Stock prices fluctuated amid inflation concerns and bargain hunting, leaving stocks mixed for the week.
The Dow Jones Industrial Average slipped 0.51%, while the Standard & Poor’s 500 dropped 0.43%. The tech-heavy Nasdaq Composite index advanced 0.31%. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.67%.1,2
Markets have traded sideways since mid-April, though beneath the surface has been ongoing sector rotation. Last week continued that trend.
While stocks ended on a strong note, the performance of industry sectors varied widely. Energy, real estate, utilities, and a number of reopening stocks performed well, while consumer discretionary, communication services, healthcare, and technology stocks lagged.
The Fed announced on Wednesday that it will soon begin selling the corporate bonds and exchange-traded funds it had accumulated during the pandemic, an action that some observers interpreted as a harbinger of an approaching change in its easy-money policies. But the below-consensus May job figure on Friday buoyed investors who believe the Fed will not change course soon.4,5
Labor Market Recovery
It was a good week for the labor market. Initial jobless claims fell to pre-pandemic levels (385,000), ADP (Automated Data Processing) reported a big jump in private-sector hiring (978,000), and the monthly employment report saw nonfarm payrolls increase by 559,000 in May – a healthy increase even though it fell short of some expectations. The unemployment rate declined to 5.8% from April’s 6.1% level.5,6,7
Friday’s report showed that total employment numbers still remain about seven million jobs below their pre-pandemic levels. It also showed an acceleration in wage gains, which rose 2% year-over-year following the 0.4% gain in April.8
Jobless Claims Reach Pandemic Lows
In a sign of further recovery in the labor market, the number of initial jobless claims fell to a pandemic low, continuing the downward trend in worker layoffs. New jobless claims totaled 406,000 for the week, well below the pandemic high of nearly 1.5 million, though still above the 2019 weekly average of 218,000.5
This Week: Key Economic Data
Tuesday: Job Openings and Labor Turnover Survey (JOLTS).
Thursday: Consumer Price Index (CPI). Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, June 4, 2021
This Week: Companies Reporting Earnings
Monday: Marvell Technology, Inc. (MRVL), Coupa Software (COUP).
Wednesday: Campbell Soup Company (CPB), Brown-Forman Corporation (BF.B).
Thursday: Chewy (CHWY)
Source: Zacks, June 4, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
1. The Wall Street Journal, June 4, 2021
2. The Wall Street Journal, June 4, 2021
3. The Wall Street Journal, June 4, 2021
4. The Wall Street Journal, June 2, 2021
5. CNBC, June 3, 2021
6. CNBC, June 3, 2021
7. CNBC, June 4, 2021
8. CNBC, June 4, 2021