Last Week’s Summary
- S&P 500 Index rose 0.35%
- International Equities fell -1.83%
- Emerging Markets fell 0.41%
- U.S. 10-Year Treasury Yield rose to 3.80%
- Initial Jobless Claims fell to 229k
- New Home Sales rose 683k
- Existing Home Sales fell to 4.28 million
- PCE Core Deflator rose to 0.4%
What to Watch for This Week
- T, 5/30/23 Consumer Confidence
- W, 5/31/23 JOLTS Report, Federal Reserve Beige Book
- Th, 6/1/23 ADP Employment, Initial Jobless Claims, ISM Manufacturing
- F, 6/2/23 Nonfarm Payrolls, Unemployment Rate
Weekly Market Recap
U.S. markets gained, primarily driven by technology stocks, as market sentiment turned positive following Nvidia Corp.’s optimistic sales forecasts. The focus remains on Washington, where U.S. negotiators are nearing an agreement to raise the U.S. debt limit and impose federal spending caps for two years. The risk of a U.S. default looms, causing market apprehension.
Treasury Secretary Janet Yellen expressed that the likelihood of the U.S. meeting all its financial obligations by mid-June is relatively low. Investors are demanding higher premiums to hold U.S. debt, especially for those at higher risk of default, while time runs short for politicians to reach a resolution. In economic news, U.S. new-home sales unexpectedly reached a more than one-year high, and business activity in the U.S. experienced the strongest growth in over a year in May.
The Personal Consumption Expenditures Price Index, favored by the Federal Reserve as an inflation measure, rose by a faster-than expected 0.4% in April. St. Louis Federal Reserve President James Bullard hinted at considering two additional rate hikes this year. Consequently, the market is pricing in a high probability of another rate hike at the upcoming Federal Reserve meeting.
In Asia, concerns are mounting over China’s sluggish post-pandemic recovery, negatively impacting vital commodity prices such as iron ore and copper.