Mid-Week Market Minute 06.01.22

Stocks were mostly higher this week as Wall Street turned the page on another volatile month. The S&P 500 edged out a positive total return of about 0.20% in May after briefly dipping into bear market territory. Stocks in the Energy, Financials, Utilities, and Materials sectors led the way. Real Estate and Consumer Discretionary were the laggards, as higher interest rates and slowing economic growth put downward pressure on these names. Overseas, the international developed index was higher by about 0.55%, while emerging markets gained about 0.50%. Following a dismal start to the year, bonds finished the month in positive territory, as well. The Bloomberg Aggregate index gained about 0.64% in total return, while the Bloomberg Municipal index rallied nearly 1.50%.

As we enter June, investors will continue to focus their attention on the Federal Reserve’s fight against inflation. Starting this week, the Federal Reserve will begin to reduce their $9 trillion balance sheet. The monthly runoff will be capped at around $47.5 billion until September and will be raised to $95 billion per month thereafter. Details of the Fed’s Beige Book is set for release this afternoon, where market participants will get a glimpse into the economic conditions in each of the Fed’s 12 districts.

On the data front, MBA mortgage applications fell 2.3% last week after declining 1.2% in the prior period. Separately, the S&P CoreLogic Case-Shiller 20-city index showed home prices spiked 19.8% year-over-year.  Meanwhile, the Conference Board’s gauge of consumer confidence fell to 106.4 in May from last month’s print of 1.8.6. On Friday, investors will take a close look at the employment report for a closer look at the employment situation. In addition to new jobs created (325,000 consensus) and the unemployment rate (expected to fall to 3.5%), the Fed will be laser-focused on wage pressures, as measured through average hourly earnings.

Source: GSAM, CNBC, JPMorgan

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