Last Week’s Summary
- S&P 500 Index rallied 1.88%
- International Equities gained 1.08%
- Emerging Markets rose 1.26%
- U.S. 10-Year Treasury Yield fell to 3.69%
- Initial Jobless Claims rose to 232k
- Change in Nonfarm Payrolls rose to 339k
What to Watch for This Week
- M, 6/5/2023 ISM Services Index, Durable Goods Orders
- W, 6/7/2023 Trade Balance, MBA Mortgage Applications
- Th, 6/8/23 Initial Jobless Claims, Wholesale Inventories
Weekly Market Recap
U.S. stocks experienced a strong rally as the S&P 500 surged by 1.83%, marking its largest weekly gain since March and reclaiming the key level of 4,200. This upward movement in stocks was accompanied by a significant drop in Wall Street’s “fear gauge.” The CBOE Volatility Index, or VIX, fell below 15, a level not seen since before the pandemic, contrasting with its average of 23 over the past year.
Against the backdrop of a June 5 deadline to prevent a disruptive default, senators worked urgently on reaching a consensus regarding the debt-limit deal put forth by President Joe Biden and House Speaker Kevin McCarthy. Meanwhile, Federal Reserve officials conveyed their intention to maintain interest rates at the current level in June, although they retained the option to raise them in the future.
This communication helped shape market expectations, especially as signs of a slowdown in the labor market emerged in May, despite an increase in hiring. Fed Chair Jerome Powell and other officials argued that it was necessary to take more time to evaluate incoming data and the evolving economic outlook before considering another rate hike. As a result, the yields on Two-Year Treasury bonds, which are particularly sensitive to immediate central bank actions, surged by 16 basis points to 4.5%.