in August and above the Reuters consensus forecast of 0.7%. The University of Michigan also reported that its preliminary consumer sentiment index for October rose to 81.2, up from 80.4 in September and above the consensus forecast. In vaccine news, Pfizer said that it would not apply for emergency use of its coronavirus vaccine until the third week of November, after it had collected the necessary safety and manufacturing data. The Dow rose 0.9%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil fell slightly to about $41 per barrel, while gold traded near $1906 per ounce.

Stocks rose on Friday morning following better-than-expected September retail sales data. The Commerce Department said that U.S. retail sales rose 1.9% last month, up from 0.6% growth in August and above the Reuters consensus forecast of 0.7%. The University of Michigan also reported that its preliminary consumer sentiment index for October rose to 81.2, up from 80.4 in September and above the consensus forecast. In vaccine news, Pfizer said that it would not apply for emergency use of its coronavirus vaccine until the third week of November, after it had collected the necessary safety and manufacturing data. The Dow rose 0.9%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil fell slightly to about $41 per barrel, while gold traded near $1906 per ounce.

Stocks rose on Wednesday morning amid positive news on potential coronavirus vaccines and signs of progress on a new fiscal stimulus plan in Washington. However, employment data disappointed. Payroll provider ADP said that U.S. private employers added just 167,000 new jobs in July, down from more than 4.3 million in June and below the Reuters consensus of 1.5 million. On the earnings front, Disney shares rose strongly after the company reported a surprise quarterly profit late Wednesday, while CVS shares fell despite strong 2Q results and higher full-year guidance. The Dow rose 1.2%, the S&P 0.6%, and the Nasdaq 0.3%. Crude oil traded near $43 per barrel, while gold rose $40 to $2061 per ounce.

Stocks rose on Wednesday morning amid positive news on potential coronavirus vaccines and signs of progress on a new fiscal stimulus plan in Washington. However, employment data disappointed. Payroll provider ADP said that U.S. private employers added just 167,000 new jobs in July, down from more than 4.3 million in June and below the Reuters consensus of 1.5 million. On the earnings front, Disney shares rose strongly after the company reported a surprise quarterly profit late Wednesday, while CVS shares fell despite strong 2Q results and higher full-year guidance. The Dow rose 1.2%, the S&P 0.6%, and the Nasdaq 0.3%. Crude oil traded near $43 per barrel, while gold rose $40 to $2061 per ounce.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, many smaller companies often are more focused on domestic operations and may not be exposed to the global economic uncertainty caused by the coronavirus. For another, prior to COVID-19, the long-term record favored small-caps over large-caps. From 2003-2019, the Russell 2000 Index had climbed 282%, compared to an advance of 233% for the Russell 1000 Index. In 2020, a relatively weak performance by the Russell 2000 Index has brought the measures more in line for the year-to-date. SP despite risks associated with smaller-cap stocks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, many smaller companies often are more focused on domestic operations and may not be exposed to the global economic uncertainty caused by the coronavirus. For another, prior to COVID-19, the long-term record favored small-caps over large-caps. From 2003-2019, the Russell 2000 Index had climbed 282%, compared to an advance of 233% for the Russell 1000 Index. In 2020, a relatively weak performance by the Russell 2000 Index has brought the measures more in line for the year-to-date. SP despite risks associated with smaller-cap stocks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Technology has been the leading sector in 2020, which continues a multi-year pattern and also reflects new inputs. The iShares Technology ETF (IYW) is up 4.6% year-to-date, while the S&P 500 is down 9.3% and the DJIA is off 14.7%.

Technology has been the leading sector in 2020, which continues a multi-year pattern and also reflects new inputs. The iShares Technology ETF (IYW) is up 4.6% year-to-date, while the S&P 500 is down 9.3% and the DJIA is off 14.7%.

Black Swan: Our Monthly Survey of the Economy, Interest Rates, and Markets

Black Swan: Our Monthly Survey of the Economy, Interest Rates, and Markets

Stocks rose on Wednesday morning amid positive news on potential coronavirus vaccines and signs of progress on a new fiscal stimulus plan in Washington. However, employment data disappointed. Payroll provider ADP said that U.S. private employers added just 167,000 new jobs in July, down from more than 4.3 million in June and below the Reuters consensus of 1.5 million. On the earnings front, Disney shares rose strongly after the company reported a surprise quarterly profit late Wednesday, while CVS shares fell despite strong 2Q results and higher full-year guidance. The Dow rose 1.2%, the S&P 0.6%, and the Nasdaq 0.3%. Crude oil traded near $43 per barrel, while gold rose $40 to $2061 per ounce.

Technology has been the leading sector in 2020, which continues a multi-year pattern and also reflects new inputs. The iShares Technology ETF (IYW) is up 4.6% year-to-date, while the S&P 500 is down 9.3% and the DJIA is off 14.7%.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, many smaller companies often are more focused on domestic operations and may not be exposed to the global economic uncertainty caused by the coronavirus. For another, prior to COVID-19, the long-term record favored small-caps over large-caps. From 2003-2019, the Russell 2000 Index had climbed 282%, compared to an advance of 233% for the Russell 1000 Index. In 2020, a relatively weak performance by the Russell 2000 Index has brought the measures more in line for the year-to-date. SP despite risks associated with smaller-cap stocks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Black Swan: Our Monthly Survey of the Economy, Interest Rates, and Markets

Earnings Beats and Waning Recession Fears Propel Stocks

Earnings Beats and Waning Recession Fears Propel Stocks

Stocks rose on Friday morning following better-than-expected September retail sales data. The Commerce Department said that U.S. retail sales rose 1.9% last month, up from 0.6% growth in August and above the Reuters consensus forecast of 0.7%. The University of Michigan also reported that its preliminary consumer sentiment index for October rose to 81.2, up from 80.4 in September and above the consensus forecast. In vaccine news, Pfizer said that it would not apply for emergency use of its coronavirus vaccine until the third week of November, after it had collected the necessary safety and manufacturing data. The Dow rose 0.9%, the S&P 0.5%, and the Nasdaq 0.2%. Crude oil fell slightly to about $41 per barrel, while gold traded near $1906 per ounce.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

The S&P 500 ended the final full trading week of July at an all-time high, within a technically healthy and broadly advancing market. At a time when financial headlines are dominated by geopolitics, potential Fed actions, and other factors, the market's quiet driver remains earnings.

The S&P 500 ended the final full trading week of July at an all-time high, within a technically healthy and broadly advancing market. At a time when financial headlines are dominated by geopolitics, potential Fed actions, and other factors, the market's quiet driver remains earnings.

Stocks traded sharply lower on Friday morning on increased trade war concerns, as President Trump carried out his threat to impose additional tariffs on Chinese goods and China said that it would be forced to retaliate. Prospects for a deal between the two sides all but collapsed on Thursday, though talks were set to continue on Friday. The S&P fell 1.3%, the Dow 1.0%, and the Nasdaq 1.5%. Crude oil fell slightly to $61.50 per barrel, while gold rose $4 to $1289 per ounce.

Stocks traded sharply lower on Friday morning on increased trade war concerns, as President Trump carried out his threat to impose additional tariffs on Chinese goods and China said that it would be forced to retaliate. Prospects for a deal between the two sides all but collapsed on Thursday, though talks were set to continue on Friday. The S&P fell 1.3%, the Dow 1.0%, and the Nasdaq 1.5%. Crude oil fell slightly to $61.50 per barrel, while gold rose $4 to $1289 per ounce.

Stocks fell on Wednesday morning, led by declines in the Communication Services, Real Estate, and Consumer Discretionary sectors. Videogame maker Electronic Arts fell nearly 14% after posting disappointing fiscal 3Q results and lowering its full-year revenue guidance. Competitors Take-Two Interactive and Activision Blizzard also fell sharply. The Dow fell 0.1%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose 1% to about $54 per barrel, while gold fell $3 to trade near $1316 per ounce.

Stocks fell on Wednesday morning, led by declines in the Communication Services, Real Estate, and Consumer Discretionary sectors. Videogame maker Electronic Arts fell nearly 14% after posting disappointing fiscal 3Q results and lowering its full-year revenue guidance. Competitors Take-Two Interactive and Activision Blizzard also fell sharply. The Dow fell 0.1%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose 1% to about $54 per barrel, while gold fell $3 to trade near $1316 per ounce.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky.

Large-caps have outperformed over the past 12 months, but small- and mid-caps may be in a better position to generate market-beating returns going forward. For one thing, most smaller companies are often more focused on domestic operations and may not be exposed to the uncertainty surrounding the ongoing trade wars. For another, the long-term record favors small-caps over large-caps. Since 2003, the Russell 2000 Index has climbed 260%, compared to an advance of 189% for the Russell 1000 Value Index. But small-caps can be risky. Large-caps outperformed small-caps in nine of the 16 years of our test period. Annual returns were negative four times for both indices, but the average decline for small-caps was 18% in down years versus an average 12% annual decline for large-caps in down years. The standard deviation for monthly returns was 5.29% for small-caps over the 15-year period, versus 3.89% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 15%-20% of the U.S. stock market's capitalization is comprised of small- and mid-cap stocks.

The S&P 500 ended the final full trading week of July at an all-time high, within a technically healthy and broadly advancing market. At a time when financial headlines are dominated by geopolitics, potential Fed actions, and other factors, the market's quiet driver remains earnings.

Stocks traded sharply lower on Friday morning on increased trade war concerns, as President Trump carried out his threat to impose additional tariffs on Chinese goods and China said that it would be forced to retaliate. Prospects for a deal between the two sides all but collapsed on Thursday, though talks were set to continue on Friday. The S&P fell 1.3%, the Dow 1.0%, and the Nasdaq 1.5%. Crude oil fell slightly to $61.50 per barrel, while gold rose $4 to $1289 per ounce.

Stocks fell on Wednesday morning, led by declines in the Communication Services, Real Estate, and Consumer Discretionary sectors. Videogame maker Electronic Arts fell nearly 14% after posting disappointing fiscal 3Q results and lowering its full-year revenue guidance. Competitors Take-Two Interactive and Activision Blizzard also fell sharply. The Dow fell 0.1%, the S&P 0.2%, and the Nasdaq 0.3%. Crude oil rose 1% to about $54 per barrel, while gold fell $3 to trade near $1316 per ounce.

The major indices continued to rally on Wednesday morning, led by Tech stocks. Facebook rose strongly despite a lukewarm earnings call yesterday afternoon. Industries doing well today include Personal Products, Interactive Media & Services, and Construction Materials. Industries showing weakness include Food Products, Tobacco, and Household Products. The VIX is down 1.86 to 21.49 after the previous close of 23.35. The Dow rose 1.1%, the S&P 1.2%, and the Nasdaq 1.8%. Crude oil rose slightly to about $66 per barrel, while gold traded near $1218 per ounce.

The major indices continued to rally on Wednesday morning, led by Tech stocks. Facebook rose strongly despite a lukewarm earnings call yesterday afternoon. Industries doing well today include Personal Products, Interactive Media & Services, and Construction Materials. Industries showing weakness include Food Products, Tobacco, and Household Products. The VIX is down 1.86 to 21.49 after the previous close of 23.35. The Dow rose 1.1%, the S&P 1.2%, and the Nasdaq 1.8%. Crude oil rose slightly to about $66 per barrel, while gold traded near $1218 per ounce.

Earnings Beats and Waning Recession Fears Propel Stocks