Stocks clocked in large weekly gains, returning to positive territory year-to-date. The Dow Jones Industrial Average (DJIA) rose by 1.17%, the S&P 500 (SPX) increased by 1.50%, and the tech-heavy Nasdaq-100 (NDX) gained 1.97% for the week. The S&P 500 finished more than 20% above April’s low, reclaiming the 6,000 mark first reached in February, although it remained about 2% shy of its record high.
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The week began on a positive note, losing some steam in the second half. The weakness in PMI reports – with the manufacturing activity contracting for a third month in a row and services activity shrinking for the first time in 11 months – infused some gloom. However, Friday saw stocks find their footing again on solid job gains, which allayed fears about an imminent economic downturn.
U.S. jobs growth stayed strong in May, climbing 139,000 with unemployment unchanged at 4.2%. Although the March and April reports were revised downward, May’s report reassured investors, as it reflected a very gradual cooling of the labor market. Still, diving into the job report’s details, a stronger-than-expected wage growth continues to put a floor under inflation. This supports the Federal Reserve’s “wait and see” stance, despite President Trump’s demands for a cut.
According to the CME FedWatch Tool, the chances of a June cut are nil, and July’s rate decrease looks increasingly improbable. Prices in interest rate futures markets imply that investors expect two quarter-point rate cuts by year-end, with the first cut not expected until September.
Three Economic Events
Here are three key economic events that could affect your portfolio this week. For a full listing of additional economic reports, check out the TipRanks Economic Calendar.
» May’s CPI and CPI ex. Food and Energy (Core CPI) – Wednesday, 06/11 – The Consumer Price Index (CPI) is one of the two key measures of inflation (the other being the Personal Consumption Expenditures index, or PCE). Policymakers, businesses, and consumers closely monitor the CPI report, as it reflects price trends across the economy, shapes consumer spending and business sentiment, and directly influences the Federal Reserve’s interest rate decisions.
» May’s Producer Price Index (PPI) and PPI ex. Food and Energy – Thursday, 06/12 – This report reflects input costs for producers and manufacturers. Since the PPI measures the cost of producing consumer goods – which ultimately affects retail prices – it is viewed as a leading indicator of inflationary pressures. As such, it often foreshadows the following month’s CPI and plays a critical role in shaping inflation expectations among policymakers.
» June’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 06/13 – These reports summarize consumer confidence and long-term inflation expectations in the U.S. Consumer confidence impacts spending, which accounts for roughly 70% of U.S. GDP. The inflation expectations component is closely monitored by policymakers and is factored into the Federal Reserve’s Index of Inflation Expectations.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.