The third quarter of 2024 has been rewarding for equity investors, as the S&P 500 increased another 5% and has gained almost 20% year to date. Surprise, surprise, though, as value was the segment leader in the quarter. The S&P 500 Value Index advanced approximately 7% in the period, while the S&P 500 Growth Index edged only 3% higher. Leading sectors included Real Estate, Utilities, Financial, Healthcare and Industrials, while lagging sectors for the past three months included Information Technology and Energy. The average stock in the Argus Universe of Coverage rose almost 8% during the quarter, while the median stock increased 9%. The average BUY-rated stock rose 8.3%, while the average HOLD-rated stock gained 6.7%. Here are the top-10 and bottom-five performers from the Argus Universe in 3Q24.

Global stocks are gaining, if not at the pace of domestic equities. While the S&P 500 has risen 17% year to date, the EAFA index of large- and mid-cap stocks based in countries other than the U.S. and Canada has gained 9.5%. Over the past five years, the performance gap has been wider, with the S&P 500 advancing 94% compared to a 32% gain in EAFE. But the underperformance has given global stocks a valuation advantage, particularly in the area of dividends. Consider that the EAFE dividend yield of 2.9% is 170 basis points higher than the comparable S&P 500 dividend yield. We think global dividend stocks now offer opportunity, particularly given the endless speculation over the direction of interest rates in the U.S., which has created market-timing headaches for equity income investors, who have endured recent wide swings in prices for rate-sensitive equity in areas such as utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S. interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this asset class for U.S. investors, including a wide selection of companies that pay dividends, robust industry diversification, and, as we have mentioned, higher yields and lower valuations. Argus has recently boosted its global coverage, and recommends the following international dividend stocks, each of which has at least a long-term BUY rating from an Argus analyst. Note this list of approximately 25-30 companies offers exposure to eight of the 11 major industrial sectors. The list includes companies from 10 countries.

Investors and analysts of all stripes seem amazed by the speed at which stocks are recovering from the early August swoon. Insiders, who had been so pessimistic a just few weeks ago, are included in this group. Among the positive indicators, the Insider Index from Vickers Stock Research has moved in a positive direction for a second week, marking its least-bearish reading since early May. Additionally, Vickers' Total One-Week Sell/Buy Ratio, NYSE One-Week Sell/Buy Ratio, and Nasdaq One-Week Sell/Buy Ratio are all lower (bullish) for a second week, and down dramatically from highs seen a mere three weeks ago. The above has led Vickers' Total, NYSE, and Nasdaq Eight-Week Sell/Buy Ratios to also move lower for the first time in months. And all of the above is taking place in an environment that features growing transaction volume now that earnings-related trading restrictions are falling away. On a sector basis, insider buying outpaced selling in the Energy sector by a factor of 2.75-times. On the flipside, selling by insiders last week was greatest in Information Technology, with shares valued at $157 million sold versus $25 million bought. This week, analysts at Vickers highlighted insider transactions of interest at Quanta Services Inc. (NYSE: PWR) and ConocoPhillips (NYSE: COP).

The technical scorecard for stocks remains bullish, as indices at new all-time highs (and others missing by only a few points) are actually lagging advance/decline lines that have led price to new highs. Historically, when market breadth leads price, it has been bullish when looking out six to 12 months.

Stock indices are at all-time highs, while the overall tone in current and recent sell/buy ratios from Vickers Stock Research remains one of clear caution. Indeed, at 5.47, Vickers' Total One-Week Sell/Buy ratio, which measures activity across the NYSE, Nasdaq, and American Stock Exchange, is at its highest level since July 2023, shortly before the market experienced a 10% pullback in stock prices that extended until late October 2023. With readings above 2.50 signifying bearish sentiment, the Total One-Week ratio has now been in bearish territory since late November, fueling a rise in the Total Eight-Week Sell/Buy ratio to its current reading of 4.51. These cautious readings align with other developing concerns, such as overbought momentum, overbought breadth, and market sentiment that is exceedingly hot. Stocks have performed nicely so far in 2024, but insiders, with a recent uptick in pre-planned sales and decrease in buying, still seem to be building a defensive case.

Global stocks are picking up the pace. While the S&P 500 has jumped almost 11% in the past month, the EAFA index of large- and mid-cap stocks based in countries other than the U.S. and Canada has risen 10%. Over the past six years, the performance gap has been wider, with the S&P 500 advancing 12% compared to a 7% gain for the EAFE. But the underperformance has given global stocks a valuation advantage, particularly in the area of dividends. The EAFE dividend yield of 2.4% is 80 basis points higher than the comparable S&P 500 dividend yield. We think global dividend stocks now offer opportunity, particularly given the endless speculation over the direction of interest rates in the U.S., which has created market-timing headaches for equity income investors. Those investors have endured recent wide swings in prices for rate-sensitive equity sectors such as Utilities, REITs and MLPs. In our view, investing in international income stocks is one way to increase portfolio diversification while reducing sensitivity to volatile U.S interest rates. Investing in overseas stocks carries its own set of risks, including the impact of currency exchange and geopolitical turmoil. But there are also a number of positives in this asset class for U.S. investors, including a wide selection of companies that pay dividends, robust industry diversification, and, as we have mentioned, higher yields and lower valuations. Argus has recently boosted its global coverage, and recommends the following international dividend stocks, each of which has at least a long-term HOLD rating from an Argus analyst.

Stocks rose on Monday morning, led by gains in the Technology and Communication Services sectors. Microsoft shares rose on news that Sam Altman, the former head of OpenAI, would join the company and lead a new advanced AI research team. On Tuesday, investors will weigh earnings from chipmaker Nvidia as well as the Fed's latest meeting minutes. The Dow rose 0.3%, the S&P 0.5%, and the Nasdaq 0.8%. Crude oil rose $2 to $78 per barrel while gold traded near $1976 per ounce.

The growth prospects for the artificial intelligence (AI) universe are impressive, yet hard to determine. Argus has derived a model of the size and scope of the global AI industry, based on our coverage of the major publicly-traded players and most of the mid-tier players, along with our industry analysts' knowledge of private players. We estimate the global AI industry amounted to about $90-$100 billion in 2021, and expect it to grow at a 40% CAGR through 2030, when it is expected to reach $1.8 trillion in annual revenue. We expect annual growth to decelerate from the low- to mid-40% range in immediate years to the mid-30% range for years toward the end of the survey period. But determining a realistic estimate for the size of the industry is a challenge. Even for an industry that promises to redefine measuring tools, there is no measurable unit of AI output comparable to barrels of oil or tons of steel. As well, much of AI development occurs within labs and at universities, and the output is measured in tangible progress against objectives, not dollars or units of output. In the corporate world, nearly all the AI pure-play companies service micro-niches, have little measurable revenue, and are deeply unprofitable. For our list this week, we take a big picture view of three areas where AI applications are developing. In Big Tech, we believe much of the revenue and most of the profitability from AI is attributable to several giant U.S. and a few international companies that operate primarily in growth sectors such as Technology, Communication Services, and Consumer Discretionary. Next, we note that China is also a hub of AI development, with companies like Alibaba, Baidu, and Tencent (though Argus follows only Alibaba). Finally, Niche Tech has significant AI activity among companies pursuing advances in IoT, vehicle electrification, autonomous driving, automation and connectivity solutions for manufacturing, warehousing, construction, and other areas. Here are featured companies followed by Argus in those three categories.

While not at all a sure thing, the possibility that the Fed might engineer a so-called soft landing is in play. On an admittedly less-impactful basis, insiders may be crafting a soft landing of their own. For the better part of a month, insider-sentiment data from Vickers Stock Research was trending in a bearish direction -- driven somewhat by low transaction volume during earnings season, but more noticeably by bearish spikes in response to the surprise moves from Fitch and Moody's that clouded the outlook for the U.S. economy and the banking sector. But now, we see evidence that insider sentiment is calming while transaction volume is growing (as the end of earnings season nears).

In this edition, streaming services changing their channels; BRP looks promising; China's AI is calling; and Autoliv, Sirius XM, and American Express.

Stocks rallied late Thursday amid optimism about a potential debt ceiling deal and strong earnings from Walmart. On the employment front, first-time claims for state unemployment benefits fell by 22,000 to 242,000 for the week ended May 13, below the Reuters consensus forecast of 254,000. Housing data was weak. The National Association of Realtors said that sales of existing homes fell by 3.4% to a seasonally adjusted annual rate of 4.28 million units in April, below the consensus forecast. The Dow rose 0.34%, the S&P 0.94%, and the Nasdaq 1.51%. Crude oil traded near $72 per barrel, while gold fell $25 to $1960 per ounce.

The stock market has held up again (as of this writing!), despite additional bearish news about the global banking system. This time, Europe imploded (after already having booked a nasty decline). Indeed, once contagion starts, it generally does not stop on a dime -- but rather continues down an increasingly negative path.

Stocks fell sharply on Friday morning following more hot inflation data. The Commerce Department said that its PCE price index rose at a 5.4% annualized rate in January, up from 5.3% in December and above the consensus forecast of 4.9%. The core PCE, excluding volatile food and energy prices, rose 4.7% from the prior year, up from 4.6% growth in December and also above the consensus of 4.3%. The Dow fell 1.3%, the S&P 1.4%, and the Nasdaq 1.7%. Crude oil fell nearly 2% to $74 per barrel, while gold dropped $10.50 to $1816 per ounce.

Last week, we reported that the volume of insider transactions was ramping up with the end of earnings season upon us. This week brings a burst of transactions, with about 2300 insider transactions meeting the criteria for inclusion in the Weekly Insider Report from Vickers Stock Research.

Stocks fell on Wednesday morning following weak retail sales data and disappointing second-quarter results from Target. The Commerce Department reported that U.S. retail sales were flat on a month-over-month basis in July after a 0.8% gain in June. The result was slightly below the Reuters consensus forecast. The Dow fell 0.9%, the S&P 1.1%, and the Nasdaq 1.7%. Crude oil fell slightly to $86 per barrel, while gold traded near $1776 per ounce.

While stocks sank for seven weeks, several of the major indices hit key support levels. The S&P 500 hit a 38.2% retracement of the rally off the March 2020 lows on May 20 (down near 3,800) and bounced sharply. That carried into last week, with the index jumping 6.6% (the biggest one-week gain since March).

This edition features our oil market update, Sea's challenges in shoring up profitability, the rhythm of media entertainment's pulse, and BASF, Alibaba, and BlackRock.

With the market focus shifting from inflation to the Russian invasion of Ukraine, stocks finished last week with a surprise two-day rally that included the best stock day of 2022. On Friday, the Dow Jones Industrial Average soared by 835 points, or 2.51%. The S&P 500 rose 2.24%, and the Nasdaq Composite gained 1.64%. For the week, the DJIA was down 20 points, or 0.1%, while the S&P 500 rose 0.82%, and the Nasdaq Composite gained 1.09%. For the year to date, the Dow is down 6.2%; the S&P 500 is off 8.01%; and the Nasdaq Composite remains in correction territory though off its lows, down 12.47%.

This edition features top pick APA Group, Alibaba's attractive share price, Brambles' hardiness in challenging conditions, and TransUnion, Etsy, and Nabtesco.

Raising Earnings Estimates for 2021 and 2022

Raising Earnings Estimates for 2021 and 2022

Due to a difficult September, in which the S&P 500 fell 4.7%, 3Q21 was barely positive for stocks, with the major benchmark index increasing only 0.6%. The average stock in the Argus Universe of Coverage fell 1.7% during the quarter, and the median stock dropped 1.4%. The average BUY-rated stock slipped 0.9%, while the average HOLD-rated stock declined 3.7%. Will investors continue to favor value in 2021? Will small-caps reverse their recent weak trend? Given low interest rates, we expect growth stocks to resume their outperformance over time, and think this may be the one-in-five years that value leads. Investors seeking value are encouraged to focus on dividends and look for yields in the 3%-4% range. As for small-caps, the promise of the vaccine is encouraging for these companies, which typically don't have the gilt-edged balance sheets of large-caps and are thus more dependent on a strong U.S. economy. Small-cap valuations remain depressed, and this group looks to offer value into 2022.