Advanced Micro Devices, Inc. (AMD)

While the average stock continues to languish, there has been some clear alpha generators from Energy (XLE) and Utilities (XLU). Those sectors are not where most market players typically look for the next growth and momentum cycle of a bull market. For the most part, the Information Technology trade has been nonexistent in recent months -- but has provided great volatility for skilled traders. The rest of us would be better off throwing darts at names, as there just aren't any consistent trends to grab.

There are a few key data points for investors to ponder this week, starting with the August PCE report on Wednesday morning and Micron's EPS report after the close. Then, on Friday, the September employment report hits the tape. There is a lot riding on these events, with Treasury yields spiking higher, the FOMC in a potential tightening cycle, and the semiconductor trade still in limbo (with some nice recoveries but other holdings still back on their heels). The next earnings season doesn't kick off for another couple of weeks.

The Fed again has taken a tightening stance for monetary policy. Policymakers lifted the fed funds target range to 3.75%-4% last week -- and history suggests that more rate hikes are coming. Ahead of the rate move last week, Argus Fed Watcher Kevin Heal changed his forecast to two rate increases of 25 basis points each before the end of 2026. His rationale is that employment is surprisingly healthy while inflation has been obstinate and the bond market has agita. We do not expect that two rate hikes will derail earnings growth or stunt innovation. Kevin says that two increases should keep the Fed from falling out of step if inflationary shocks persist, while not over-medicating the economy if inflation moderates. In sum, the economy is still strong and the Fed is doing its job by trying to keep inflation in check. Given the return to tightening monetary policy, we are looking at industries and companies that can do well during a period of higher interest rates. All of the following stocks carry Argus BUY ratings.

The song remains the same. And maybe that song is Dazed and Confused! Crude oil has gone up, Treasury yields are up to recovery highs, and stocks are lower. On Tuesday, WTI rose another 1.7% to $94.25/ barrel, the highest level since early June. Brent gained 2.5% to $99.40/barrel, almost reaching the highs from mid-July. Gasoline is back up to $3.28/gallon from $2.80 in early August.