Weekly Market Commentary June 2nd to June 6th 2025

The week started with the Institute of Supply Management (ISM) Manufacturing and Services Indices, and both were disappointments compared to the previous month and to estimates. ISM Manufacturing fell to 48.5 when 49.5 was predicted. Last month came in at 48.7. ISM Services dropped into contractionary territory for the first time since June of last year, coming in at a disappointing 49.9 when 52.1 was expected and April’s was 51.6.

All other important data for the week was related to the labor market. On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) Job Openings metric, a key indicator of U.S. labor market health, showed over 7.4 million jobs available. This number has been in a slow steady decline since it hit 12.1 million in March of 2022.

The big report for the week was the May employment report which was released on Friday. There were 139,000 newly created jobs when 125,000 was expected; the unemployment rate held steady at 4.2%; and year-over-year average hourly earnings surprised to the upside at +3.9%. All in all, it was a strong report which will likely make it more difficult for the Fed to consider cutting short-term rates at their June meeting.

Equity markets took this generally good news in stride, with all three major indices finishing up for the week. The S&P 500 closed at 6000, or up 1.5%; the Dow Jones Industrials eked out a gain of 1.2% and ended at 42,763; and the NASDAQ finished at 19,530 or up 2.2%. In fixed income, rates were up across the yield curve with the 2-Year U.S. Treasury closing at 4.04%; the 10-Year at 4.51%; and the 30-Year at 4.96%.

This upcoming week, we will get May inflation data in the form of the Consumer Price Index (CPI) and the Producer Price Index (PPI). The importance of inflation data has been magnified recently as Fed Chair Powell continues to get pressure to both cut interest rates and leave them where they are. With May’s decent labor report, any uptick in inflation will surely put the Fed on hold for longer.