Market Recap Week Ending June 4

Tuesday – Dow +46 to 34,575, Nasdaq (12) to 13,736 and the S&P (2) to 4,202. Inflationary data caused the markets to trade nearly flat today. The May Purchasing Managers Index for May rose to 62.1 vs expectations of 61.5 and last month’s print of 61.5. The Institute for Supply Management’s Manufacturing number printed at 61.2 for May above expectations of 60.5 and April’s 60.7 number and lastly, oil traded up 2.46% to a two-year high of $67.95/bbl (WTI). As a result, the 10-year Treasury yield climbed back up 3 bp to 1.61%…Similarly to much of last week, the market was highly fractured with only 6 of the eleven S&P sectors trading higher, led by Energy and Real Estate. Utilities and Health Care were the two worst performers…Zoom Video (ZM) traded up 1.6% post-close after beating both their revenue and earnings expectations…Hewlett Packard Enterprise saw no such luck and traded down 0.87% despite beating expectations across the board.

Wednesday – Dow +25 to 34,600, Nasdaq +20 to 13,756 and the S&P +6 to 4,208.  Energy and the “meme” trade was the story today. WTI rose 1.57% to close at $71.35/bbl for a new two year high. AMC Entertainment exploded up 95% on news that the movie theater company had sold $230.5 million worth of stock. The Fed Beige Book saw moderate growth in economic activity across all twelve districts and warned that they were experiencing inflation pressure on the wage side as well as on the input goods side. The U.S. 10-year Treasury yield retreated 2 bp to 1.59%. Breadth was the best it has been in the last 3-5 trading sessions with seven of the eleven S&P sectors higher. Energy was your leader in the clubhouse yet again, up 1.74% and Industrials and Consumer Discretionary were the worst performers of the day…C3.ai (AI) fell nearly 9% post-close despite posting a narrower than expected loss and beating their revenue numbers…The beginning of the end..? The Federal Reserve announced that it would divest itself of its portfolio of corporate bonds and ETFs that it purchased during the pandemic in an effort to quell the volatility in the fixed income markets that appeared in March/April of 2020. While the portfolio is small, only $13.8 billion, this could be the first step in a reduction of the Fed’s balance sheet. The Federal Reserve Open Market Committee meets June 15/16 followed by a briefing from Fed Chair Powell on Wednesday, the 16th….

Thursday – Dow (23) to 34,577, Nasdaq (141) to 13,614 and the S&P (15) to 4,192. Private payrolls jumped to 978,000 in May according to ADP, a large gain over April’s 654,000 and crushing expectations of 680,000. Jobless claims were the lowest since the beginning of the pandemic, coming in at 385,000 vs estimates of 393,000. The Institute for Supply Managment’s Services PMI printed at 64 for May, a record number, 1.3% higher than April’s number and the 12th consecutive month of faster growth. It appears however, that cold ice was splashed all over the outstanding economic data in the form of the Fed’s announcement yesterday to end the Secondary Market Corporate Credit Facility and sell the corporate bond and ETF holdings that it had accumulated since the beginning of the pandemic. It is possible that many market professionals see this as the beginning of the end of the era of “easy money.” The 10-year Treasury yield continued to bounce within its tight 3 bp range and traded up to 1.62%. Defensive sectors Utilities and Consumer Staples led only five of the eleven S&P sectors higher. Materials and Consumer Discretionary were the two worst performers. Tomorrow is the May jobs number….

Friday – Dow +179 to 34,756, Nasdaq +200 to 13,814 and the S&P +37 to 4,229. The May jobs number was “goldilocks.” The U.S. economy added 559,000 jobs last month, below expectations of 671,000, but a strong rebound from April’s upwardly revised number of 278,000. Why “goldilocks?” The number was strong enough to continue the thesis of economic recovery but not so strong as to stoke inflation fears. Thus, the number was “just right. The 10-year U.S. Treasury yield agreed and dropped 7bp to 1.55%. Ten of the eleven S&P sectors traded higher today, led by Technology which has been the sector most affected by inflation fears. Utilities was the sole sector to trade in the red today…