We have reviewed our sector allocations this month, and have adjusted our current sector Over-Weight, Under-Weight, and Market-Weight recommendations for the calendar third quarter. Our multi-factor model includes a performance ranking system. It assigns points for monthly, quarterly, and YTD sector performance vs. the benchmark S&P 500; current sector P/E vs. 5-year P/E, with points awarded for discount to S&P 500 current vs 5-year P/E delta; two-year earnings growth, with points awarded for exceeding benchmark average and for EPS acceleration; relative performance to the sector group average; sector conviction (meaning BUY rating percentage per sector vs. total Argus BUY rating percentage); and PEG ratio, with points awarded or subtracted based on sector PEG ratios below or above the group average. This time, our process led to an upgrade of the Materials sector to Over-Weight from Market-Weight. The process has also resulted in three downgrades: Healthcare and Utility to Market-Weight from Over-Weight; and Consumer Staples to Under-Weight from Market-Weight. Our rebalancing process takes place four times a year, early in the months of March, June, September and December. Our current Over-Weight sectors are now Financial, Industrial, Materials, and Information Technology. Our current Market-Weight sectors are Communication Services, Healthcare, Energy, Real Estate, and Utilities. Our Under-Weight sectors are Consumer Discretionary and Consumer Staples. The Argus Research Investment Policy Committee suggests that advisors and investors leverage this consistent and comprehensive process to adjust sector weightings within their diversified equity portfolios, with a primary focus on the largest sectors.

BHP is a global diversified miner mainly supplying iron ore and copper. The merger of BHP Limited and Billiton PLC created the present-day BHP Group. The dual-listed structure from the 2001 BHP and Billiton merger was collapsed in 2022. Major assets include Pilbara iron ore and Escondida copper. Onshore US oil and gas assets were sold in 2018, and the remaining Petroleum assets were spun off and merged with Woodside in 2022, with BHP vesting the Woodside shares it received to BHP shareholders. It purchased copper miner Oz Minerals in fiscal 2023 and half of the Vicuna copper joint venture in fiscal 2025. It is entering the potash market through the development of its Jansen project in Canada. However, due to low prices, BHP placed its nickel business on care and maintenance in 2024.

BHP, based in Australia, is the world's largest diversified natural resources company by market capitalization, with over 39,000 employees and contractors, primarily in Australia and the Americas. BHP's primary commodities include copper, iron ore, and metallurgical coal. It also has substantial interests in conventional and unconventional oil and gas and thermal coal.

This is one of the busiest weeks of the year on Wall Street. There's a Fed rate meeting, which is also the last meeting with current-but-departing Chairman Jerome Powell. As well, five of the Mag7 are due to report earnings and there's a lot of economic data coming out (including updated on GDP and inflation). Last week, the Dow Jones Industrial Average and the S&P 500 were essentially flat, while the Nasdaq gained 1.5%. Year to date, all three indices are in positive territory. The Dow is up 2%, the S&P 500 is higher by 5%, and the Nasdaq is up 7%. On the earnings calendar, about 850 public companies are reporting this week. Highlights include Verizon on Monday; Visa, Coca-Cola, Novartis, Seagate Technology, Starbucks, and UPS on Tuesday; Alphabet, Microsoft, Amazon, and Meta Platforms on Wednesday; Apple, Eli Lilly, Merck, and Caterpillar on Thursday; and Exxon Mobil and Chevron on Friday. Turning to the economic calendar, the Case-Shiller Home Price Index will be reported on Tuesday; the Federal Reserve rate decision comes on Wednesday (followed by a final press conference hosted by Chairman Powell); and the Personal Consumption Expenditures Index inflation indicator and an update on GDP hit the tape on Thursday. The impact of the war is showing up in economic forecasts. Gas prices have been elevated, but fell eight cents last week and are now at an average of $4.04 per gallon for regular gas. The Atlanta Fed GDPNow forecast is now calling for 1.2% growth in 1Q, down from 3.0% about a month ago. The Cleveland Fed Inflation Nowcast forecast is at 3.6% for CPI in April, up from the 3.3% print in March. Mortgage rates moved lower last week, down seven basis points, with the average 30-year fixed-rate mortgage at 6.23%, according to FreddieMac. For the Federal Open Market Committee (FOMC) meeting this week, odds are at zero for a rate move. President Trump's nominee to be the next Fed chairman, Kevin Warsh, testified before Congress last week as he continues to move through the formal approval process. Of note, the controversial DOJ investigation into Chairman Powell was dropped. His term as Chairman expires on May 15, though he will remain on the committee. Taking a deeper dive into year-to date performance, a leading industrialized global stock market index, the ETF EFA, is up 5% year to date, while the leading emerging market ETF (EEM) is up 16%. U.S. growth stocks are flat year to date when looking at ETF IWF, and value stocks (IWD) are up 7%. Crude oil has pulled back from its high of $110 on April 7. On Friday, it was at $94 per barrel, still up 62% for the year. In other asset classes for the year to date, AGG bonds are flat, gold is up 8%, and Bitcoin is down 11%. The U.S. dollar is flat, tracking DXY. The VIX Volatility Index was about 19 on Friday, below its historical average of 20. Turning to sector performance, the list from first to worst so far in 2026, as of March 31, is Energy (+27%), Materials (+14%), Industrials (+11%), Real Estate (+10%), Utilities (+9%), Consumer Staples (+9%), Information Technology (+8%), Communication Services (+5%), Consumer Discretionary (+2%), Financials (-5%), and Healthcare (-6%). By comparison, the S&P 500 is up 5% year to date.