Latest Research
Argus fundamental universe of coverage, daily spotlight, market watch {date:this.formatdateshort}, raising 1q gdp growth forecast to 2.4%.
Our analysis of recent data leads us to conclude that the U.S. economy is healthy and consumers are still leading the way. According to the third estimate released by the Bureau of Economic Analysis (BEA), U.S. Gross Domestic Product expanded in the fourth quarter at an annualized rate of 3.4%, up from the second estimate of 3.2%. Consumer spending, designated as Personal Consumption Expenditures (PCE) in the GDP report, contributed 2.2 points of the 3.4% increase in 4Q GDP. Our 2024 GDP forecast is still for 2.0% growth. We are raising our 1Q24 GDP forecast to 2.4% from 2.3% and lifting our 2Q estimate to 1.5% from 1.3%. Our second half estimate is unchanged. We expect 2Q to be the weakest quarter of 2024, with growth ramping to 1.8% in 3Q and 2.3% in 4Q. On April 4, the Atlanta Fed's GDPNow model estimated 1Q24 growth of 2.5%. Based on our analysis of the Nowcast, we believe that PCE, Residential Investment, Intellectual Property, and Government could all add to 1Q GDP, while Equipment, Nonresidential Structures, Net Exports, and Inventories may detract from or add very little to growth. Our 2024 forecast assumes inflation continues to fall and the Fed has completed its rate-hike campaign, with monetary easing likely to begin in the second half of the year. In recent data, the New Orders component of the ISM Purchasing Managers Index for March rebounded to 51.4 from a contractionary (below 50) 49.2 in February. The headline PMI also rebounded to 50.3 from 47.8. That raises our hopes (slightly) for the manufacturing sector. Our outlook for spending in the huge services category remains positive. The services PMI came in at an expansionary 51.4 in March, although it declined from 52.6 in February. The economy is on a growth path, but the yield curve is still inverted so a geopolitical surprise could trigger a slowdown. While economic growth may be uneven in 2024 and 2025, we believe the Fed has the ability to bolster growth if it falters. Our forecast is for GDP to grow 2.0% on 2025. ... is still for 2.0% growth. We are raising our 1Q24 GDP forecast to 2.4% from 2.3% and lifting our 2Q estimate to 1.5% from 1.3%. Our second half estimate is unchanged. We expect 2Q to be the weakest quarter of 2024, with growth ramping to 1.8% in 3Q and 2.3% in 4Q. On April 4, the Atlanta Fed's GDPNow model estimated 1Q24 growth of 2.5%. Based on our analysis of the Nowcast, we believe that PCE, Residential Investment, Intellectual Property, and Government could all add to 1Q GDP, while Equipment, Nonresidential Structures, Net Exports, and Inventories may detract from or add very little to growth. Our 2024 forecast assumes inflation continues to fall and the Fed has completed its rate-hike campaign, with monetary easing likely to begin in the second half of the year. In recent data, the New Orders component of the ISM Purchasing Managers Index for March rebounded to 51.4 from a contractionary (below 50) 49.2 in February. The headline PMI also rebounded to 50.3 from 47.8. That raises our hopes (slightly) for the manufacturing sector. Our outlook for spending in the huge services category remains positive. The services PMI came in at an expansionary 51.4 in March, although it declined from 52.6 in February. The economy is on a growth path, but the yield curve is still inverted so a geopolitical surprise could trigger a slowdown. While economic growth may be uneven in 2024 and 2025, we believe the Fed has the ability to bolster growth if it falters. Our forecast is for GDP to grow 2.0% on 2025. more
Market Podcast
Argus president john eade reviews his 8 fundamental forecasts for 2023, analyst quick notes, investing in small- and mid-cap stocks, shooting stars and falling angels from 1q24, value in global names, investing in health, focus list changes, news & media.
Webinar Announcement Wed. 4/10/2024, 11am EST
Webinar - Semiconductors: Powering Digital Transformation 3/6/2024
Webinar - Healthcare: Enhancing Quality of Life 2/7/2024
New Portfolio Update
The argus mid-cap model portfolio.
Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. more
SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.
Market View
Stocks lower midday tuesday.
Stocks are lower ahead of tomorrow's CPI release with the prospect of a hotter-than-expected print weighing on sentiment. The 10-year yield is declining as investors seem to be primed to jump back in the market if the inflation reading beats expectations. However, oil and housing prices have continued to trend higher since the last CPI reading and are likely to continue to provide upward pressure on inflation in the near term. Meanwhile gold continues to push into new all-time highs as investors flock to safe-haven investments during times of uncertainty. ... more
Turning to stocks, shares of Moderna (MRNA) popped after the company reported that patients showed a positive response in an early-stage neck and head cancer vaccine trial. Boeing (BA) shares are off after the company delivered 83 airplanes in 1Q - this down from 157 in 4Q as production remains slow as it deals with quality concerns. Intel (INTC) shares are up slightly after the company unveiled its latest Gaudi 3 AI processors that it claims is more efficient and faster than NVDA's H100 GPU with availability expected in 3Q. Nvidia has won an estimated 80% off the AI chip market but companies are searching for more affordable and accessible options to build out their AI systems. Norfolk Southern (NSC) shares are up after the company reached a settlement for $600 million related to its train derailment in Ohio in 2023 that spilled toxic chemicals. The S&P 500 is down 0.21%, the Dow is down 0.43%, the Nasdaq is down 0.15%, and the Russell 2000 is up 0.12%. Industries trading higher today include: Automobile Components, Personal Care Products, and Life Sciences Tools & Services. Industries trading lower today include: Construction & Engineering, Diversified Telecommunication Services, and Insurance. The VIX is up 0.42 at 15.61 after closing yesterday at 15.19. Options on Snap Inc - A (SNAP) have appeared on the most-active list today with more than 5,930 contracts of the Jun. 21 14 call, changing hands. The put/call ratio is 0.92 (1,897,795)/(2,052,265). NYSE Adv/Dec (1,518/1,226). Nasdaq Adv/Dec (2,285/1,768). [Argus Research, various news and data sources]
Turning to stocks, shares of Moderna (MRNA) popped after the company reported that patients showed a positive response in an early-stage neck and head cancer vaccine trial. Boeing (BA) shares are off after the company delivered 83 airplanes in 1Q - this down from 157 in 4Q as production remains slow as it deals with quality concerns. Intel (INTC) shares are up slightly after the company unveiled its latest Gaudi 3 AI processors that it claims is more efficient and faster than NVDA's H100 GPU with availability expected in 3Q. Nvidia has won an estimated 80% off the AI chip market but companies are searching for more affordable and accessible options to build out their AI systems. Norfolk Southern (NSC) shares are up after the company reached a settlement for $600 million related to its train derailment in Ohio in 2023 that spilled toxic chemicals.
The S&P 500 is down 0.21%, the Dow is down 0.43%, the Nasdaq is down 0.15%, and the Russell 2000 is up 0.12%.
Industries trading higher today include: Automobile Components, Personal Care Products, and Life Sciences Tools & Services. Industries trading lower today include: Construction & Engineering, Diversified Telecommunication Services, and Insurance.
The VIX is up 0.42 at 15.61 after closing yesterday at 15.19. Options on Snap Inc - A (SNAP) have appeared on the most-active list today with more than 5,930 contracts of the Jun. 21 14 call, changing hands. The put/call ratio is 0.92 (1,897,795)/(2,052,265). NYSE Adv/Dec (1,518/1,226). Nasdaq Adv/Dec (2,285/1,768).
[Argus Research, various news and data sources] less
Weekly Economic Commentary
Solid 1q leads into 2q uncertainty.
The S&P 500 just concluded its best first quarter in five years. The start to the second quarter has been bumpy, yet we can hardly recall a more welcomed correction – if that is what it turns out to be. The market showed solid breadth in 1Q24, with a broad set of sectors either beating or tracking the broad market and no sector negative in the quarter. ... more
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