Stocks Were Mostly Higher Last Week

Despite a dip at the end of the week, stocks closed last week generally higher, with the exception of the economically sensitive small caps of the Russell 2000. A robust jobs report at the end of last week may have alleviated concerns about an economic slowdown, but it also strengthened the Federal Reserve’s case to refrain from lowering interest rates until inflation recedes. Nevertheless, both the S&P 500 and the Nasdaq recorded fresh records. Among the market sectors, information technology, health care, communication services and consumer staples performed well, while utilities, energy and materials ended the week in the red.

Employment Rose in May

Employment rose by a higher-than-expected 272,000 in May after a net downward revision of 15,000 in the prior two months. The unemployment rate ticked up 0.1 percentage points to 4.0%. The number of unemployed rose by 157,000 to 6.6 million. A year earlier, the jobless rate was 3.7%, and the number of unemployed people was 6.1 million. In May, the labor force participation rate fell 0.2 percentage points to 62.5%, while the employment-population ratio dipped 0.1 percentage points to 60.1%.

Eye on the Week Ahead

The Federal Open Market Committee (FOMC) meets this week. While it is highly unlikely that the Committee will adjust interest rates lower, the meeting statement and subsequent Chairman’s presser may offer some insight into the direction the FOMC is likely to head over the next several months. The Consumer Price Index for May is out this week. Consumer prices rose 0.3% in April and 3.4% over the past 12 months, well above the Fed’s 2.0% target rate.