Broker Check


THIS WEEK'S UPDATE

| June 01, 2022
Share |

THE WEEK ON WALL STREET

Stocks posted solid gains for the week, buoyed by the release of Fed meeting

minutes and upbeat earnings from mid-size and discount retailers. The Dow Jones

Industrial Average jumped 6.24%, while the Standard & Poor’s 500 advanced 6.58%.

The Nasdaq Composite index gained 6.84% for the week. The MSCI EAFE index,

which tracks developed overseas stock markets, rose 2.09%.

A GOOD WEEK

The stock market staged a broad rally last week, ignited by the release of minutes from

the May’s Federal Open Market Committee (FOMC) meeting. The meeting notes eased

concerns that the Fed might pursue a more aggressive monetary tightening stance than

the Street had anticipated. Investor sentiment rose owing to solid earnings and

encouraging guidance from several mid-size and discount retailers, which eased concerns

about the health of the American consumer. A smaller rise in the personal consumption

expenditures price index, the Fed’s preferred measure of inflation, triggered a strong rally

on Friday. The powerful move ended seven straight weeks of stock losses.

FED MINUTES

The minutes from May’s FOMC meeting were released last week. They confirmed the

likelihood of at least two successive 50 basis point interest rate hikes. The minutes also

indicated they might need to raise rates to a level that acts to restrict economic growth,

something that Fed Chair Jerome Powell acknowledged might be a painful process. Not

all Fed members are fully committed to the more aggressive rate hikes. Last week, Atlanta

Fed president Raphael Bostic wrote that a pause in rate increases in September might be

appropriate. He joined other members in suggesting that economic conditions may warrant

reconsideration of additional rate hikes beyond those already signaled by Powell.


THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Consumer Confidence.

Wednesday: Institute for Supply Management (ISM) Manufacturing Index. Jobs Openings

and Labor Turnover Survey (JOLTS).

Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Factory

Orders.

Friday: Employment Situation. Institute for Supply Management (ISM) Services Index.

THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS

Tuesday: Salesforce, Inc. (CRM), HP, Inc. (HPQ).

Wednesday: MongoDB, Inc. (MDB).

Thursday: Broadcom, Inc. (AVGO), Hormel Foods Corporation (HRL), DocuSign (DOCU),

CrowdStrike (CRWD).

FINAL THOUGHTS

Going into last week stocks were very oversold. A little bounce was inevitable. The fundamentals

behind the bounce were inflation and interest rates. Data supporting the idea that we may be at

peak inflation got markets excited that rates may not need to go as high as once thought to slow

the economy. The facts… the jury is still out and we’ll need more than a week’s worth of data to

identify a trend, but it’s a start and we’ll take it. Inflation will be a hot topic as we ready for

mid-term elections. But, don't think the government will waste a crisis. There'll be much political

posturing and grandstanding and promises made. And, like most government action it will be

reactive and behind the curve and promises broken.

Stay tuned…

Share |