Market Summary – May 6, 2024

Last Week’s Summary

  • S&P 500 Index rose 0.56%
  • International Equities rose 1.61%
  • Emerging Markets rose 2.01%
  • U.S. 10-Year Treasury Yield fell to 4.50%
  • Initial Jobless Claims fell to 208k
  • FOMC left rates unchanged at 5.25%-5.50%
  • Change in Nonfarm Payrolls fell to 175k
  • Unemployment Rate rose to 3.9%

What to Watch for This Week

  • T, 5/7/24 Consumer Credit
  • W, 5/8/24 Wholesale Inventories, MBA Mortgage Applications
  • Th, 5/9/24 Initial Jobless Claims, Continuing Claims
  • F, 5/10/24 U. of Mich. Sentiment, U. of Mich. 1-Year Inflation

Weekly Market Recap

Equities rose in their most significant rally, on Friday, since February, propelled by a notable deceleration in U.S. job growth that caused bond yields to plummet. This development reignited trader optimism for potential Federal Reserve interest rate cuts later this year.

On Friday, the S&P 500 surged by 1.3%, fueled further by Apple Inc.’s impressive post-earnings performance. The tech-dominated Nasdaq 100 also saw a robust climb of 2%. Reflecting the newfound confidence, Wall Street’s “fear gauge,” the VIX, descended to its lowest level in over a month.

Investor concerns about “stagflation” or a looming recession were assuaged by a jobs report that, while softer than anticipated, did not indicate a labor market downturn. Instead, it suggested a gradual economic slowdown, bolstering the case for a Fed responsive to evolving data.

This sentiment was reinforced by Fed Chair Jerome Powell’s remarks following Wednesday’s decision to maintain interest rates, where he hinted at a predisposition towards easing policy rather than tightening.

In a parallel development, unexpected contraction in the U.S. services sector for the first time since 2022 was reported on Friday. This decline was underscored by a business activity gauge slumping to a four-year low, coupled with a rise in input costs.

These mixed signals further underscored the delicate balance the Fed faces in navigating economic uncertainties while maintaining stability.

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