Weekly Market Commentary June 1st to June 5th 2020
A 4-day winning streak for markets was snapped on Thursday, but Friday’s job numbers sent markets soaring. Amidst a backdrop of nationwide protests and the still present Covid-19 virus, the S&P 500 finished the week up by 4.9% to 3,194. The Nasdaq finished the week at 9,814, just under its closing record while the DJIA closed at 27,111, an increase of 6.8% on the week.
The 10-Year U.S. Treasury Yield also popped on the unexpectedly positive jobs report finishing the week at 0.93%, the highest it has been since March.
Weekly Jobless Claims were under 2 million for the first time in 10 weeks. The official number was 1.88 million bringing the total since the beginning of lockdowns to 44.6 million. Continuing Claims rose unexpectedly to 21.5 million from a revised 20.8 million. Nonfarm Payrolls rose 2.5 million in May beating estimates by about 10 million. The 2-month average was revised down from -881k to -1.373 million. Average Hourly Earnings fell over 1.0% to 6.7% from last month’s high of 8%, mostly because rehires were lower paid workers. The Unemployment Rate dropped to 13.3%.
The ISM Manufacturing Index rose slightly to 43.1 in May, largely in line with expectations. While the underlying readings of the index (new orders, production, and employment) were well below 40, delivery times skewed the overall number higher. Unfortunately, higher delivery times signal shortages in the supply chain rather than strength in demand. The ISM Non-Manufacturing Index came in at 45.4 for May, up from the prior month’s reading of 41.8. The PMI Manufacturing Index was unchanged from the prior month reporting both domestic and foreign new orders contracting and a substantially reduced workforce. PMI Services came in at 37.5, still well in contraction territory but up almost 10 points from April’s reading.
Key economic data to be released next week include PPI, CPI and we will hear from the FOMC.