Last Week’s Summary
- S&P 500 Index rallied 0.41%
- International Equities gained 0.98%
- Emerging Markets rose 1.89%
- U.S. 10-Year Treasury Yield rose to 3.74%
- Initial Jobless Claims rose to 261k
- ISM Services Index fell to 50.3
- Factory Orders fell to 0.4%
What to Watch for This Week
- T, 6/13/23 Consumer Price Index
- W, 6/14/23 FOMC Rate Decision, Producer Price Index
- Th, 6/15/23 Retail Sales, Initial Jobless Claims, Business Inventories
- F, 6/16/23 U. of Michigan Sentiment
Weekly Market Recap
U.S. stocks continued their winning streak, notching four consecutive weeks of gains. The impressive rally was primarily fueled by the surge in technology stocks, propelling the S&P 500’s cumulative gains since October’s low beyond the 20% threshold that signifies a bull market.
However, a dampened outlook on the U.S. economy emerged as the Institute for Supply Management reported an unexpected drop in their overall gauge of services, marking the lowest level of the year. This unforeseen development prompted speculation regarding the Federal Reserve’s upcoming rate decision.
With the possibility of the Fed maintaining steady rates in June but leaving the door open for future hikes, market participants became more inclined to believe that the central bank would keep interest rates unchanged during its June meeting. Traders now anticipate that any rate adjustments will likely occur later, rather than sooner. Notably, Richard H. Clarida, the former vice-chair, remarked on Tuesday that rate cuts from the U.S. central bank were unlikely until 2024.
Investors found themselves reevaluating their expectations surrounding Fed policy after unexpected rate hikes by the central banks of Australia and Canada earlier in the week. These developments led to a full pricing-in of another hike by July in the eyes of traders.
Furthermore, a noticeable increase in U.S. jobless claims, reaching their highest level since October 2021, provided further evidence of a cooling labor market.