Markets Trend Higher Despite Weak Labor Data

Wall Street ended last week on a positive note, with each of the major benchmark indexes closing higher. The S&P 500 rose to its highest level since February, boosted by guarded optimism around U.S.-China trade talks and a better-than-expected jobs report. However, unemployment claims rose to their highest level in eight months, adding some concerns about the future of the labor sector. Stocks opened last week with minimal gains amid investor profit-taking following a strong May. Throughout the remainder of the week, stocks whipsawed on trade information and economic data. In addition to renewed hopes of a resolution to the trade conflict with China, investors also saw a cooling of the vitriol between President Trump and a former ally. Information technology and communication services outperformed among the market sectors, while consumer discretionary and consumer staples closed the week in the red. Ten-year Treasury yields rose. Crude oil prices had their first weekly gain after declining in each of the previous three weeks.

Manufacturing Increased in May Ahead of Price Increases

Manufacturing picked up in May, despite issues with tariffs and trade policy. According to the latest survey of manufacturing purchasing managers, companies increased new orders and stocks in anticipation of price increases and possible supply-chain disruptions. Nevertheless, tariff-driven input cost increases led to the highest rise in output prices since November 2022. The S&P Global U.S. Manufacturing Purchasing Managers’ Index™ posted 52.0 in May, up from 50.2 in each of the preceding two months, and represented the best performance since February.

Eye on the Week Ahead

Inflation data for May is available this week with the releases of both the Consumer Price Index (CPI) and the Producer Price Index (PPI). The CPI rose 0.2% in April but dipped to 2.3% for the 12 months ended in April. The PPI fell 0.5% in April but rose 2.4% over the last 12 months.