Markets “In A Nutshell” for June 6, 2022

Markets “In a Nutshell” for June 6, 2022

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average fell 0.90%, the S&P 500 was down 1.20%, and the NASDAQ fell 1.00%. Foreign stocks (MSCI EAFE) were also down, falling 3.10%.  Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 2.94%.  (Data source: Wall Street Journal)

Job Numbers Remain Strong

The May jobs report was released last week and the economy added 390,000 jobs in the month of May. The job market has been one of the strengths of the economy and is the one area that has shown no signs of a recession for the US as many people are working. Another positive from this report is that 330,000 workers entered or rejoined the workforce which should start to help slow down the demand for labor. As more people join the workforce again, wages will start to slow leading to inflation coming to more reasonable levels. The unemployment rate stayed steady at 3.6% which continues to be the lowest since the Pandemic and just above record low unemployment. As many people get back to work and wages increase, the consumer in the United States seems to still be in a strong position which should drive the economy going forward.

Market Reactions

Although the job report was good from an economic stance, markets dipped slightly on the report because of its strength. The market worries that the Fed will continue raising rates because of the strong report as it seems the economy is still going strong. A weak jobs number would have given the Fed a reason to slow rate hikes as they try to avoid sending the economy into a recession. Wage growth was another reason the Fed should continue raising rates as we saw average hourly earnings up 5.2% year over year. Wage growth ranged from 2%-2.5% from 2009 to 2020 so the current wage growth will continue to fuel inflation but could begin to slow down as we see more people entering the workforce. Until we see these numbers cool off, the Fed has no reason to slow down rate hikes which will continue to cause choppiness in the market.

Quiz:

Quiz

How many unemployed persons per job opening are there in the United States? (Scroll Down for Answer)

1.    1.2
2.    0.8
3.    0.5
4.    0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

3.   0.5.   In the United States there are about half the number of unemployed people as job openings. This shows we are still seeing high demand for workers but not enough of a supply which is causing wages to rise as companies try to entice people to work.