Consumers are now more willing to spend on lifestyle enhancements along with necessary spending on life-saving treatments. In addition, the survival of the Affordable Care Act has kept the ranks of insured U.S. citizens above the historical average, further increasing consumer spending on healthcare services and products. Meanwhile, companies with experience in diagnostic testing, vaccines, and antiviral medicines, as well as suppliers of protective equipment and other hospital products, should benefit from efforts to contain the coronavirus pandemic. The sector accounts for 13.0% of the S&P 500, and includes companies in the pharmaceuticals, medical devices, healthcare services, and insurance industries. The sector is underperforming the market thus far in 2021, with a gain of 12.9%. We think the sector should account for 15-17% of diversified portfolios. Here is how we use our analysts' Financial Services sector ideas in our Focus List and Model Portfolios. All stocks are rated BUY at Argus.

Earnings Topping Already-High Expectations

The onset of the coronavirus in 2020 knocked the stock market into a bear market. Though stocks have recovered, the U.S. economy is about to slow down and COVID-19 cases are rising again as virus variants spread. Volatility, which has dropped from the highs of 2020, still has not returned to pre-COVID levels. Daily prices can swing wildly, as they did during two consecutive days in mid-July when the Dow Jones Industrial Average plummeted more than 1,000 points. Yet investors exit the stock market at their own peril, as long-term returns from equities consistently have outpaced long-term returns from other asset classes. Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate and can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

Stocks Stumble as the Economy Moves Ahead

The U.S. economy added 850,000 jobs in June, up from the tepid prior two-month average of 426,000 jobs. The unemployment rate ticked higher to 5.9%. The re-opening trend was prominent, as jobs gains were led by sectors such as leisure and hospitality (+343k) and local government education (155k). Industries including professional and business services, and retail, also added jobs. Manufacturing and construction were little changed. The labor market continues to reflect the impact of the pandemic, as the shape and character of the workforce is changing as the economy recovers. The current number of jobs is approximately 6.7 million lower than the pre-COVID February 2020 level, according to Automatic Data Processing. The labor force participation rate remains a low 61.6%, compared to the historical average of 65%. Last month, 14% of employed persons teleworked because of the pandemic. Pre-pandemic, that reading was 3.0%. On Thursday, the Labor Department reported that 364,000 people filed initial unemployment claims, down from 385,000 a month ago. Though trending in the right direction, the data indicates that the employment environment is still under stress. We expect the unemployment rate will remain high above 5.0% -- and thus the Federal Reserve will keep interest rates low -- into 2022.

Stocks rose slightly on Tuesday morning. May existing home sales fell 0.9% to a seasonally adjusted annual rate of 5.80 million units due to low supply and higher prices. Home resales, however, rose 44.6% year-over-year against last year's pandemic lows. Bitcoin fell below $30,000 on China's regulatory actions. The S&P was up 0.3%, the Nasdaq 0.4% and the Dow was up 0.1%. Crude oil traded near $73 per barrel, while gold traded near $1777 per ounce.

This edition features moat sources in medtech; American cannabis; what eliminating the 1031 would mean for REITs; and notes from newly wide-moat Nvidia and new coverage Sofi and Spirax-Sarco.

We recently identified a nascent trend that suggested corporate insiders at relatively out-of-favor technology firms on the Nasdaq were starting to buy the lull. Meanwhile, we saw other evidence that insiders at blue chip companies listed on the NYSE were starting to take some money off the table. But we cautioned that 'a few weeks has not a trend made.' And this week, data from Vickers Stock Research resoundingly legitimizes our caution.

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.

Stocks rose on Wednesday morning, led by the Consumer Discretionary sector, as Fed officials again sought to ease concerns about inflation. On the M&A front, Amazon said that it would purchase the MGM movie studio for $8.45 billion. The acquisition will bolster its Amazon Prime video service and help it to compete with rival streaming services. The Dow rose 0.2%, the S&P 0.3%, and the Nasdaq 0.7%. Crude oil traded near $66 per barrel, while gold rose $5 to $1903 per ounce.