This is Tracey Ryniec, Senior Stock Strategist and Editor of the Value Investor and Insider Trader portfolios, filling in for Kevin for a few days this week.

After a red-hot May, which saw the S&P 500 finish up 5% for the month, Wall Street enters into the dog days of summer on a high note. Historically, such a strong May usually portends good things for large cap stocks the rest of the year.

Additionally, the S&P 500 was also red-hot since the start of the year and finished up 10.6% through May. The last time it finished up double digits after the first five months was in 2021, which was an incredible year. Bull markets with this kind of momentum have finished the rest of the year higher 84% of the time.

June has started out with a bit of weakness in some of the hottest names, especially those in AI. Look for buying opportunities in your favorites. Nevertheless, the S&P 500 still managed to finish higher to open the month as the bulls remain in charge.

A sign of things to come?

First of This Week's Economic Data: Manufacturing

This week we'll see a lot of important economic data that will set the tone for the month. ISM for Manufacturing for the month of May came out yesterday and was a bit lighter than expected. It came in at 48.7%, which was below April's 49.2%. A reading below 50 indicates contraction. It has been below 50 for 18 out of the last 19 months so this is nothing new.

The closely watched New Order index also fell more than expected, to 45.4% from 49.1% in April. It seems pretty clear that manufacturing continues to struggle as the Federal Reserve interest rate policy bites.

Manufacturing is about 12% of the US economy, so these weak numbers, unto themselves, aren't enough to tip the Fed's hand towards cuts. But the continued contraction in manufacturing is a reminder that the Fed's rate cuts are having the desired effect to slow some parts of the economy.

When Will the Fed Begin Its Cuts?

This week will see other important economic data including job openings, out this morning, and ISM for Services and the May BLS jobs report later this week. Most are in the camp that this data will not be either too hot, or too cold, so it will not force the Fed to tip its hand.

Additionally, there are still earnings reports rolling out this week including from some key retailers such as Lululemon and Dollar Tree, and some big technology companies like CrowdStrike and Hewlett Packard which are reporting tonight.

June can be a quiet month as Wall Street focuses on graduations and the beach. Will that prove true this year?

I'll see you tomorrow.

Regards,