John Hancock: Weekly Market Recap Ended June 6

Resilient labor market

Stock indexes posted the week’s biggest daily gains on Friday after an employment report modestly exceeded expectations. The economy generated 139,000 new jobs in May, above consensus expectations of around 130,000. However, initial estimates for the previous two months’ gains were revised downward by a total of 95,000. The unemployment rate held steady at 4.2%.

Rate cut outlook

Bond market trading that followed Friday’s jobs report continued to support expectations that the U.S. Federal Reserve is unlikely to cut interest rates at its meeting ending June 18 or at a subsequent late July session. Prices in interest rate futures markets implied that most investors were expecting two quarter-point rate cuts by year end, with the first cut not expected until September, according to CME Group’s FedWatch tool.

Small-cap gain

.An index that tracks U.S. small-cap stocks outperformed its large-cap counterpart by a wide margin during the week, although small caps continued to lag larger stocks on a year-to-date basis. The small-cap index was up 3.2% for the week versus a 1.6% gain for its large-cap peer.

CPI ahead

A Consumer Price Index report scheduled for release on Wednesday will show whether a recent trend of moderating inflation extended into May despite elevated tariffs and global trade tensions. Last month’s CPI report showed an annual rate of 2.3% in April, down from 2.4% the previous month. Excluding volatile energy and food prices, core inflation was unchanged at 2.8% in April relative to March.

Source: https://www.jhinvestments.com/weekly-market-recap#market-moving-news