Mostly Drifting Sideways into Summer with the S&P 500

With the trading week shortened by the Memorial Day holiday, the S&P 500 (Index: SPX) mostly drifted sideways in the unofficial start of summer for the U.S. stock market.

Investors were therefore left with all the same unanswered questions they had coming into the week, although the weaker-than-expected jobs report on Friday, 4 June 2021 provided a signal the Fed is unlikely to begin pulling back its stimulative bond-buying activities until sometime later this year.

That was enough to bid stock prices up to close the week, but not to definitively resolve the questions investors have for the future. Meanwhile, the market moving headlines of the week that was reveal other factors investors were focusing upon.

Tuesday, 1 June 2021

• Signs and portents for the U.S. economy:

• Oil rises to highest since March on demand prospects
• U.S. construction spending rises moderately in April
• U.S. manufacturing gains steam; raw material, labor shortages mounting

Fed minions say labor market worse than it looks, inflation no problem, want to keep juicing home sales:

• U.S. labor market worse than it appears, Fed paper suggests
• Fed’s Brainard: Economy making ‘welcome progress,’ but still ‘far’ from goals
• Fed’s Brainard says central bank’s mortgage purchases part of broader effort to lower rates
• Fed’s Quarles: Still expects inflation jump will be transitory

Bigger inflation developing all over:

• China factory growth picks up in May but inflation pressures build -Caixin PMI

• China’s new home prices rise for third month in May – private survey

Euro zone inflation jumps past ECB target in May

Counter inflation with rate hike, Bavarian minister urges ECB

Australia’s home prices surge, adding challenges for dovish RBA

UK house prices jump by 10.9%, could speed up further- Nationwide

Factory activity racing but supply squeeze dims outlook

• S.Korea May exports at full throttle, set fastest pace in 32 years
• French manufacturing grows at fastest rate in 20 years in May – PMI
• German manufacturing hums along in May despite supply bottlenecks – PMI
• New orders drive record surge in UK manufacturing in May – PMI

S&P 500 dips, as healthcare weighs; Dow ends higher

Wednesday, 2 June 2021

• Signs and portents for the U.S. economy:

• Half of U.S. states to end Biden-backed pandemic unemployment early
• Oil hits over 1-year high on OPEC+ supply discipline, demand prospects

Fed minions say all’s good, time to stop corporate bond market support, and time to think about thinking about stopping stimulus bond buys:

• Amid hiring troubles, rising prices, U.S. growth gains speed -Fed
• Fed says it will start unwinding its corporate bond holdings
• Fed’s Harker says it’s time to ‘think about thinking about’ tapering

Bigger inflation developing all over:

• Euro zone producer prices rise more than expected in April

ECB minions to keep pouring on stimulus:

• ECB to help euro zone ‘well into’ recovery, Lagarde says
• ECB’s Weidmann drops opposition to making bond purchases greener
• Counter inflation with rate hike, Bavarian minister urges ECB

Wall St edges up ahead of key economic data, AMC soars

• Analysis: Linker bonds: inflation-proof or inflated expectations?

Thursday, 3 June 2021

• Signs and portents for the U.S. economy:

• U.S. weekly jobless claims fall below 400,000; private payrolls rise solidly
• U.S. service sector index at record high in May; input costs soar – ISM survey
• Oil steady after sharp rise on improved demand picture
• Record-high number of U.S. small businesses can’t fill job openings – NFIB

Fed minions say they’ll keep juicing U.S. economy, even though its forcing rates to record lows. Also say banks are A-OK:

• Fed’s policies to support ‘robust’ economic recovery: Clarida
• NY Fed’s Williams says now not the time to take action on tapering
• Analysis: A ‘tsunami’ of cash is driving rates ever lower. What will the Fed do?
• Fed’s Quarles says reworked bank regulatory system performed ‘quite well’ through pandemic

Bigger inflation developing all over, but Turkey:

• Analysis-’Punk nation’: Argentina inflation soars as hazy future drives price hikes
• Turkish inflation rate drops unexpectedly to 16.59% in May

Eurozone discovers key to growth is lifting lockdown restrictions:

• Euro zone business growth soared in May as restrictions eased -PMI

S&P 500, Nasdaq dragged by tech as upbeat data fans inflation fears

Friday, 4 June 2021

• Signs and portents for the U.S. economy:

• US May payrolls rise indicates gradual economic recovery

• U.S. job growth improves; desperate employers raise wages to attract workers

U.S. factory orders fall more than expected in April

Oil hits two-year high on OPEC+ discipline, demand hopes

Fed minions list things they don’t want to do:

• Powell says Fed does not seek to set climate policy for U.S
• Fed’s Mester says further progress needed before central bank reduces support

Bigger trouble developing in the Eurozone?

• Euro zone retail sales fall more than expected in April

Tech drives Wall Street higher as jobs report calms inflation fears

Barry Ritholtz succinctly summarized the positives and negatives he found in the markets and economy news of the holiday-shortened trading week!