The major stock market averages posted nice gains last month. The Standard & Poor’s 500 Index rallied 6.2% in May, the Dow Jones Industrial Average gained 3.9%, and the NASDAQ Composite surged 9.6%. For the S&P and NASDAQ it was their best months since November of 2023. The May rally can in large part be attributed to an announced trade deal between the United States and the United Kingdom. This gave investors reason for optimism that other trade deals will eventually be reached.
Looking at last week, the stock market benefitted from some better-than-expected corporate earnings reports and a relatively cool inflation report. The Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred inflation measure ticked down last month (meaning less inflation). Weekly trade saw the S&P 500 up 1.9% to 5,912, the Dow up 1.6% to 42,270, and the NASDAQ Composite up 2% to 19,114.
For the week ahead, along with watching trade policy and the tax and spending bill working its way through Washington, investors will be focused on the Jobs Report Friday morning. Expectations are the U.S Bureau of Labor Statistics will report the economy added 125,000 jobs last month and that the unemployment rate held steady at 4.2%. The jobs report is a key ingredient for the Federal Reserve in determining monetary policy. Generally, financial markets are currently expecting two interest rate cuts from the Fed by the end of (later) this year.
Also this week, we’ll get an interesting and diverse batch of earnings reports. Lululemon Athletica, DocuSign, CrowdStrike, Dollar General, Broadcom, and Hewlett Packard Enterprise are among companies announcing results this week. Bulls are of course hoping the data flow this week can keep the rally going!
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All the best – Southport Station Financial Management, LLC