US Jobs/Fed/SU/LULU
The U.S. stock market closed higher on Friday as investors reacted to a labour market report that showed moderating wage growth in May, 2023. The report indicated that the Federal Reserve might decide to pause a rate hike scheduled in two weeks, as the data has given the Fed breathing room.
The Nasdaq surged to a 13-month high and marked its sixth consecutive week of gains, making it the best winning streak since January 2020. The Labor Department’s report revealed that U.S. job growth accelerated in May. However, the unemployment rate also experienced a surge, reaching a seven-month high of 3.7%. This increase was attributed to more people actively looking for employment, suggesting that labor market conditions were easing. The rise in the unemployment rate, along with a larger labor pool, eased pressure on businesses to raise wages and helped decelerate inflation.
The data provided relief to investors who had expected the Federal Reserve to pause its rate-hiking cycle at the upcoming policy meeting on June 13-14. If the Fed indeed decides to pause, it would be the first time since they started their aggressive anti-inflation policy tightening over a year ago.
According reports there is a 71.3% probability of the Fed holding rates steady in two weeks, down from 79.6% on Thursday.
Another significant development that influenced market sentiment was the passage of a bill by the Senate on Thursday, lifting the U.S. government’s $31.4 trillion debt ceiling. This action avoided a catastrophic default, alleviating investor concerns. (https://veroinn.com) As a result, the CBOE volatility index, also known as Wall Street’s fear gauge, fell to its lowest level since November 2021.
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- Toronto home prices rise in May as sales jump 20%: The Greater Toronto Area witnessed an increase in home prices in May compared to April, coupled with a sharp rise in sales. This development indicates that the housing market is rebounding after facing challenges due to higher borrowing costs.
- Slower U.S. job and wage gains expected in May: Job growth in the United States is anticipated to have slowed in May, with wages also expected to moderate. This potential slowdown in economic indicators could allow the Federal Reserve to skip an interest rate hike this month, marking a departure from its previous tightening stance.
- Fed’s new projections may fill the void on interest rate guidance: Federal Reserve officials are likely to signal the end of their consecutive interest rate increases, leaving open the possibility of future rate hikes. The central bank’s messaging on interest rates has been closely scrutinized by investors, and the upcoming projections could provide clarity on the path of borrowing costs.
- Global airline summit to tackle travel boom, climate goals: Airlines are set to discuss the fast-paced recovery of the travel industry and explore ways to translate climate commitments into actionable plans. With the resumption of regular business activities, the summit aims to address both the surging demand for travel and sustainability goals.
Investors were monitoring several companies, including Lululemon Athletica Inc, which raised its annual sales and profit forecasts due to strong demand for its activewear. Suncor Energy Inc, Canada’s second-largest oil producer, plans to cut 1,500 jobs by year-end to improve its financial performance.
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