Author: Davis Finke, CFA
With earnings season now in the rearview, economic data releases — particularly those centered on employment — have been the main focus for investors this week. This week’s data was broadly consistent with other recent indicators pointing to a stable labor market. The U.S. economy added 172,000 jobs in May, well above expectations of 90,000, while the unemployment rate held steady at 4.3%. Job gains were concentrated in leisure and hospitality, local government, health care, and manufacturing. In addition, job openings rose in April to the highest level in nearly two years, continuing claims declined, and initial jobless claims remained well below their 20-year average. While the overall employment picture is a positive for the economy, it also further reduces the likelihood of a Fed rate cut in the near term. Markets have reacted accordingly, with stocks moving sharply lower today.
After a sharp pullback on Friday, the S&P 500’s historic nine-week winning streak came to an end. Weak guidance from Broadcom, one of the largest semiconductor companies in the world, also weighed on sentiment, and technology stocks broadly moved lower as investors rotated toward other sectors. Health care, energy, real estate, and financials ended the week with positive returns, pointing to a healthy broadening in market participation. That trend has also been supported by lower oil prices. Brent crude is down sharply from last month’s highs despite ongoing tensions between the U.S. and Iran, suggesting investors remain hopeful for a ceasefire and the eventual reopening of the Strait of Hormuz. Looking ahead to next week, SpaceX’s IPO on Friday, June 12, will likely be one of the market’s most closely watched events. The company is expected to price at $135 per share with a valuation of around $1.75 trillion, making it the largest IPO in history. A public offering of that scale could influence broader market dynamics, affect index tracking, and create heavy trading volume across retail platforms. Oracle is also set to report earnings next week, which will be closely watched given the company’s significant role in AI infrastructure and data center expansion. In addition, another round of inflation data will provide further clarity on the outlook for interest rates.
