In this week’s recap: the blue chips have their best week of 2019, as investors like what they hear from the head of the Federal Reserve and interpret the latest monthly employment numbers.
Weekly Economic Update
THE WEEK ON WALL STREET
Stocks rallied during a week in which Wall Street was buffeted by headlines. The S&P 500 rose 4.41%. The Nasdaq Composite and Dow Jones Industrial Average respectively added 3.88% and 4.71%. The MSCI EAFE index of overseas stocks improved 2.02% across five days.1-2
Following a mixed Monday, the market jumped Tuesday after dovish remarks from Federal Reserve Chairman Jerome Powell. Breaking out of a 6-week losing streak, the Dow had its best week since November.3
JEROME POWELL’S COMMENTS
Speaking at the Federal Reserve Bank of Chicago, the Fed chair stated that central bank officials “will act as appropriate to sustain the expansion” of the economy in the face of “recent developments involving trade negotiations and other matters.”4
The next 2-day Fed policy meeting ends on June 19, with a press conference to follow.5
Employers added just 75,000 net new jobs to their payrolls in May, according to the Department of Labor. Economists polled by Reuters thought that the gain would be 185,000. The main unemployment rate held at 3.6% last month; the U-6 rate, which includes the underemployed and those who have stopped looking for work, fell 0.2% to 7.1%.
To some analysts, the weak May hiring number hints at private-sector concern over tariffs. To others, it simply signifies the possibility that the economy may be at or near full employment.6
While breaking news does often merit investor attention, refrain from letting the headlines of the moment prompt you into emotional decisions. Brace yourself for further headlines that may drive market volatility, because new developments are arriving quickly in the financial markets.
THE WEEK AHEAD: KEY ECONOMIC DATA
- Wednesday: The latest Consumer Price Index, showing the rate of inflation in May and across the past 12 months.
- Friday: The Census Bureau’s May retail sales report as well as the University of Michigan’s initial June consumer sentiment index, measuring consumer confidence levels.
Source: Econoday / MarketWatch Calendar, June 7, 2019
The Econoday and MarketWatch economic calendars list upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
- Tuesday: H&R Block (HRB)
- Wednesday: Lululemon Athletica (LULU)
- Thursday: Broadcom (AVGO)
Source: Morningstar.com, June 7, 2019
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1 – wsj.com/market-data [6/7/19]
2 – quotes.wsj.com/index/XX/990300/historical-prices [6/7/19]
3 – cnbc.com/2019/06/07/us-futures-edge-higher-as-wall-street-rally-set-to-continue-jobs-data-in-focus.html [6/7/19]
4 – cnbc.com/2019/06/04/powell-says-the-fed-will-act-as-appropriate-to-sustain-the-expansion.html [6/4/19]
5 – federalreserve.gov/newsevents/calendar.htm [6/7/19]
6 – reuters.com/article/us-usa-economy-instant/us-may-payrolls-rose-less-than-expected-idUSKCN1T81GG [6/7/19]