The cold hard message is sinking in. Higher rates are here to stay for longer than expected. Federal Reserve Chairman Jerome Powell has said multiple times that the Fed will be 'data-driven' when deciding on monetary policy. And the data has spoken. First, let's look at inflation. There has been great progress made in knocking inflation down from its peak of 9.1% in June of 2022. But achieving progress at the current lower levels, with inflation in the low-3% range, as expected, has been difficult. The Fed has been specific, saying inflation needs to be at 2% before restrictive policy will be eased. The Fed was patient after the January inflation data, and again with February data. But when March showed persistently higher prices, the Fed threw came right out and said that change can wait. Chairman Powell said the following last week. "The recent data have clearly not given us greater confidence..." and "If higher inflation does persist, we can maintain the current level of restriction for as long as needed." Now let's consider unemployment. The Fed again has been specific. Officials are looking for a 4.1% unemployment rate to gently (hopefully) slow the economy. Currently, the rate is not budging and is vacillating between 3.8% and 3.9%. Given the current macroeconomic backdrop, the following is a list of industries and companies we like that should benefit from a sustained period of higher interest rates. All are BUY-rated at Argus.

Stock markets were down on Friday morning amid the kick-off of earnings by big banks. JPMorgan Chase is down 5% despite above-consensus results. However, net interest income decline sequentially and CEO Dimon noted a number of 'significant uncertain forces' due to inflationary pressures and geopolitical tensions. The Dow was down 0.8%, while the S&P 500 lost 1.0% and the Nasdaq fell 1.1%. Oil prices are on the rise amid increasing tensions in the Middle East. Israel has reportedly started preparations for a direct attack expected by Iran this weekend in response to the Israeli attack on the Iranian consulate in Syria last week. Crude oil is trading near $87 per barrel and gold rose $35 to $2408 per ounce.

Stocks were mixed on Friday after briefly rising following new inflation data. The PPI fell 0.1% in December, following a 0.1% decrease in November and 0.4% decrease in October. However, oil prices jumped today after the U.S. and British forces struck several Houthi targets in a move aimed at diminishing the group's capabilities in the area. On the earnings front, airline stocks are down, after Delta lowered its 2024 guidance. Bank stocks also have begun reporting. The Dow fell 0.5%, while the S&P 500 was nearly flat, and the Nasdaq was up 0.1%. Crude oil traded near $74 per barrel, while gold rose $37 to $2056 per ounce.

Stocks were mixed on Friday after briefly rising following new inflation data. The PPI fell 0.1% in December, following a 0.1% decrease in November and 0.4% decrease in October. However, oil prices jumped today after the U.S. and British forces struck several Houthi targets in a move aimed at diminishing the group's capabilities in the area. On the earnings front, airline stocks are down, after Delta lowered its 2024 guidance. Bank stocks also have begun reporting. The Dow fell 0.5%, while the S&P 500 was nearly flat, and the Nasdaq was up 0.1%. Crude oil traded near $74 per barrel, while gold rose $37 to $2056 per ounce.

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.

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 gave up early gains on Friday morning following the first 3Q earnings reports from major banks. JPMorgan, Wells Fargo, and Citigroup all rose after posting stronger-than-expected results. UnitedHealth also reported strong 3Q earnings, helped by lower-than-projected medical costs, and raised its full-year EPS guidance. Meanwhile, Microsoft completed its acquisition of videogame maker Activision after receiving approval from UK regulators. The Dow rose 0.1%, the S&P fell 0.3%, and the Nasdaq fell 0.8%. Crude oil rose more than 3% to $86 per barrel, while gold rose $50 to $1933 per ounce.

Stocks gave up early gains on Friday morning following the first 3Q earnings reports from major banks. JPMorgan, Wells Fargo, and Citigroup all rose after posting stronger-than-expected results. UnitedHealth also reported strong 3Q earnings, helped by lower-than-projected medical costs, and raised its full-year EPS guidance. Meanwhile, Microsoft completed its acquisition of videogame maker Activision after receiving approval from UK regulators. The Dow rose 0.1%, the S&P fell 0.3%, and the Nasdaq fell 0.8%. Crude oil rose more than 3% to $86 per barrel, while gold rose $50 to $1933 per ounce.

The country's biggest banks kick off earnings season this week. For sure, this sector has suffered this year following the failure of Silicon Valley Bank and the downward spiral that followed. The KRE (S&P Regional Bank Index) is down 29% year-to-date versus a rise of 12% for the S&P 500. We see opportunity here and have an Over-Weight rating on the sector. We believe the worst is over after the March/April bank failures and that the risk associated with these failures has been factored into share-price valuations. In the earnings reports that start flowing on Friday, we'll be focused on updates in the following areas: loan growth, where we expect growth to have slowed to low single-digits as higher interest rates weigh on consumers and businesses; loan loss provisions, where we see the gauge moving higher as net charge-offs trend toward normal; commercial real estate, where higher interest rates and new post-pandemic social, work, and shopping behaviors magnify the exposure of banks to commercial real estate, and; investment banking, where we are starting to see recovery in M&A and IPO activity. Yes, banks have challenges. Overall, we feel the banks are on solid footing and that valuations at current levels are attractive. Here's a list of our favored banks, broken down by niche.

Crude oil (WTI) hit another recovery high on Thursday, finishing at $90.67/barrel, and continues to see nice follow-through after its early September breakout. Crude had been stuck in a range going all the way back to the middle of November of last year and closed at its highest level since November 7, over 10 months ago. WTI has retraced over 38.2% of the decline since its secondary peak in June 2022.

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

Argus Research believes that ESG investing is a smart option to consider. Companies committed to ESG values typically reflect positive traits from management which often translate into better business. ESG (Environmental, Social, Governance) investing has come a long way and continues to grow. According to the Global Sustainable Investment Association, global assets under management in ESG strategies were $40 trillion in 2020, up from $23 trillion in 2016 and on track for $50 trillion by 2025. 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. In time, the list of industries to avoid increased to include soft drinks, fast food, and oil and gas, among numerous others. But performance of these initial strategies lagged. Now, instead of merely identifying industries to avoid, the discipline promotes "sustainable" business practices across industries that have an "impact" on global issues such as climate, hunger, poverty, disease, shelter, and workers' rights. At Argus Research, we track ESG progress at specific companies as part of our Management analysis -- one of the six points in our proprietary Six-Point System for fundamental research. In addition to reviewing and measuring the ESG proclamations from companies under coverage, we partner with an ESG research firm, JUST Capital, and leverage its analysis and insights. JUST Capital's mission is to drive measurable corporate change to create a stakeholder-centric form of capitalism that reflects the priorities of the American public. JUST utilizes a combination of data-driven research and strategic engagement in an attempt to shift norms and practices in corporate America and the financial markets. JUST ESG Custom Ratings rank stocks in the Russell 1000 on criteria using a scale of 1-100. Drawing on the JUST Capital rankings, we have compiled focused lists of companies followed by Argus Research that are in position to have a "sustainable impact" on the environment, workplace, community, and marketplace. These firms have exemplary records of delivering on the bottom line, and also in improving the environment, contributing to community relations, and showing respect for their employees. We also have a theme model portfolio based in part on ESG criteria. To build the Argus U.S. ESG Theme Model Portfolio, we apply financial concepts such as industry diversification, income generation, risk reduction, and growth at a reasonable price to our various lists. In addition, all stocks must be on the Argus BUY list. For more on JUST Capital's criteria, please visit the JUST Capital website, www.justcapital.com. For more information on the Argus companies, please see our Analyst Reports at www.argusresearch.com. Here are some of the stocks that are currently in the Argus U.S. ESG Theme Model Portfolio.

Stocks gave up most of their early gains on Friday morning as investors weighed earnings from JPMorgan Chase, Wells Fargo, and Citigroup. JPM and WFC both reported strong second-quarter results, while Citi posted lower earnings amid weakness in its trading and investment banking businesses. Consumer sentiment data was stronger than expected. The University of Michigan said that its preliminary consumer sentiment index for July rose to 72.6, up from 64.4 in June and above the Reuters consensus forecast of 65.5. The Dow rose 0.3%, the S&P 0.1%, and the Nasdaq 0.2%. Crude oil fell 2% to $75 per barrel, while gold traded near $1963 per ounce.

At the end of June, we talked about the important intermarket relationship between stocks and commodities vs. the U.S. Dollar Index (USD) and Treasury yields. Both the 5-year and 10-year Treasury yields have broken out of downward channels that have been in place since October 2022. These breakouts were fierce, reminiscent of that sweet sound a baseball bat makes hitting a — no doubt about it — home run. You know it's gone just by the sound!

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 major indices were mixed on Thursday morning amid continued debt ceiling uncertainty, though a stellar report from Nvidia lifted the Tech sector, which was up nearly 4%. Nvidia shares jumped 27% after the chipmaker reported strong fiscal 1Q results and issued much higher-than-expected sales guidance for the second quarter. The Dow fell 0.4%, the S&P rose 0.7%, and the Nasdaq rose 1.6%. Crude oil fell $2 to $72 per barrel while gold fell $18 to $1946 per ounce.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks were mixed on Monday morning as investors weighed the takeover of failing First Republic Bank by JPMorgan. JPM shares rose nearly 3% on news of the acquisition. Investors also awaited the Fed's interest rate decision and economic commentary later this week. A 25-basis-point rate hike is widely expected. The Dow rose 0.2%, the S&P rose 0.1%, and the Nasdaq fell 0.2%. Crude oil fell to $75.50 per barrel while gold fell $8 to $1992 per ounce.

Our list this week identifies companies that received an Argus target-price increase in April. As the stock prices of these companies approached their target prices, Argus analysts saw those prices going even higher. We are in the thick of earnings season and our analysts are scouring quarterly reports to evaluate how the companies they follow are doing. With economists busy analyzing economic data to determine whether the economy might slip into recession, companies have been attending to their businesses. Some are weathering current economic conditions better than others. The economic pressures are real - including rising interest rates, inflation, the strong dollar, and wavering consumer spending patterns. These stressors are on top of normal competitive pressures, as companies fight to sell their products and services, outmaneuver peers, and make profits. Looking back at April, our analysts found companies where the business outlook is solid - and went through the mechanics of our valuation framework to adjust target prices upwards. Our framework includes analysis of historical multiples, peer multiples, and future dividends and cash flows. Here are the stocks on which we raised target prices in April. All are rated BUY at Argus.

Treasury yields and the U.S. Dollar Index (USD) have turned higher of late -- and since early 2022, this combination of intermarket action has not been good for stocks. As a recap, the entire yield curve started to rip higher in January 2022, with the greenback joining in February. While yields paused for a few weeks from mid-February until early March, they took off on March 7, soaring until mid-June. Along with the dollar's ascent, this was a very bad period for equities.

Stocks fell on Friday morning following the first round of earnings reports from major banks and new retail sales data. JPMorgan shares rose 7% after the company posted a 52% year-over-year increase in first-quarter earnings, helped by strong net interest income. Citigroup also rose following better-than-expected results, while Wells Fargo shares were flat. The Commerce Department reported that U.S. retail sales fell 1.0% in March after a 0.2% decline in February. The Reuters consensus forecast had called for a smaller decline of 0.4%. The Dow fell 0.5%, the S&P 0.3%, and the Nasdaq 0.4%. Crude oil rose to $83 per barrel, while gold dropped $42 to $2013 per ounce.

California-based SVB Financial Group was taken over by regulators last Friday due to inadequate liquidity and insolvency; SIVB equity shareholders have been wiped out. The collapse has reverberated on Wall Street in a sharp downturn in bank stocks as investors worry about a contagion impact on the banking industry. We believe the reaction has been overblown. Silicon Valley Bank was a special situation in two ways. First, deposits at the bank accounted for about 90% of funding, versus 65% for the average bank, leaving the bank susceptible to funding shortfalls from a relatively small base of depositors. As well, the bank was deeply concentrated in holding deposits for technology start-ups, which have been unable to access the capital markets due to a downturn in capital raising and were thus funding operations by draining their deposits from prior fund raisings. While depositors with more than the FDIC cap of $250,000 will face uncertain timing on recovery of funds, we view deposits as a zero sum game. Funds pulled from one bank will be allocated to another. Banks routinely face interest-rate cycles and hold a large amount of fixed-income assets, sometimes at gains, other times at losses. But default risk is really non-existent and gains/losses are zero if held to maturity. SVB's issue was having received a large amount of deposits and having invested them when rates were very low, and then being asked for those deposits back after rates moved considerably higher -- leaving it with short-term losses. Larger banks have far better distribution among funding sources (such as a greater number of depositors and short-term borrowings). Larger banks also are subject to stringent stress tests on a range of severe economic scenarios and have abundant capital requirements. Smaller banks with large exposure to single sectors may be at risk, so we would focus on larger banks in this risk-off environment. Here is a list of BUY-rated Financial sector stocks in Argus' universe of coverage that fell sharply last week and offer value, in our opinion.

Major stock indices have held key short-term support and bounced on Thursday. Stocks finally got some help, as Treasury yields fell after technical doji candlesticks formed on Wednesday and the U.S. Dollar Index (UUP) ran smack into its 200-day moving average, which acted as a ceiling (for at least the day).

After a mere two days above its bear-market trendline (which goes back to early January of 2022), the S&P 500 pulled back on Monday right to the trendline. This is called a backtest, where prior resistance becomes support. A successful backtest would be quite bullish. But a failure and a drop below the 200-day at 3,955 and trendline support near 3,925 (looking out a week) could spell trouble.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks were mixed on Friday morning after big banks reported. Tesla stock was down when it announced that it was cutting prices on some of its models. According to the University of Michigan, consumer sentiment rose to 64.6 in January from a revised 59.7 in December. However, this is still well below prepandemic numbers The Nasdaq is down 0.27%, the S&P 0.22%, while the Dow Jones is up 0.17%. Crude oil rose to $79 per barrel, while gold rose $16 to $1914 per ounce.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are American Express Co. (AXP); Skechers U S A, Inc. (SKX); Seagate Tech Hldgs Pl (STX); Netflix Inc (NFLX) and the Focus List deletions are JPMorgan Chase & Co. (JPM); Home Depot, Inc. (HD); Microsoft Corporation (MSFT); T-Mobile US Inc (TMUS).

Typically, the big banks are the first to report earnings, and those announcements are beginning this week. Currently, the consensus (according to I/B/E/S data from Refinitiv) has 4Q earnings for S&P 500 companies declining 2.2%, year-over-year. Excluding the Energy sector, earnings are expected to decline 6.7%. We note that companies typically exceed consensus estimates, and our S&P 500 EPS estimate for the full year 2022 of $224 still calls for 8%-9% EPS growth. Drilling down to sectors, and in addition to growth from the Energy sector, we look for positive comparisons in the Industrial, Real Estate and Utility groups. At the other end of the spectrum, the worst performances are expected from Consumer Discretionary, Communication Services, and Basic Materials. These groups are expected to post EPS declines in the 15%-25% range. Looking further ahead, and reflecting Fed actions, consumer-spending caution, and geopolitical factors, we recently lowered our 2023 and 2024 earnings estimates for S&P 500 earnings from continuing operations. We lowered our 2023 estimate to $230 from $235; that implies slightly less than 3% growth in 2023 EPS. Off the lower base, we reduced our 2024 forecast to $250 from $258. This marks our second reduction in 2023 and 2024 EPS estimates in the past three months.

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.

Both the potential onset of recession (if the economy is not in one already) and the sharp move higher in interest rates have pulled the foundation out from under the equity market in 2022. Few sectors have been spared, with only the Energy industry in the green on a year-to-date basis. The broad retrenchment has dragged down small-caps, mid-caps, large-caps, and even the mega-caps that had previously pushed stocks to new heights as the economy recovered from the pandemic. In our opinion, some of these world-class companies have been oversold. For our list this week, we have identified 11 BUY-rated large- or mega-cap companies across numerous industries that are selling at attractive valuations and are more than 20% below their 52-week highs.

Stocks fell on Friday morning, reversing course after Thursday's rally, as investors weighed the first round of 3Q earnings reports from major banks. JPMorgan and Citigroup posted lower 3Q earnings, reflecting weakness in investment banking and higher loss provisions, though both banks topped consensus EPS forecasts with help from higher net interest income. Wells Fargo missed the consensus EPS estimate as earnings fell sharply from the prior year. The Dow fell 0.4%, the S&P 1.1%, and the Nasdaq 1.6%. Crude oil fell more than 3% to $86 per barrel, while gold traded near $1654 per ounce.

PepsiCo and the big banks are typically the first to report earnings, and those announcements are beginning this week. The consensus has 3Q earnings for S&P 500 companies growing 3.0%, year-over-year. For the 3Q22 earnings period, our model assumes that about half of the 11 sectors will post lower earnings in 3Q22 than in 3Q21. These include Technology, Communication Services, Consumer Staples, Financial Services, Healthcare, and Materials. We are modeling positive EPS growth from Consumer Discretionary (for the first time in three quarters), Utilities, REITs, and Industrials. We expect Energy, which has posted sector EPS growth exceeding 200% in 1Q22 and 2Q22, to post one final quarter of triple-digit percentage growth in the 110%-120% range. In subsequent quarters, tougher prior-year comparisons are expected to limit Energy EPS growth to double digits. Largely because of this final triple-digit EPS growth contribution from Energy, we continue to model positive earnings growth for 3Q22. Based on our multi-input model, we are lowering our estimate of S&P 500 earnings from continuing operations for 2022 from $225 to $224. That may not seem like much, and it reflects a few factors. First, half of the 2022 earnings year is in the record books; and first-half earnings overall were slightly better than our expectations. Second, we are modeling stronger growth in a few sectors (Energy, Consumer Discretionary) in the back half of 2022. Our 2022 EPS model assumes 9% growth from our 2021 estimate, in line with earlier expectations. Our 2023 estimate now calls for a lesser gain, of 5%, to $235. Our preliminary 2024 estimate is $258.

Last week was the busiest of the quarter for earnings, with many sharp stock-price moves following above- or below-consensus results or changes in guidance. Through July 26, Refinitiv noted that 133 S&P 500 companies had reported earnings, with 76% beating expectations, above the long-term average of 66%. The blended (actual for those reporting and consensus for those still to report) growth rate is 6.2%, near the 5.6% expectation and indicating the "beats" have not been robust. But the sour mood coming into the quarter is being greeted with relief that profit shortfalls and lowered guidance are not rampant. Our analysts always look for companies that boost outlooks during earnings season. Raising guidance can be a catalyst for strong returns in the quarters ahead. Here is an initial list of BUY-rated companies in Argus coverage with raised guidance or increased outlooks during the 2Q22 EPS reporting season.

Stocks fell on Thursday morning, led by sharp declines in the Energy, Basic Materials, and Financial sectors. JP Morgan and Morgan Stanley shares both fell after the companies reported disappointing 2Q earnings, hurt by weakness in investment banking. The Dow fell 1.4%, the S&P 1.3%, and the Nasdaq 0.8%. Crude oil fell 3% to $93 per barrel, while gold traded near $1703 per ounce.

The big banks typically are the first to report earnings, and those announcements are beginning this week. According to Refinitiv, the consensus has 2Q earnings for S&P 500 companies growing 5.6%, year-over-year, although the Energy sector is providing a huge boost. Absent Energy, the consensus falls to negative 2.4%. Percentage changes at the sector level range from a negative 20% for Financials (which have been hurt by weak investment banking and M&A revenues and expected higher loss provisions) to a more-than-200% rise for the aforementioned Energy sector (aided by sharply higher oil prices and lower costs due to a lack of reinvestment in exploration/production). Some companies have started to lower analyst expectations, with names in the retail and semiconductor space prominent among them. Important on earnings conference calls will be management's commentary on how they are navigating lingering supply-chain issues, handling high inflation, and possibly hiring or laying off employees. Based on our multi-input model, which includes granular analysis of both sectors and quarters, we are maintaining our estimate of S&P 500 earnings from continuing operations for 2022 at $224. This is the first time in at least six quarters that we are not raising our EPS expectations. Our 2022 EPS model assumes 9% growth from our 2021 estimate, in line with earlier expectations. Our preliminary 2023 estimate calls for another 9% gain, to $243.

Dividend income, an important element of total return, is often overlooked amid gyrations in the stock market. Between 1930 and 2012, dividend income accounted for 42% of the 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. The pattern is being repeated in 2022 as well. 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.

May had a little bit of everything, with wild day-to-day swings, a consistent but short downtrend, a few big bullish reversal candles, and (fortunately) a nice bounce at the end of the month. After all those gyrations, the major indices finished basically flat for the month. The S&P 500 was flat, the Nasdaq lost 2%, and the QQQs gave up 1.6%. That is a win after the lousy monthly returns so far this year.

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 fell sharply on Tuesday morning, reversing Monday's gains as the S&P 500 again moved closer to bear market territory. Snap shares dropped 40% after the social media company warned of a deteriorating macroeconomic environment and cut its second-quarter revenue and adjusted EBITDA guidance. On the housing front, new single-family home sales fell to a seasonally adjusted annual rate of 591,000 in April, down from a revised 709,000 in March and well below the consensus forecast of 750,000. The Dow fell 0.8%, the S&P 1.7%, and the Nasdaq 2.8%. Crude oil traded near $110 per barrel, while gold rose $20 to $1868 per ounce.

Argus has published its latest Portfolio Selector, which features its popular Focus List. Each month, Director of Research Jim Kelleher, CFA, surveys the team of Argus Research industry analysts for their timeliest recommendations out of the company's fundamental universe of approximately 500 stocks. The Focus List typically includes 30 stocks: turnover is high, as Director of Research Kelleher typically adds three or four new stocks per month. Below are the latest additions, all of which are rated BUY at Argus Research.

The Portfolio Selector features the Argus Focus List, a group of 30 "best idea" stocks generated and regularly updated by Argus' analysts and investment policy committee. It also includes the director of research’s monthly investment strategy column, stock recommendations and sector picks, economic forecasts, and an asset allocation model. This month, the Focus List additions are Home Depot, Inc. (HD); JPMorgan Chase & Co. (JPM); Palo Alto Networks Inc (PANW); Lilly(Eli) & Co (LLY) and the Focus List deletions are Williams-Sonoma, Inc. (WSM); U.S. Bancorp. (USB); Western Digital Corp. (WDC); IQVIA Holdings Inc (IQV).

Innovation may be hard to define. But to borrow from former U.S. Supreme Court Justice Potter Stewart, you know it when you see it. 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, even during the pandemic, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines) and services and moving into new markets and applications, the domestic economy would not be growing, and capital would not be flooding into the country. Consider that U.S. GDP was approximately $1 trillion in 1930 but was more than $24 trillion at the end of 2021. That's growth of 24-times. Meanwhile, the U.S. population has grown less than three-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.

Trimming GDP Estimates for 2022 & 2023

The big banks are typically the first to report earnings, and those announcements are beginning. S&P 500 profits are expected to rise 6.4% year-over-year in 1Q, according to Refinitiv. While that's down from the double-digit rates of growth in 2021, we note that analysts are typically cautious and companies often beat reduced expectations. The quarter should get a healthy boost from Energy sector earnings, which are forecast to rise by more than 200%. However, a few sectors are expected to be a drag, including Financials (expected to be down 12%), which benefited a year ago from loss-reserve releases after putting aside more reserves than needed for loan losses during the pandemic, and in the wake of a downturn in capital markets revenues due to weak IPO and M&A activity. Based on our multi-input model, which includes granular analysis of both sectors and quarters, we recently increased our estimate of S&P 500 earnings from continuing operations for 2022 to $225. Our revised 2022 EPS model assumes 8% growth from 2021 results. Off the higher 2022 base, and on the assumption that positive economic momentum can be carried forward, we raised our estimate of S&P 500 earnings from continuing operations for 2023 to $243.