Market Perspective for June 9, 2024

On Monday, the Final Manufacturing PMI and ISM Manufacturing PMI data was made public. The manufacturing PMI from S&P Global came in at 51.3 percent, which indicates that the sector grew over the past month. The ISM PMI came in at 48.7 percent, which indicates that there was a contraction in the industry. It’s likely that the truth is somewhere in the middle with manufacturing largely remaining flat during the month of May.

On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) report came out. During May, there were 8.07 million job openings in the United States, which was the lowest in years. This was seen as an indication that the labor market may be slowing down.

On Wednesday, the ADP version of the nonfarm payroll (NFP) report came out and revealed 152,000 jobs were added to the economy in May. This was lower than the projected 173,000 and also lower than the 188,000 figure that was reported for April.

In addition, the ISM Services PMI was released, and it came in at 53.8 percent, which was higher than the 51 percent projection and the 49.4 percent reported last month. This indicates that service sector spending may still be a key driver of the economy.

On Thursday, unemployment claims data came in, and it was revealed that 229,000 people had filed for benefits over the past seven days. This was compared to a projected 220,000 and 221,000 that was reported the prior week.

On Friday, the Bureau of Labor Statistics (BLS) came out with its version of the NFP report, and it was quite a shocker to many market observers. In May, there were 272,000 jobs created compared to an estimated 182,000 and 165,000 a month ago. Meanwhile, the unemployment rate ticked up to 4 percent and average hourly earnings went up .4 percent over the past month.

The increase in the unemployment rate is likely because of an increase to the overall labor participation rate. However, the increase in wages and job gains is likely related to continued strength in the economy, which could call into question whether the Fed is ready to cut rates. There was growing belief that the May jobs report would indicate further weakness in the economy and pave the way for reduced rates.

Over the past week, the S&P 500 gained 53.16 points to close at 5,346. The market made its weekly high on Friday at 5,368 and made its low of the week on Monday at 5,242. Currently, the S&P is at both yearly and all-time highs and has earned a return of 25 percent over the past 12 months.

The Dow was relatively flat this week finishing up 91 points to close at 38,798. This was a .24 percent gain over the last five trading days. The market would make its low of the week on Monday morning when it dipped to 38,291 while making a high of 39,004 on Friday.

The Nasdaq closed the week at 19,000 after gaining more than 346 points this week. That represented a gain of 1.86 percent over the past five trading days. As with the other markets, the Nasdaq made its low of the week on Monday at 18,394 and made its high of the week on Friday at 19,090.

In international news, the Bank of Canada (BOC) and the European Central Bank (ECB) cut their respective interest rates by 25 basis points. On Tuesday, Switzerland announced that its inflation rate was .3 percent on a monthly basis. Also on Tuesday, Australia announced that its gross domestic product (GDP) for the past quarter grew by .1 percent compared to an expected .2 percent.

The upcoming week is going to be full of news from both domestic and foreign sources. On Wednesday, inflation data is set to be released and the FOMC will make its June rate decision. It’s expected that rates will remain unchanged at 5.5 percent. Price change data will be released on Thursday. Internationally, Great Britain will release GDP data on Wednesday, while Japan will make its policy rate statement on Thursday evening.

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