Stocks rose on Wednesday morning as investors digested new earnings reports and economic data. In December, the U.S. trade deficit was $62.2 billion -- an increase of 0.5%, with exports rising 1.5% to $258.2 billion and imports increasing 1.3% to 320.4 billion. The S&P 500 rose 0.7%, the Dow 0.4% and the Nasdaq was up 0.8%. Crude oil traded above $73 per barrel and gold traded at $2053 per ounce.

In this edition, we think utilities have good buzz; there are bargains in Asia if you shop carefully; Big Pharma is building some immunity to patent losses; and PayPal, Crown Castle, and Domino's Pizza.

In this edition, we think utilities have good buzz; there are bargains in Asia if you shop carefully; Big Pharma is building some immunity to patent losses; and Paypal, Crown Castle, and Domino's Pizza.

In this edition, Singapore Exchange still undervalued; shares cheap for Ramsay Healthcare; multitude of issues faces multifamily construction in U.S.; and Singapore Exchange, Baxter International, and Etsy.

Argus Research will host a webinar for clients at 11 a.m. ET on Wednesday, December 6, 2023. The webinar topic is Argus Investment Strategy: The Year Ahead. The webinar will be hosted by Argus Director of Research Jim Kelleher, CFA. Jim will be joined by Director of Economic Research Chris Graja, CFA, Senior Analyst Kevin Heal, and Argus President John Eade.

Stocks fell on Tuesday morning on concerns about more weak economic data from China, along with unexpected interest rate cuts by the Chinese central bank, and potential downgrades of several major U.S. banks by Fitch. Retail sales data were stronger than expected. The Commerce Department said that U.S. retail sales rose 0.7% in July, up from 0.3% in June and above the Reuters consensus forecast of 0.4% growth. The Dow fell 0.7%, the S&P 0.7%, and the Nasdaq 0.6%. Crude oil fell nearly 2% to $81 per barrel, while gold traded near $1942 per ounce.

Stocks finished mostly lower on Thursday amid more signs of weakness at regional banks, continued debt ceiling concerns, and new inflation and employment data. The Labor Department's producer price index showed progress against inflation, as prices rose at a slower annual rate in April. First-time claims for state unemployment benefits also rose from the prior week, pointing to a tighter labor market. On the earnings front, Disney shares dropped nearly 9% after the company reported disappointing earnings and a decline in Disney+ subscribers. The Dow fell 0.66%, the S&P fell 0.17%, and the Nasdaq rose 0.18%. Crude oil traded near $71.50 per barrel, while gold fell $17 to $2021 per ounce.

The S&P 500 has rallied from the lows of October 2022, but still has not surpassed its all-time high of 4818, established in January 2022. The latest roadblock to a recovery has been the financial fallout from the failure of SVB Financial Group. This debacle falls in line behind the other challenges investors have faced, including high inflation, the war in Ukraine, the Federal Reserve's rate-hike campaign, the budget mess brewing in Washington, D.C., and the risk of recession. As such, the bear market slogs on. How does the current bear market compare to the average historical bear market? Well, the average peak-to-trough decline during the previous seven bear markets was 38%; the lows of this bear market were 25% from the all-time highs. So the current bear is a little bit better on performance, so far. But the duration is closer to the normal average, which we estimate is 16 months; we are now 14 months into the current bear market. What's next? Well, if inflation can continue trending lower (toward 5% by year-end), we would expect to see interest rates decline -- which could help corporations widen margins and also re-inflate valuation multiples. If inflation proves to be stubborn to contain, then the Federal Reserve may extend its rate-hike campaign into the second half of 2023, likely further extending the duration of the current bear market.

Stocks were mixed on Friday morning after a much better-than-expected jobs report raised prospects for additional Fed rate hikes. The Labor Department reported that the U.S. economy added 517,000 payroll jobs in January, up from 260,000 in December and well above the Reuters consensus forecast of 185,000. The official unemployment rate ticked down to 3.4% from 3.5% in December. The Dow rose 0.2%, the S&P fell 0.1%, and the Nasdaq rose 0.1%. Crude oil fell 1% to $75 per barrel, while gold dropped more than 2% to $1880 per ounce.

Stocks extended their Fed-driven rally on Thursday, led by strong gains in the Communication Services, Consumer Discretionary, and Technology sectors. Meta Platforms jumped 23%, despite disappointing 4Q earnings, as investors focused on the company's better-than-expected revenue, cost-cutting efforts, and new share buyback plan. On the employment front, first-time claims for state unemployment benefits fell by 3,000 to 183,000 for the week ended January 28, below the Reuters consensus forecast of 200,000. The data came ahead of the government's January employment report on Friday morning. The consensus estimate calls for 185,000 new payroll jobs, down from 223,000 in December, and an unemployment rate of 3.6%, up from 3.5% a month earlier. The Dow fell 0.11%, the S&P rose 1.47%, and the Nasdaq soared 3.25%. Crude oil traded near $76 per barrel, while gold fell $16 to $1927 per ounce.

This week's insider-sentiment data from Vickers Stock Research is remarkably aligned. Insiders typically sell stock more often than they purchase stock, and Vickers' sell/buy ratios are designed to reflect that with a scale that is neutral between 2.00 and 2.50. Any reading below 2.00 is positive and a reading below 1.00 is especially of note as it indicates the rare condition when insiders are bullishly buying shares more often than they are selling. On the other side of the scale, anything above 2.50 is negative, with sustained readings above 5.00 of concern and suggesting a pullback in share prices is likely. As is the case with most data sets, individual data points within the set typically offer hints about future developments as they lead or follow from week to week.

The 2022 bear market lumbers on. High inflation, concerns over Federal Reserve rate hikes, fears of recession, and geopolitical developments have kept the S&P 500 out of bull territory for most of the year. So what's next, as the bear market approaches its tenth month? The record is not pretty. Bear markets do not tend to be short, with an average duration of 16 months for the past six downturns (so we are possibly more than halfway through). The average peak-to-trough decline for those bear markets has been 38%; that would drop the S&P 500 down to 2,974. From a technical standpoint, we see support for the S&P 500 near 3,500, which is a 50% retracement of the bull market's gains -- and held last week. The 61.8% retracement level is 3,200. On the fundamentals, the current market P/E ratio of 16-times forward earnings is not far from the historical market average, but there are questions about the durability of earnings. If we review dividend yield, the historical average yield for the S&P 500 is 1.9; the current market yield is not far from that, at 1.82%. The worst bear market in the past six decades occurred during the Great Recession, when stocks dropped 57%. That kind of move would take the S&P 500 down to 2,060. We have yet to see a model that can accurately predict when stock prices will bottom, but we suspect investors will take their cues from leading inflation indicators such as the price of gold (down 16% in the past six months), commodities, and inventory levels.

A Resolute Fed Tanks the Market: Our Monthly Survey of the Economy, Interest Rates, and Stocks

The venerable New York Stock Exchange Bullish Percent Index is a market indicator that tracks the percentage of NYSE stocks that are on buy signals based on point-and-figure technical analysis. It plots rising prices in columns of Xs and falling prices in columns of Os. The indicator rallied to "Bull Confirmed" status earlier this month, according to StockCharts.com, which suggests demand is in control of the U.S. market. We believe that event is worth watching closely.

Stocks rose strongly on Thursday following solid earnings reports from Macy's and other retailers, and a major Tech sector acquisition, as chipmaker Broadcom announced that it would purchase VMware for $61 billion. On the economic front, the Commerce Department reported that U.S. GDP contracted at a 1.5% annualized rate in 1Q, a slight weakening from its initial estimate of a 1.4% decline, and down from 6.9% growth in the fourth quarter. Employment data was slightly better than expected. First-time claims for state unemployment benefits fell to 210,000 for the week ended May 21, down from 218,000 a week earlier and below the consensus estimate of 215,000. The Dow rose 1.61%, the S&P 1.99%, and the Nasdaq 2.68%. Crude oil traded near $114 per barrel, while gold rose $3 to $1850 per ounce.

Russia's invasion of Ukraine, skyrocketing inflation, and concerns over the upcoming actions of the Fed have led to a 20% decline in the S&P 500, ushering in the first bear market since the onset of the pandemic. (A bear market is typically defined as a 20% decline from the S&P 500's latest peak, which occurred on January 3, 2022, at 4797.) So what can investors expect? The record is not pretty. Bear markets do not tend to be short, with an average duration of 16 months for the past six downturns. The average peak-to-trough decline in those bear markets has been 38%; that would drop the S&P 500 to 2974. From a technical standpoint, we see support for the index near 3,500, which is the 200-week moving average and represents a 50% retracement of the bull market's gains. On the fundamentals, the current market P/E ratio of 16x forward earnings is not far from the historical market average, but there are questions about the durability of earnings. The historical average dividend yield for the S&P 500 is 1.9%. If stock prices were to fall to that level, the S&P 500 would settle around 3150. The worst bear market in the past six decades occurred during the Great Recession, when stocks dropped 57%. That kind of move would take the S&P 500 down to 2060. Few can predict precisely when stock prices will bottom, but we suspect investors will take their cues from Federal Reserve activity and inflation reports.

Skyrocketing inflation, concerns over the upcoming actions of the Federal Reserve, and now Russia's invasion of Ukraine have led to a 10% correction in the S&P 500 -- bringing the U.S. equity market close to a bear market. (A bear market is typically defined as a 20% decline from the S&P 500's latest peak.) The S&P 500 set an all-time high on January 3, 2022, at 4797; on February 24, the day of the Russian invasion, the index dropped to a point that was 14% below that level. A 20% decline would be reached at 3838. That's not too far off, especially given today's environment of computer trading coupled with the growth of passive investment vehicles such as ETFs. So what can investors expect, if stocks do enter bear territory? The average peak-to-trough decline during the past six bear markets has been 38%; that would drop the S&P 500 down to 2974. And bear markets do not tend to be short, with an average duration of 480 days; if January 3 was indeed the start, we are only 56 days in. Bear markets typically occur amid rising uncertainty -- economic, geopolitical, health-related, etc. -- and crumbling market fundamentals. The current events have delivered on the uncertainty, but have obscured positive fundamentals of strong economic growth and historically low interest rates. We do think the Fed will be able to control inflation over the next few quarters without causing a U.S. recession. It is harder to predict the moves of Russian President Vladimir Putin.

Economy Keeps Chugging as Inflation Whittles away Confidence

This edition features Broadridge's potential, trends in utility companies, new coverage of Datadog, and Eastman, Atlassian, and Comcast.

This edition features the changing winds of solar energy, the wide moats in network security, our pondering Zendesk's recent acquisition, and Fresenius, Deliveroo, and New World Development.

Stocks fell on Monday morning amid ongoing COVID concerns, as the British government confirmed one death from the new Omicron variant, and uncertainty ahead of the Federal Reserve's policy meeting later this week. Investors will be looking for updates on the Fed's inflation outlook, tapering plans, and potential timeline for raising interest rates next year. The Dow fell 0.9%, the S&P 0.8%, and the Nasdaq 1.3%. Crude oil fell slightly to $71 per barrel, while gold traded near $1789 per ounce.

Our bond/stock asset-allocation model indicates that stocks and bonds -- both of which are overvalued against their own metrics -- are near fair value against each other. Our asset-allocation model takes into account current levels and forecasts of short-term and long-term fixed income yields, inflation, stock prices, GDP, and corporate earnings. 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 0.10 sigma discount for stocks. Generally, the model has done a good job of highlighting asset-class value. For example, stocks were very attractive compared to bonds in the late 1970s, when benchmark Treasury rates were in the high teens before heading consistently lower. The model indicated that stocks were at a sharp premium to fair value compared to bonds prior to the "dot-com" crash of 2001 and also at a premium prior to the Great Recession in 2007-2009. Starting in 2009, the model favored stocks over bonds -- another good call. As our chart shows, markets can manage with premiums and discounts for extended periods of time. But the high valuations on stocks leave little room for disappointment on earnings, interest rates, or even the country's health.

A couple of the major indices are again hitting or approaching some key Fibonacci extension targets, so this is no time to put a portfolio on auto-pilot (even if that's how it feels). The targets are based on the depth of the 'V' bottom back in early 2020. Once an index or individual stock breaks out to all-time highs, there is no chart resistance or supply overhead as every buyer of the asset has a profit. Therefore, potential targets must come from other technical tools like trendlines, the top of a channel, and Fibonacci extensions based on the size of the latest reversal formation.

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.

We recently raised our rating on the Utilities sector to Market-Weight from Under-Weight. Regulated electric and gas distribution operations are benefiting from the recovery in commercial and industrial demand as workers return to offices, plants, factories, and showrooms. Hotter summers are also pushing up demand for air conditioning across most of the U.S. The sector is underperforming the market thus far in 2021, with a gain of 1%. It underperformed in 2020, with a gain of 3.9%, and in 2019, advancing 22.2%. The sector accounts for 2.6% of the S&P 500. Over the past five years, the weighting has ranged from 2.0% to 4.0%. We think the sector should account for about 2%-3% of diversified portfolios. The sector includes the electric, gas, and water utility industries. Here is how we use our analysts' Utility sector ideas in our Focus List and Model Portfolios. All stocks are rated BUY.

The stock market moved slightly higher last week, with outperformance from blue-chip stocks. During Friday's session, the Dow Jones Industrial Average increased 0.52%. The S&P 500 was up 0.88% and the Nasdaq Composite was up 1.47%. For the week, the DJIA rose 0.66%, the S&P 500 0.61%, and the Nasdaq Composite 0.48%. Year-to-date, the DJIA is up 13.56%, the S&P 500 12.61%, and the Nasdaq 7.19%.

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

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.

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 fell on Wednesday morning as investors weighed new retail sales and producer price data, and awaited the release of minutes from the Federal Reserve's last meeting. The Commerce Department reported that U.S. retail sales rose a seasonally adjusted 5.3% in January, up from a decline of 1.0% in December and well above the Reuters consensus forecast of 1.1% growth. The Labor Department said that its producer price index rose 1.3% in January, up from 0.3% in December and the strongest gain since December 2009. The Dow fell 0.2%, the S&P 0.6%, and the Nasdaq 1.2%. Crude oil traded near $60 per barrel, while gold fell $18 to $1781 per ounce.

Stocks were mixed on Thursday morning amid surging coronavirus cases, as the U.S. pandemic death toll rose above 250,000. On the employment front, first-time claims for state unemployment benefits rose to 742,000 for the week ended November 14, up from 711,000 a week earlier and above the Bloomberg consensus forecast of 700,000. In other data, the National Association of Realtors said that U.S. existing home sales rose 4.3% in October to a seasonally adjusted 6.85 million units, up from 6.57 million in September and above the consensus forecast of 6.45 million. The Dow fell 0.3%, the S&P fell 0.1%, and the Nasdaq rose 0.5%. Crude oil traded near $41.50 per barrel, while gold fell $14 to $1860 per ounce.