Markets “In A Nutshell” for June 10, 2024

Markets “In a Nutshell” for June 10, 2024

Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.30%, the S&P 500 was up 1.30%, and the NASDAQ rose 2.40%. Foreign stocks (MSCI EAFE) were also up, rising 1.30%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.43%.  (Data source: Wall Street Journal)

Unemployment Ticks Higher Despite More Jobs

The U.S. economy added 272,000 jobs in May, a beat from the expected 180,000 gain. Despite this number, unemployment increased from 3.9% to 4.0%. This is the highest number in 2.5 years and the largest number of people who joined the labor force but couldn’t find a job since August of 2021. Although higher unemployment is not good, there are some positives from this report as more jobs were added than expected. The jump in people looking for a job should also alleviate inflation pressure as wages will not be pushed higher due to a labor shortage as they had been. In March of 2022, there were two job openings for every unemployed person, that number is now down to 1.2. All of this data would suggest that inflation should continue to decline and may cause the Fed to cut rates before unemployment gets too high.

Central Banks Begin to Cut Rates

Although the Federal Reserve has not begun its rate-cut cycle, other central banks have. Last week the Bank of Canada (BoC) cut rates for the first time since they began raising rates. A day after that, the European Central Bank (ECB) also cut rates by 0.25%, the same amount as the Bank of Canada (BoC). These two central banks could kick off the string of rate cuts around the World as inflation pressure has eased for most nations. The Fed does meet this week but a rate cut is not expected, however, the market will be paying close attention to the updated “dot-plot” which will show how many rate cuts the Fed is projecting throughout the year. Depending on what the Fed projects, markets could move in either direction, and interest rates could see some volatility. The other important data that will move markets this week is the CPI report being released on Wednesday. This week may set the market up for summer depending on what the data looks like.

Quiz:

How many of the 11 sectors are positive so far in 2024? (Scroll Down for Answer)

1.     3
2.     5
3.     8
4.     10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer:

4.    10. The market gains have reached every sector this year except Real Estate. In comparison, 3 months before the tech bubble popped, 7 sectors were negative despite the overall market continuing to move higher.