Stocks closed slightly lower after a volatile session on Friday, as another batch of stronger-than-expected jobs data dented hopes for a Fed interest-rate decrease in September. Despite the daily loss, major stock benchmarks ended the week higher, thanks to an NVIDIA (NVDA)-led rally earlier in the week, which propelled the S&P 500 (SPX), Nasdaq Composite (NDAQ), and Nasdaq-100 (NDX) to all-time highs on Wednesday.
May’s nonfarm payroll growth strongly accelerated from April, marking the 41st consecutive month of increases, with the economy adding jobs at a rate well above pre-pandemic trends. Although the unemployment rate inched higher in May, it still marked the 30th straight month with rates at or below 4%, the longest such stretch in at least 50 years.
The apparent strength of the U.S. job market contradicts the downbeat economic reports received earlier in the week, which included a downward revision of first-quarter GDP and data pointing to weakening consumption and manufacturing. While payroll data significantly lowered chances for an imminent monetary easing, some investors also took it as sign of the diminishing possibility of stagflation – a low-growth, high-inflation economic environment.
Market participants are now awaiting the all-important CPI report, due on the same day that the Federal Reserve’s committee members gather for their policy meeting. While policymakers will certainly keep rates on hold for another month, investors will look for a possible change of tone or other clues that might shed some light on the central bank’s further steps.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» May’s CPI and CPI ex. Food and Energy (Core CPI) – Wednesday, 06/12 – The CPI report is one of the two key indicators used to measure inflation (the second one is the Personal Consumption Expenditures, or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlooks, and directly affects the Federal Reserve’s policy rate decisions.
» May’s Producer Price Index (PPI) – Thursday, 06/13 – This report reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods – directly affecting retail pricing – PPI is seen as a good pre-indicator of inflationary pressures. This makes it a leading indicator for the following month’s CPI. Thus, the PPI directly impacts the overall inflation outlook among policymakers.
» June’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 06/14 – These reports portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s Index of Inflation Expectations calculations.
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