U.S. stocks turned lower on Wednesday morning as investors digest new earnings reports. As interest rates are expected to remain elevated for some time, subdued consumer demand could persist. Orders for durable goods rose 2.6% in March, up from revised 0.7% increase in February and in line with estimates. Excluding transportation, orders ticked up 0.2% as a 30.6% increase in nondefense aircraft and parts led the increase. Orders for motor vehicles and parts also saw an increase (+2.1%), while orders slipped for computers and related products (-3.9%) and primary metals (-0.5%). Shares of Tesla (TSLA) popped despite the company missing estimates for earnings and sales and logged a drop in production and vehicle deliveries in the latest quarter. Plans to reintroduce a more-affordable EV. The Dow was down 0.4%, the S&P 500 fell 0.4% and the Nasdaq lost 0.3%. Crude oil is trading above $82 per barrel and gold fell $5 to $2337 per ounce.

Monday Tee Up: Jobs and the Fed

The 'Energizer Bunny' stock market seems to have a lot of juice left, as the major indices powered to new all-time highs on Monday, January 29, while smaller-cap stocks also joined in. The S&P 500 (SPX) and the S&P 100 rose 0.8%, the Nasdaq and Nasdaq 100 rallied a bit more than 1%, the S&P 400 tacked on 0.9%, and the Russell 2000 led the day, popping 1.7%. Ten of the 11 SPX sectors rose, with Consumer Discretionary, Technology, Communication Services, Real Estate, Healthcare, Industrials, Utilities, and Staples all rising 0.6% to 1.5%.

Will the Fed spook the markets with their next call on interest rates this week? As well, the calendar flips to November -- so the October jobs report is equally (if not more) important news. Finally, investors face the ongoing release of earnings. Last week, the Dow Jones Industrial Average was down 2.1%, the S&P 500 shed 2.5%, and the Nasdaq lost 2.6%. Year-to-date, the DJIA is now down 2%, the S&P 500 is up 7%, and the Nasdaq is higher by 21%.

Value stocks -- a market segment that includes high-yield stocks -- outperformed growth stocks in 2022 for the first time since 2016. Indeed, for the past decade, the performance record has favored growth. But the tide turned in 2022. The rollout of COVID-19 vaccines gave a lift to some of the cyclical companies (energy companies and regional banks) that had lagged in recent quarters, and value stocks outpaced growth stocks over the past year. Meanwhile, the Federal Reserve continues to lift interest rates to fend off inflation, which could possibly cap multiple expansion for growth companies for a few more quarters. Regardless, the value sector is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.2%, compared to the 0.9% current yield on the iShares Russell 1000 Growth Index ETF. For our High-Yield Theme Model Portfolio, we are seeking stocks with yields of at least 3.0%. This moves us deep into the value segment of the market.

Value stocks -- a market segment that includes high-yield stocks -- outperformed growth stocks in 2022 for the first time since 2016. Indeed, for the past decade, the performance record has favored growth. But the tide turned in 2022. The rollout of COVID-19 vaccines gave a lift to some of the cyclical companies (energy companies and regional banks) that had lagged in recent quarters, and value stocks outpaced growth stocks over the past year. Meanwhile, the Federal Reserve continues to lift interest rates to fend off inflation, which could possibly cap multiple expansion for growth companies for a few more quarters. Regardless, the value sector is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.2%, compared to the 0.9% current yield on the iShares Russell 1000 Growth Index ETF. For our High-Yield Theme Model Portfolio, we are seeking stocks with yields of at least 3.0%. This moves us deep into the value segment of the market.

Last week, we noted that corporate insiders were responding to ongoing weakness in stocks with a growing sense of opportunity, this as expressed in weekly data from Vickers Stock Research. This week, the song remains the same: stocks continue what appears to be an orderly but noticeable pullback and insiders continue to respond by buying the falling shares - especially at companies that list on the tech-heavy Nasdaq.

As of this writing, a massive week for tech stocks and the overall market is underway, with earnings reports from GOOGL, MSFT, META, AMZN, TXN, KLAC, NOW, SPOT, KO, PEP, MCD, WHR, UPS, MRK, CAT, CMG, BA,V, MA, FSLR, XOM, and GE. It likely will be the largest market-cap week of the EPS season.

Our bond/stock asset-allocation model is indicating that bonds are close to fair value, as rising yields have made fixed-income investments relatively more attractive over the course of the past year. Stocks remain overvalued, though valuations have improved in recent months. Our model takes into account current levels and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks of 0.15 sigma, with a standard deviation of 1.0. The current valuation level is a 0.54 sigma premium for stocks, which is inside the normal range and down from a 0.86 premium for stocks a month ago. T-bond yields are around 3.9%, by comparison, coming closer to our fair value target yield of 4.8%. Generally, the model has done a good job of highlighting asset-class value, such as stocks in the late 1970s, bonds prior to the "dot-com" crash of 2001, and stocks once again at the depths of the financial crisis in 2009. Markets can manage with premiums and discounts for extended periods of time, as interest rates and stock prices fluctuate daily. Based on the current model input levels, we continue to expect a recovery in stock prices from bear-market lows in 2023 -- and are maintaining our year-end S&P 500 target of 4,300. Our recommended asset-allocation model for moderate accounts is 67% growth assets, including 63% equities and 4% alternatives; and 33% fixed income, with a focus on opportunistic segments of the bond market.

Value stocks -- a market segment that includes high-yield stocks -- outperformed growth stocks in 2022 for the first time since 2016. Indeed, for the past decade, the performance record has favored growth. But the tide turned in 2022. The rollout of COVID-19 vaccines gave a lift to some of the cyclical companies (energy companies and regional banks) that had lagged in recent quarters, and value stocks outpaced growth stocks over the past year. Meanwhile, the Federal Reserve continues to lift interest rates to fend off inflation, which could possibly cap multiple expansion for growth companies for a few more quarters. Regardless, the value sector is the place to achieve income. The current yield on the iShares Russell 1000 Value Index ETF is 2.2%, compared to the 0.9% current yield on the iShares Russell 1000 Growth Index ETF. For our High-Yield Theme Model Portfolio, we are seeking stocks with yields of at least 3.0%. This moves us deep into the value segment of the market.

Our bond/stock asset-allocation model is indicating that bonds are close to fair value, as rising yields have made fixed-income investments relatively more attractive over the course of the past year. Stocks remain overvalued. Our model takes into account current levels and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks, of 0.15 sigma, with a standard deviation of 1.0. The current valuation level is a 0.66 sigma premium for stocks, which is inside the normal range. T-bond yields are around 3.5%, by comparison, coming closer to our fair-value target yield of 4.9%. Generally, the model has done a good job of highlighting asset-class value, such as stocks in the late 1970s, bonds prior to the "dot-com" crash of 2001, and stocks once again at the depths of the financial crisis in 2009. As our chart shows, markets can manage with premiums and discounts for extended periods of time, as interest rates and stock prices fluctuate daily. Based on the current model input levels, we are expecting a recovery in stock prices from bear-market lows and have established a 2023 year-end S&P 500 target of 4,300. Our current recommended asset allocation model for moderate accounts is 70% growth assets, including 65% equities and 5% alternatives; and 30% fixed income, with 200 basis points of the bond allocation in cash.

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.

As of this writing, the S&P 500 and the S&P 100 are up 6% so far in 2023, the Nasdaq and Nasdaq 100 are higher by 11%, the S&P 400 has popped 8%, and the Russell 2000 has gained 9%. So the overall market is off to a good start (especially after 2022). All those indices have jumped above their 200-day averages, though some by only a very minor amount. All but the S&P 100 also have broken their bear-market trendlines -- but, again, by very small margins.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 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. 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 climate, hunger, poverty, disease, shelter, and workers' rights.

The stock market had a wild ride in the trading week ended Friday, October 21, with a big rally on Monday and early strength Tuesday, before the sellers moved in. Wednesday was a mild down day and Thursday wasn't a big downer -- but some nice early gains were lost. Friday, which has not been a good day for stocks for the past five weeks, helped push the market to a strong finish.

As of the close on July 25, the major indices were sitting at key short-term spots -- either at recent breakout areas or just above. The S&P 500 fell back to its breakout area near 3,950 and was just above its 50-day average. The Nasdaq was slightly above its breakout at 11,700 and a few hundred points above its 50-day. The QQQs were above the breakout point at 297; the S&P MidCap 400 was very close to breakout; and the Russell 2000 had pulled right back to key short-term chart support.

Sustainable Impact Investing, or ESG investing, is gaining traction not only with Argus Research clients but also with the global investment community. BlackRock CEO Lawrence Fink, who oversees approximately $9 trillion in assets, announced in January 2020 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. 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 climate, hunger, poverty, disease, shelter, and workers' rights.

Stocks plunged again on Tuesday morning, reversing Monday's gains amid continued concerns about inflation, Fed policy, the war in Ukraine, and the expanding pandemic in China. Housing market data was weak. The Commerce Department said that U.S. new home sales fell 8.6% in March to a seasonally adjusted annual rate of 763,000 units, below the Reuters consensus forecast of 765,000. On the earnings front, PepsiCo shares rose slightly after the company posted better-than-expected 1Q results and raised its full-year sales guidance. The Dow fell 1.7%, the S&P 2.1%, and the Nasdaq 3.2%. Crude oil traded near $101 per barrel, while gold rose to $1904 per ounce.

This edition features Gap's continued makeover, how packaged food firms can protect themselves from margin pressure, FedEx keeping on trucking, and Pendal Group, Starbucks, and Reckitt Benckiser.

We have raised our intermediate-term technical outlook to neutral from bearish. The market has come roaring back after a week of panic and indiscriminate selling. While we were disappointed with market breadth on January 28, it was strong on Monday, January 31. The S&P 500 rose another 1.9%, for a two-day spike of 4Friday, .4%, the biggest two-day gain since April 2020 when we were coming out of the pandemic low. The Nasdaq spiked 3.4% for a two-day surge of 6.6%, while the Nasdaq 100 (QQQ) has screamed higher by 6.4% on a two-day basis. These are the biggest returns for both indices since November of 2020.

The onset of the coronavirus in 2020 knocked stocks into a bear market. Though equities recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did three times in 2021 when stocks dropped 4%-5% in a matter of a few days. 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. As well, those returns are from eras when the 10-year Treasury bond yield was not sub-2.0%. 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.

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.

What happened to the September sell-off? A month ago, the S&P 500 was in the process of falling off all-time highs (ATHs) set early in September. From the ATH of 4,537 on 9/2/21, the '500' fell to the 4,350s on 9/21/21; staged what would be a failed rally to just under 4,450 on 9/24/21; and then made twin lows right around 4,300 on 9/30/21 and 10/4/21.

Stocks fell on Tuesday morning amid continued Delta variant concerns as investors awaited earnings from a range of major tech companies. The Commerce Department said that U.S. core capital goods orders excluding aircraft rose 0.5% in June, in line with the prior month but below the Reuters consensus forecast of 0.7%. Meanwhile, the Conference Board reported that its July consumer confidence index rose slightly to 129.1 and topped the consensus of 123.9. The Dow fell 0.4%, the S&P 0.7%, and the Nasdaq 1.7%. Crude oil traded near $71.50 per barrel, while gold rose to $1802 per ounce.

The onset of the coronavirus in 2020 knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did during two consecutive days in mid-July when the Dow Jones Industrial Average plummeted more than 1,000 points. Yet 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. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate and can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

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

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.

With April winding down, you can count on someone, somewhere saying, 'sell in May and go away.' That pronouncement is mainly popular because it rhymes. While it is true that summer is typically a period of relative underperformance, market timing rarely works. And sometimes summer is a good time for stock performance.

Stocks were largely flat on Wednesday morning following earnings reports from Alphabet and Amazon and new employment data. Payroll provider ADP said that U.S. private employers added 174,000 jobs in January, well above the Reuters consensus forecast of 49,000 and up from a loss of 78,000 in December. The Dow fell 0.2%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil traded near $56 per barrel, while gold rose $3 to $1836 per ounce.

The onset of the coronavirus earlier this year knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is still in recession and COVID-19 cases are spiking as the weather turns colder and people head indoors. Volatility, which was low in early 2020 after a robust year for equities in 2019, has spiked higher, and has remained elevated. Is it time to cash in the 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. As well, those returns are from eras when the 10-year Treasury bond yield was not sub-1.0%. 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. Stocks included in our Min Vol model portfolio and typically industry leaders and have received a high score from our A6 Quant Model on Financial Strength and a low score on Risk. Stocks in the portfolio include the following.

Maybe you intend to catch-up on certain things over the holidays. That's what defensive sectors appear to be doing in the fourth quarter. At the nine-month mark, income-oriented, defensive, and/or cyclical sectors were deeply lagging -- and they won't catch the leaders in 2020. But in the past two months, formerly unloved sectors have meaningfully closed the gap.

The Labor Department's nonfarm payrolls report for November 2020 will be released on December 4. The news has been good the last few months, as approximately 12 million jobs were created from May through October, and initial unemployment claims have declined from an average of 5 million per week in April to 800,000 per week in October. But the recovery is not complete, as the gains have not made up for the losses in March and April, when the economy shed a total of 22.2 million jobs. Unemployment claims ticked higher last week to 778,000, and continuing claims are above 6.5 million. That's out of a total workforce of 160 million. Continuing claims have been declining since peaking in April, but jobs growth has slowed since July, as numerous states are again tightening restrictions with COVID-19 cases surging. Our forecast for nonfarm payrolls growth for November is 625,000. That's a decline from the October level but would still contribute to reducing the unemployment rate, assuming the labor force participation rate remains steady.

Final Thoughts on Market Tendencies around the Election

The Labor Department's Nonfarm Payrolls report for July 2020 will be released at 8:30 a.m. EST Friday, August 7. The news has been good for the last two months, as 7.5 million jobs were reclaimed in May and June -- in stark contrast to the results in March and April, when the economy shed a total of 22.1 million jobs. But we still are not convinced that a durable turnaround in the employment environment has started. Unemployment claims ticked higher last week, and remain above 1.4 million per week, and continuing claims are still around 17 million. That's out of a total workforce of 156 million. Now some states and companies are starting to slow the re-opening process and companies are even shuttering some operations/locations as COVID-19 cases increase. Before we see the unemployment rate start trending down consistently, the country needs to recover its health, through better testing programs for COVID-19, treatments for the disease and ultimately a vaccine. We expect testing procedures to improve through the summer, a treatment in the fall and a vaccine in the first half of next year.

The Labor Department's Nonfarm Payrolls report for July 2020 will be released at 8:30 a.m. EST Friday, August 7. The news has been good for the last two months, as 7.5 million jobs were reclaimed in May and June -- in stark contrast to the results in March and April, when the economy shed a total of 22.1 million jobs. But we still are not convinced that a durable turnaround in the employment environment has started. Unemployment claims ticked higher last week, and remain above 1.4 million per week, and continuing claims are still around 17 million. That's out of a total workforce of 156 million. Now some states and companies are starting to slow the re-opening process and companies are even shuttering some operations/locations as COVID-19 cases increase. Before we see the unemployment rate start trending down consistently, the country needs to recover its health, through better testing programs for COVID-19, treatments for the disease and ultimately a vaccine. We expect testing procedures to improve through the summer, a treatment in the fall and a vaccine in the first half of next year.