Our rating on the Financial sector is Over-Weight. The Fed's rate-hike campaign is expanding net interest margins for banks. We also look for recovery in fee-based businesses, bond issuance, and M&A as the rate cycle winds down. Still, with inflation running hot, companies may cut back on hiring and investments, and thus on business loans. As of the end of April, the sector accounted for 13% of the S&P 500. The sector was outperforming the market with a gain of 12.0%. It underperformed the market in 2023, with a gain of 7% compared to a gain of 24% for the S&P 500. The sector includes money center banks, regional banks, investment banks and brokerages, exchanges, insurers, and financial data companies. Here are the Financial companies that either are on our Focus List or are used in our model portfolios.

June is not one of the better months for stocks, according to our analysis of market returns since 1980. On average, equity investors in June eke out a 0.2% positive return for the month -- better than only the weakest months of February, August, and September. The winning percentage is 61%, higher than only the 3Q summer months. We note that market returns in June have exceeded 5% only three times in the past 37 years: a 5.4% increase in 1999, a 6.9% gain in 2019, and last year's 6.3%. Clunkers? We have seen a few, including 2008 (-8.6%), 2002 (-7.2%), 2010 (-6.1%), and 1991 (-4.8%). June typically is a quiet month for earnings, as the second quarter draws to a close. But don't be surprised by fireworks on the economic, interest rate, and inflation fronts. On Friday, the nonfarm payrolls report will be watched to determine the strength of the employment and thus consumer segments of the economy. Our forecast is for a solid 168,000 new jobs, down slightly from 175,000 new jobs last month but still supportive of economic growth. The Federal Reserve meets and is not yet expected to lower the federal funds rate from the current cycle highs, but may signal its intentions for the balance of the year. Our view is that the central bank will ease rates two times in 2024. Inflation data released mid-month should indicate that pricing pressures continue to moderate from peak established two years ago. That slowdown in inflation has spurred a bull market that has climbed approximately 40% since bottoming in October 2022. We'll see if these returns can withstand the June jinx.

To sum up the current stock market, "bend but don't break!" And yes, that is typical in a bull market. The S&P 500 (SPX) fell to 5,192 on Friday, about 10 points from its flat 50-day average and almost exactly at its 10-week exponential moving average (EMA). The index then blasted off, closing 86 points off that low. The SPX is back above its 21-day exponential average and the false breakout (generally bearish) on 5/1 may be put to rest. The major indices are still in short-term downtrends, but Friday's bullish reversal was impressive and left many bullish hammer candlesticks on the daily and weekly charts. This week could be telling. Will we burst out to new highs and continue the uptrend off the April 19 low, or see another leg lower? The Nasdaq 100 (QQQ) also was very close to its 50-day on Friday and, like the SPX, bounced off its 10-week EMA. Strength late last week was seen in the small- to mid-caps, which were hit hard since mid-May. Both the S&P 400 (MDY) and the Russell 2000 (IWM) lost their 50-day last Wednesday, but quickly recovered the average. Most of the weakness of late had been in the smaller stocks and led to deterioration in breadth. It is possible that the MDY and IWM are tracing out bullish continuous inverse head-and-shoulders patterns. If so, that would mean new MDY all-time highs and new IWM recovery highs.

Monday Tee Up: Jobs Friday Jobs data is out this week. Economists and the Fed will be looking to see if the labor market is slowing, given the longer period of elevated interest rates. The earnings calendar is light, though there are some late stragglers. The Dow Jones Industrial Average ended last week lower by 1%, the S&P 500 was down 0.5%, and the Nasdaq lost 1.1%. For the year, the DJIA is higher by 3%, while the S&P and the Nasdaq have both gained 11%. On the economic calendar, the big day is Friday, with the release of jobs data. For April, nonfarm payrolls came in at 175,000. We forecast a slight decline to 168,000 for May. The unemployment rate printed at 3.9% in April. We expect no change in May. In other economic news, Monday brings data on construction spending; Tuesday, job openings; and on Wednesday, ADP employment and the U.S. trade deficit will be reported. On the earnings calendar, CrowdStrike reports on Tuesday; on Wednesday, Lululemon, Dollar Tree, Campbell Soup, and Five Below; and on Thursday, J.M. Smucker and NIO Inc. As of last Friday, 98% of the S&P 500 companies had reported for 1Q24. Earnings were 8% higher than in the same quarter last year, which is better than what was expected before the reporting season began. Communication Services, up 43%, and Consumer Discretionary, up 27%, have performed the best. Healthcare and Energy, both down 24%, have performed the worst. Last week, mortgage rates moved back over the 7% mark, to 7.03% for the average 30-year fixed-rate mortgage. Gas prices were unchanged at $3.58 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is now forecasting for 2Q and calls for expansion of 2.7%. The Cleveland Fed CPINow indicator for April forecasts 3.36%. Looking ahead, the next Fed rate decision comes next week, on June 12. Pretty much no one expects a rate change at that meeting. After that, the next meeting is at the end of July, with odds at 16% for a rate cut. Then in mid-September, the odds pop up to 55% for a cut. Like the Fed, we are data sensitive. At this time, we still expect two rate cuts in 2024, one in September and one in December. We also forecast two cuts in 2025, both in the first half of the year. All four cuts are forecast to be by 25 basis points.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Insider Picks is a daily report that utilizes a proprietary algorithm to identify 25 companies with compelling insider purchase histories based on transactions over the past three months.

In this edition, China's EVs still have gas in the tank; Insignia Financial's risk/reward proposition; Newmont's profits poised to increase; and Seatrium, Boston Beer, and BRP.

U.S. stocks have been all over the place on Friday morning, as futures suggested a down day ahead of the release of the latest PCE; futures then turned higher after the release and indeed stocks opened broadly higher; and then enthusiasm cooled quickly. As of midday, the S&P 500, Nasdaq Composite and Russell 2000 are lower, with the DJIA clinging to a modest gain. In other areas, crude, gold, and Bitcoin are all lower. As things stand, it looks like May will end an otherwise solid month with a dud in the final week.

The Fed's favorite inflation indicator, the PCE Price Index, will be released by the BEA this morning. The index differs from the better-known Consumer Price Index because its composition is changed more frequently and it is quicker to reflect the impact of real-time pricing. In the most-recent report, through March, PCE inflation was reported at 2.7% year over year; by comparison, the latest CPI report, through April, had inflation at 3.4%. Core PCE, which removes volatile food and energy prices, was 2.8% in the latest month. Our PCE forecasts call for 2.7% for both the headline number and for the core reading -- roughly in line month to month as progress toward the Fed's 2% goal gets harder as the target gets closer. Overall, inflation in this cycle peaked in summer 2022 and has been on a downward trek until plateauing recently. We track 20 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 2.6% rate year over year, up 30 basis points versus a month ago. The numbers are volatile and are distorted somewhat by ultra-low readings within the Producer Price Intermediate Goods category, which are falling at a 5% rate and may point to easing prices across the inflation spectrum in the months ahead. Focusing on core inflation -- which we obtain by averaging Core CPI, market-based PCE Ex-Food & Energy (from the GDP report), the five-year forward inflation expectation rate the 10-year TIPs Break-even Interest Rate and the Fed's favorite core PCE Price Index -- our reading is 2.95%, up 30 basis points month over month. That's higher largely because sticky prices like shelter and transportation continue to escalate. Looking ahead, investors are expecting that the Fed's rate hikes ultimately will tame inflation, with the five-year forward expectation rate at 2.31%.

Thursday was -- yet again this week -- a tough day for the stock market. But while the session saw weakness in the mega-cap indices, there was nice strength in some of smaller caps. In addition, we finally had a decent day for market breadth, which has been weak of late. Talk about a confused market! The S&P 500 (SPX) fell 0.6%, while the Nasdaq and the Nasdaq 100 both gave back about 1.1%. The S&P MidCap 400 bounced 1% and the S&P SmallCap 600 rallied 1.2% after recent weakness.

Stocks closed lower on Thursday. The Dow fell 330 points after Wednesday's 400 point drop, dragged down by Salesforce (CRM, -19.7%). Shares of Trump Media and Technology Group (DJT) are down 6% in after hours following Trump's conviction news. The S&P 500 was down 0.6% and the Nasdaq fell 1.1%.

The Vickers Top Insider Picks is a daily report that utilizes a proprietary algorithm to identify 25 companies with compelling insider purchase histories based on transactions over the past three months.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

This month, we are keeping our recommended sector allocations. We are Over-Weight the Healthcare sector. The healthcare environment is undergoing rapid transitions, and we see an unfolding period of significant promise and opportunity in the sector based on resumption of deferred medical procedures and significant new quality-of-life drugs and treatments.

At midday, the stock-market slump continues on concerns about interest rates. Blue-chip stocks are leading most market indices lower today, as Dow Jones Industrial Average is off 1%. The yield on the 10-year Treasury note is down slightly to 4.70%. Gold and oil are flat today, while Bitcoin is up 1%.