WEEKLY MARKET UPDATE 6/7/2024

Despite Friday’s jobs report for May coming in hotter-than-expected and stoking some concerns around inflation, the S&P 500 ended the week near all-time highs.  However, market leadership continues to be very narrow, as only 5% of stocks in the S&P 500 have made new 52-week highs (per Charles Schwab) and we are closely watching for more stocks to participate in the rally to give us greater confidence in the sustainability of this recent move.  Next week there will be several potentially market moving events such as Apple’s Worldwide Developers Conference (WWDC), Federal Reserve meeting announcements, and May’s consumer price index (CPI).

COOLING LABOR MARKET?

As a prerequisite to cutting interest rates, the Federal Reserve has noted a desire for the labor market to come into better balance and this week we saw some notable signs of normalization between labor demand and supply.  For example, while Friday’s jobs report did show much stronger job creation in May than anticipated, the unemployment rate rose to 4%, a level not seen since January 2022.  Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) also indicated the smallest number of job openings in three years.  Lastly, recent data from ADP highlighted that the gap between pay increases for people switching jobs vs. staying in current positions has tightened significantly (see chart below).  As a result, it increasingly appears as though the “Great Resignation” that we saw in 2021/2022 is shifting into the “Great Stay” and we suspect the Fed is happy with this development.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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