Friday Rally & Weekly Gains – Monday Morning Market Memo – June 5, 2023

Friday Rally & Weekly Gains – Monday Morning Market Memo – June 5, 2023

The major stock market averages rallied nicely on Friday, with the Dow Jones Industrial Average rising over 700 points, or 2.1%, while the NASDAQ Composite and Standard & Poor’s 500 Index gained 1.1% and 1.5% respectively. For the holiday-shortened week in total – the Dow rose 2% to 33,763 – the S&P gained 1.8% to 4,282 – while the NASDAQ added 2% to 13,241 and notched its sixth consecutive winning week. The primary force driving the rally, along with some relief a deal was reached in Washington over the debt-ceiling, was the May Jobs Report.

The U.S. Department of Labor reported, on Friday morning, that the economy added 339,000 jobs last month. This was well ahead of market estimates looking for a gain of 190,000. Further, job gains for the prior two months were revised higher by 93,000. These hot numbers eased market worries over an impending recession. Also contained in the report – the unemployment rate rose to 3.7% – versus expectations for a 3.5% print. This was the cool part of the report, along with wage growth coming in as expected, assuaging worries higher wage growth would fuel more inflation.

The stock market took this as a Goldilocksscenario – not too hot (inflationary), or too cold (economic weakness/recession) – but just right. With that in mind, the financial markets are currently expecting the Federal Reserve to pause this month, and NOT raise interest rates.

According to the CME FedWatch Tool, the probability the Fed will leave rates unchanged at their June 14th meeting is nearly 81%. The Fed has raised interest rates 10 consecutive times, so the expected pause is welcome news to stock investors. The upcoming Fed meeting will remain front and center for the markets, especially during the week ahead as the calendar is light on corporate and economic data.

As always, please call us with any questions you may have or if you would like to schedule a meeting.

All the best – Southport Station Financial Management, LLC