Week Ending June 3 Financial Markets Update

Despite the holiday shorten trading week, the S&P 500 Index returned -1.15% last week, marking the seventh loss in the last eight weeks for the index. Energy was the top performing sector as global energy supply/demand remains out of balance. Oil closed Friday at $118.87 per barrel, the highest price since early March just after Russia invaded Ukraine. Last week OPEC agreed to boost their production output by increasing their growth in quotas from ~430k per month to ~650k per month starting in July. Despite the ~50% hike in OPEC production growth, energy markets continued to rally as inventory draws and recovering demand outpaced supply.

Jamie Dimon, CEO of JPMorgan Chase & Co., had some candid comments last week: “Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this… However, that hurricane is right out there… we just don’t know if it’s a minor one or a superstorm… you better brace yourself.” These comments sent equities falling as he is considered one of America’s top CEO’s.

Treasury yields rose significantly over the course of the week as expectations for 50 basis point rate hikes during the next four Federal Reserve meetings increased. Investors have been looking for signs that the Fed may scale back the pace of rate hikes to only 25 basis points later in the year, however, statements from Fed officials are dashing those hopes. Treasury yields rose significantly on Tuesday and Wednesday as Fed Governor Christopher Waller said that until he sees signs that inflation is coming down he will support 50 basis point rate hikes. St. Louis Fed President James Bullard said that the Fed is “on the precipice of losing control of inflation expectations” while San Francisco Fed President Mary Daly said that the Fed should not pause until the target rate is about 2.5%. Fed Vice Chair Lael Brainard doesn’t support pausing rate hikes in September, while Cleveland Fed President Loretta Mester said that 50 basis point rate hikes are still possible in that month.
The interpretations and organizations of these ideas are the confidential thoughts of 1st & Main Investment Advisors and do not represent the opinions of BFCFSDifferent types of investments involve varying degrees of risk including market fluctuation and possible loss of principal value. There can be no assurance that any specific investment strategy will be profitable. *some content provided by First Trust Portfolios L.P.  Member SIPC and FINR

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