Stryker designs, manufactures, and markets an array of medical equipment, instruments, consumable supplies, and implantable devices. The product portfolio includes hip and knee replacements, extremities, endoscopy systems, operating room equipment, embolic coils, hospital beds and gurneys, and orthopedic robotics. Stryker remains one of the three largest competitors in reconstructive orthopedic implants and holds the leadership position in operating room equipment. Just over one fourth of Stryker's total revenue currently comes from outside the United States.

The U.S. presidential election is tomorrow. Last week, in Part 1 of this series, we made a case that the state of the economy is a bigger driver for Wall Street than who wins and takes over the White House. This week, we add some color to the presidential cycle over a typical four-year term and examine how that cycle affects the market. Historical data suggests that Year 1 is a honeymoon year, with a feeling of optimism that usually is good for stocks. In Year 1, the S&P 500 has been up 14% on average for more than 50 years, going back to 1980. Year 2 is still an up year for stocks, but only by about 5% as some of the challenges of the office surface and midterm elections cause distraction and uncertainty. Year 3 has proven to be the strongest, with stocks up about 15%. As sitting presidents put their candidate hat back on, there is increased spending and often tax breaks. Year 4 dips again, with stocks rising a smaller 4% due to uncertainty about the pending election. This week, in Part 2 of our review of the election and sectors, we look at Energy and Healthcare to see how they might perform under either candidate. While our analysis does look at specific policies, it essentially boils down to the broad approach of the candidates.

Based in Kalamazoo, Michigan, Stryker manufactures and markets medical devices, primarily in the orthopedic market. The Orthopedics segment sells joint reconstructive products (hips, knees and shoulders) and trauma implants. The MedSurg Equipment segment sells powered surgical instruments, surgical navigation systems, endoscopic products, medical video imaging equipment, and hospital beds and patient-handling systems. The Neurotechnology unit includes the neurovascular business as well as the interventional spine and spinal implants business.

Monday Tee Up: The Election and Interest Rates This week features the election and a Federal Reserve interest-rate decision. Suffice it to say, the markets may be volatile. Last week, the Dow Jones Industrial Average was lower by 0.2%, the S&P 500 lost 1.4%, and the Nasdaq shed 1.5%. For the year, the Dow is higher by 12%, the S&P is up 20%, and the Nasdaq has gained 22%. The earnings calendar is packed again. On Monday, Palantir Technologies, Marriott International, and American International Group all report. On Tuesday, Apollo Global Management, Yum! Brands, DuPont, Cummins, and Archer-Daniels Midland. On Wednesday, Qualcomm, McKesson, Novo Nordisk, Toyota Motor, and Take-Two Interactive. On Thursday, Motorola, Arista Networks, Airbnb, Becton, Dickinson, and Duke Energy. And on Friday, Paramount Global. So far, 349 (or 70%) of the S&P 500 companies have reported. Earnings are coming in 8.4% higher than in the prior-year quarter. Communication Services, up 24%, and Technology, up 19%, are leading, while Energy, down 27%, is underperforming. For full year, Argus forecasts earnings growth of 7%-9%. On the economic calendar, the big day is Thursday, when the Federal Reserve comes out with its next decision on interest rates. Odds that the Fed will cut by 25 basis points (bps) are essentially at 100%, according to the CME FedWatch tool. Wall Street will focus on Chairman Powell's statement at the press conference immediately following the rate announcement. Meanwhile, Factory Orders will be updated on Monday; the U.S. Trade Deficit and ISM Services on Tuesday; and Consumer Sentiment on Friday. Argus Chief Economist Chris Graja's Call of the Week is the Institute for Supply Management's Services Index for October. Chris has offered the following commentary. 'This is an early and important indicator of 4Q economic activity. Consumer spending on services represents more than 45% of GDP. The huge category includes housing expenses, including rent, healthcare, transportation services, and food services and hotels. The Services Index printed at a healthy and expansionary 54.9 in September. We expect a small uptick to 55 in October, just above the consensus of 53, which suggests the economy is healthy and will keep growing.' The services category grew 2.6% in 3Q and contributed 1.21 points of the 2.8% increase in 3Q GDP according to the U.S. Bureau of Economic Analysis. Last week, the October jobs report delivered a mixed bag of information. Nonfarm Payrolls posted at 12,000 for October compared to a strong (but revised lower) 223,000 for September. The October number was impacted by the two recent hurricanes and the strike at Boeing, but still came in lower than expected. The Unemployment Rate was unchanged at 4.1%. Mortgage rates jumped for a fifth consecutive week and are now at 6.72% for the average 30-year fixed-rate mortgage. Gas prices fell four cents to $3.10 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 3Q and calls for expansion of 2.3%. The Cleveland Fed CPINow indicator for November is 2.68%. After this week's Fed rate decision, the next rate meeting is on December 18. If the Fed cuts this week, as is fully expected, the odds are at 83% for another 25-bps rate cut in December, again according to the CME FedWatch tool. We expect a rate cut this week and another in December, and then three more in 2025 (all by 25 bps).