Week Ending June 4 Financial Markets Update

The S&P 500 Index gained 0.64% last week, closing within 3 points of its all-time closing high of 4,232.60, set just four weeks prior on May 7. The index has steadily climbed back after hitting its mid-May lows as inflation fears weighed on the index with consumer discretionary and information technology taking the biggest hits. Investors have continued to digest inflation concerns against their expectations for the equities markets. Trading was mixed last week as some of these concerns weighed on growth stocks earlier in the week. The jobs report showed the U.S. added 559K jobs for the month of May, which was much higher than the 266K the previous month, but lower than the expected 675K. This led to Friday’s rally with data conveying an improving employment picture in the U.S. recovery, but slower than expected, leading markets to assume the Federal Reserve will continue in its accommodative monetary policies.

U.S. Treasury bond yields were mixed last week. Treasury yields on the short end of the curve finished higher, while longer-term maturities finished lower during holiday-shortened week. Earlier in the week, the ISM Manufacturing and ISM Non-Manufacturing Indexes both beat consensus expectations. Most notably, manufacturing broadly expanded in May, growing slightly faster than in April. The week wrapped up with longer-dated Treasury yields falling as investors digested a weaker-than-expected jobs report.

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