Despite April Stumble, Positive Stock-Market Outlook for 2024

The Same, Only Different: Our Monthly Survey of the Economy, Interest Rates, and Stocks

Of the four years in a presidential term, the last year (the election year) has been the worst for investors in terms of outright performance. Since 1980, S&P 500 returns in the fourth year of the presidential term have averaged 4.8%, compared to average returns of 14.4%, 5.6%, and 15.7%, respectively, in years one through three. It is true that there have been some solid returns in the fourth presidential year, including 1980 (25.8%), 1988 (12.4%), 1996 (20.3%), 2012 (13.4%), and 2020 (16.3%). But there have been some clunkers, too, such as 2000 (-10.1%) and, most ominously, 2008 (-38.5%). Why does performance drop off? The likely reason is uncertainty. Investors favor continuity, and an election year offers a real risk for change in direction, whether to fiscal policy, trade rules, antitrust philosophy, or regulatory focus. We note that incumbents typically win re-election, but the early odds out of the U.K. favor former President Donald Trump by about 6/5; President Joe Biden's odds are 2/1. Should Trump win, industries likely to benefit could include Aerospace & Defense, which did well under his presidency, and Energy. Should Biden win, sectors such as Clean-Tech, Med-Tech, and Business Services may do well. Also, laws passed under Biden supporting infrastructure building and semiconductors should remain intact, offering opportunities in those industries. We're not going to get too worked up about the impact of this fall's election on stocks, as we note that the batting average for positive years in the fourth year of a presidential term is 80%.

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 mostly lower on Wednesday morning amid mixed earnings reports from major companies and new housing market data. The Commerce Department said that U.S. new home sales rose 12.3% to a seasonally adjusted annualized rate of 759,000 units in September, well above the Reuters consensus forecast of 680,000. On the earnings front, Alphabet posted above-consensus 3Q results, though the shares dropped 9% on concerns about weakness in the company's cloud business. On the positive side, Microsoft shares rose 3% after the company reported strong fiscal 1Q sales and earnings, helped by growth in cloud computing. The Dow rose 0.2%, the S&P fell 0.8%, and the Nasdaq dropped 1.5%. Crude oil fell slightly to $83.50 per barrel, while gold traded near $1987 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.

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.

Economy and Earnings Send Mixed Signals

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 rallied on Thursday as investors weighed strong earnings from Meta Platforms and new GDP and employment data. The Commerce Department said that the U.S. economy expanded at a 1.1% rate in 1Q, helped by strong consumer spending but hurt by weak business investment. Meanwhile, employment data pointed to a still tight labor market. First-time claims for state unemployment benefits fell by 16,000 to a seasonally adjusted 230,000 for the week ended April 22, below the consensus forecast of 248,000. Meta shares jumped after strong first-quarter results, reaching their highest levels since January 2022. Amazon also reported stronger-than-expected sales and earnings after the close, sending the shares up in after-hours trading. The Dow rose 1.57%, the S&P 1.96%, and the Nasdaq 2.43%. Crude oil traded near $75 per barrel, while gold rose slightly to $1997 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.

Stocks rose strongly on Monday morning ahead of key inflation data, the January consumer price index, on Tuesday. Investors will be looking closely at the CPI report for more clues about the trajectory of Fed rate hikes in the coming months. In Europe, the European Commission raised its forecast for 2023 eurozone GDP growth to 0.9% from a prior 0.3%, and trimmed its inflation forecast to 5.6% from 6.1%. The Dow rose 0.9%, the S&P 0.9%, and the Nasdaq 1.4%. Crude oil traded near $79 per barrel, while gold fell $11 to $1863 per ounce.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and have now come in from 3Q22. 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. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

In the eight weeks before the start of earnings season, insider-sentiment data from Vickers Stock Research was consistently positive. On a scale where any reading below 2.00 is bullish, Vickers' Total One-Week Sell/Buy Ratio never got higher than 1.99 and was as low as 1.06. That resulted in a peak bullish Total Eight-Week Sell/Buy Ratio of 1.71 on October 15, just as the earnings onslaught began.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes trends in insider trading and institutional ownership. Form 13Fs are due 45 days after the end of calendar quarters and have now come in from 2Q22. 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. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

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 major indices turned on the afterburners in July following a difficult June. The S&P 500 soared 9%, regaining all its losses from June. The Nasdaq and the Nasdaq 100 both exploded over 12%, recapturing their June declines and then some. The S&P MidCap 400 and the Russell 2000 rocketed almost 11%. It was the largest 20-day rate-of-change (ROC) for the '500,' the '400,' and the '2000' since late 2020/early 2021. The Nasdaq and the QQQs saw a better 20-day ROC in early April, which, as we now know, was a bear-market rally.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and have now come in from 1Q22. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. 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. Here are some recent new purchases and key holdings of activist investors, according to the data from Vickers.

This edition features TripAdvisor's journey, Berkshire's burgeoning bank account, acquirers being a good bet, and Assa Abloy, Polaris, and ServiceNow.

Stocks rallied on Thursday, recovering from recent sharp losses as investors weighed more 1Q earnings from major companies and new GDP and employment data. The Commerce Department reported that the U.S. economy contracted at a 1.4% annualized rate in 1Q, below the consensus growth forecast of 1.1% and the first decline since 2Q20. Weekly employment data was better than expected. First-time claims for state unemployment benefits fell to 180,000 for the week ended April 23, down from 185,000 a week earlier and below the Bloomberg consensus of 184,000. On the earnings front, Meta shares rose more than 17%, despite mixed 1Q results, after the company reported better-than-expected growth in daily active users. The Dow rose 1.85%, the S&P 2.47%, and the Nasdaq 3.06%. Crude oil traded near $105 per barrel, while gold rose $8 to $1897 per ounce.

The current bull market, which began on March 21, 2020, is starting to falter. If the bull market did indeed peak back in early January of this year (with a gain of 108%), how would it compare to other bull markets? We studied the 12 bull markets that have occurred since the end of World War II. On average, the S&P 500 gained 163% during these 12 periods, which averaged 57 months in duration. Thus, the current bull market has achieved two-thirds of the average gain in about 40% of the average time. (Perhaps this is due to computer trading programs or the growth of passive investment vehicles such as ETFs.) Also, we note that recent bull markets have generated higher returns over a longer period of time. On average, the five bull markets since 1980 have seen stocks advance 240% over a period of 70 months. And the most-recent bull market (prior to the pandemic) carried on for 11 years, during which stocks rose 500%. It is worth pointing out, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks are above fair value in the current bull market as interest rates rise. If rates continue to head higher, the 2020-2022 bull market will likely be one of the shorter ones.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider-trading and institutional-ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and have now come in from 4Q21. We review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. 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. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

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.

Since the current bull market began on March 21, the S&P 500 has risen almost 110%. How does that compare to other bull markets? We have studied the 12 bull markets that occurred since the end of World War II. On average, the S&P 500 has gained 163% during these 12 periods, which have averaged 57 months in duration. Our current bull market has thus achieved two-thirds of the average gain in about 40% of the average time. (Perhaps this is due to computer-trading programs or the growth of passive investment vehicles such as ETFs.) We note that the recent bull markets have generated higher returns over a longer time. On average, the five bull markets since 1980 have seen stocks advance 240% over a period of 70 months. And the longest bull market prior to the pandemic carried on for 11 years, during which stocks rose 500%. It is worth pointing out, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks in the current bull market are already above fair value. Our message remains the same: focus on quality companies generating improving EPS.

Of the four years in a presidential term, the second year (the mid-term election year) has been one the worst for investors. Since 1980, returns in the second year of a presidential term have averaged 5.6%, compared to average returns of 14.4% and 15.8%, respectively, in years 1 and 3. Why? The likely reason is uncertainty. Investors favor continuity, and a mid-term election offers a real opportunity for a change in direction, whether its fiscal policy, antitrust philosophy, or a certain regulatory focus. We note that incumbent parties typically lose seats in mid-term elections, and even the loss of a few Democratic seats in either the Senate or the House could tip the chamber to the Republicans. Currently, President Biden's approval rating is low. According to the latest CNN/SSRS poll, President Biden has a net negative approval rating of -9 points on the economy, which is lower than the -4 point ratings for both President Obama and President Trump. The odds for a Republican-controlled House are currently 5-1. But a lot can happen over the next 12 months.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and have now come in from 2Q21. We like to review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. 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. Here are some recent new purchases and key holdings of activist investors, according to Vickers.

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.

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.

October Surprise: Recouping September's Losses

Cash is no longer king for point-of-sale transactions, with only 12% market share compared to 38% for credit cards, 29% for debit cards, and 10% for the fast-growing digital wallet sector. We see a long secular road for growth, as digital payments are in the early stages of transition. Factors driving this trend include U.S. banks and the Federal Reserve encouraging digital over paper money; the pandemic, which has accelerated contactless payments as a safety step; and greater merchant acceptance for small dollar amounts. Importantly, the emerging generations (Millennials and Gen Z) embrace both mobile banking and digital payments. Forecasts call for digital-payment transaction value to grow at an 11% compound annual rate for the next five years and to reach $11 trillion from the 2020 level of $5.4 trillion. Several companies in the Argus Research fundamental universe of coverage are in position to take advantage of this opportunity. Each of the following stocks is rated BUY at Argus.

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.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks insider trading and institutional ownership. Form 13-Fs have now come in from 2Q21. We review the 13Fs of major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved in 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. Here are some recent new purchases and key holdings of Activist investors, according to Vickers.

Second-quarter earnings announcements are nearly complete, with some 90% of S&P 500 companies having reported. The profit recovery from the depths of the pandemic low in 2Q20 was been swift, with earnings growth of 93% in 2Q21, according to Refinitiv. But earnings do not look good just on a relative basis -- the $53.93 projected to be earned by S&P 500 companies for the second quarter is the highest ever for the index. Investors can now turn their attention to the third quarter, when earnings are expected to rise a still-strong 30% year-over-year. Our analysts are always on the lookout 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. Here are 20 BUY-rated companies in Argus coverage for which management has raised guidance or increased its outlook during the 2Q21 EPS reporting season.

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.

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 rose on Monday morning as investors weighed more 2Q earnings reports, M&A news, and prospects for an infrastructure deal in Washington. Payments firm Square Inc. rose nearly 9% after announcing that it would purchase Australia's Afterpay Ltd. for $29 billion. Manufacturing data showed continued expansion, but came in slightly below consensus. The Institute for Supply Management said that its index of national factory activity fell to 59.5 in July, down from 60.6 in June and below the Reuters consensus of 60.9. The Dow, the S&P, and the Nasdaq were all up about 0.4%. Crude oil traded near $72.50 per barrel, while gold rose slightly to $1818 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 1Q21 EPS season is mostly in the books, with retailers the last group to report over the next two weeks. The results were impressive -- but came against an easy comparison with last year's 1Q, when the world started to shut down to fight COVID-19. Through early May, Refinitiv reported that S&P 500 earnings rose 50.4% year over year -- the best quarter since 1Q2010. Some 87% of companies have come in ahead of expectations, up from the prior four-quarter average of 76%, according to Refinitiv. Where is the growth? Consumer Discretionary remains atop the list with a 170% earnings increase. Financials is second at 130%. Only Industrials is expected to remain negative -- with a 2% decline. Even the Energy sector, expected to have an earnings decrease at the start of the quarter, is now poised for 8% growth. Our analysts are always on the lookout for companies that raise their outlooks during earnings season. Management's ability to "raise guidance" can often be a catalyst for strong returns in the quarters ahead. Here are 20 BUY-rated companies in Argus coverage at which management has raised guidance or increased its outlook during the 1Q21 EPS reporting season.

Stocks fell on Tuesday morning, led by a sharp drop in large Tech stocks. On the economic front, the Commerce Department said that U.S. factory orders rose 1.1% in March, up from a 0.5% decline in February but below the Reuters consensus forecast of 1.3% growth. The Commerce Department also reported that the U.S. trade deficit rose 5.6% to an all-time high of $74.4 billion in March on strong growth in imports. The Dow fell 0.9%, the S&P 1.3%, and the Nasdaq 2.5%. Crude oil traded near $65 per barrel, while gold rose slightly to $1794 per ounce.

The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles, to a large degree - have moved overseas, where costs are lower. Yet the U.S. economy, prior to the pandemic, had expanded to record levels. And now, the U.S. Healthcare industry is mobilizing to improve COVID-19 testing, treatments and vaccines. Consider that U.S. GDP was approximately $1 trillion in 1930 but nearly $22 trillion at the end of 2019. That's growth of 22-times. Meanwhile, the U.S. population has grown less than 3-times during that time span, to 320 million from 120 million. The delta between GDP growth and population growth has been driven in large part by innovation. In addition, the value of listed corporations on U.S. stock exchanges at the end of 2020 was approximately $32 trillion, representing 41% of global equity market capitalization, while U.S. GDP represented only 25% of global GDP. The current low level of interest rates (the benchmark 10-year Treasury bond yield is 1.1%) and the relatively high level of the dollar both attest to the confidence that global investors have in the innovative U.S. economy.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and are now coming in from 4Q20. We review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved 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. Here are some recent new purchases and key holdings of activist investors, according to Vickers.

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.

By the close last Friday, the S&P 500 had notched another weekly gain, and opens today near all-time highs. Since the current bull market began on March 21, the S&P 500 has risen almost 80%. How does that compare to other bull markets? We have studied the 12 bull markets that have occurred since the end of World War II. On average, the S&P 500 has gained 161% during these 12 periods, which have averaged 56 months in duration. Our current bull market has achieved one-half the average gain in about 20% of the average time. (Perhaps this is due to computer trading programs or the growth of passive investment vehicles such as ETFs.) We note that recent bull markets have generated higher returns over a longer period of time. On average, the five bull markets since 1980 have seen stocks advance 230% over a period of 68 months. The most recent bull market carried on for 11 years, during which stocks rose 500%. We note, though, that the 2009-2020 bull market began with stocks deeply depressed on valuation, whereas stocks are already above fair value in the current bull market. Our message is unchanged. We recommend that investors focus on quality companies generating improving EPS.

Stocks fluctuated on Thursday in choppy trading as investors weighed weekly employment data, a continued decline in new U.S. coronavirus cases, and a warning from President Biden about challenges from China. The Labor Department reported that both first-time and continuing unemployment claims fell from the prior week, though both readings were above consensus forecasts. After the close, Disney posted an unexpected fiscal 1Q profit amid strong growth in Disney+ subscribers. The Dow fell 0.02%, the S&P rose 0.17%, and the Nasdaq rose 0.38%. Crude oil fell more than 1% to $58 per barrel, while gold fell $17 to $1826 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.

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 Technology sector has led the market recovery from the COVID-19 depths of March 2020. Through November 20, the sector was up 31% for the year, compared to a 10% gain for the S&P 500. The Tech sector is the largest in the U.S. market and now accounts for more than 27% of the S&P 500. Over the long term, we expect the Tech sector to benefit from pervasive digitization across the economy, greater acceptance of transformative technologies, and the development of the Internet of Things (IoT): Healthy company and sector fundamentals are also positive. For individual companies, these include high cash levels, low debt, and broad international business exposure. We have an Over-Weight ranking on the Tech sector and think investors should look to allocate up to 30% of their diversified portfolios to the group. Here is how we use our Tech sector ideas from our analysts in our Focus List and Model Portfolios.

This edition features digital ad spending outlook; pandemic's impact on payments industry; chipmakers; and notes from Boeing, Amazon, and Curaleaf.

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.

Stocks pared early losses and traded near breakeven on Friday morning, as Joe Biden moved closer to winning the presidency, with narrow leads in key swing states. October employment data was stronger than expected. The Labor Department said that the U.S. economy added 638,000 nonfarm payroll jobs in October, above the Bloomberg consensus forecast of 580,000 though down from a revised 672,000 in September. The official unemployment rate also fell to 6.9% from 7.9% and was lower than the consensus forecast. The Dow and the S&P were flat, and the Nasdaq was down 0.2%. Crude oil fell more than 3% to $37.50 per barrel, while gold rose $6 to $1953 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.