The S&P 500 (^GSPC) is now roughly 2% from reaching a fresh all-time high.
Stocks ended last week on a high note as a broad-based rally following Friday’s May jobs report clinched weekly gains for all three major indexes.
The Nasdaq Composite (^IXIC) rose more than 2.3%, while the S&P 500 popped about 1.6% and the Dow Jones Industrial Average (^DJI) rose above 1%.
Updates on consumer and wholesale inflation for the month of May will headline the week ahead. The first reading of the University of Michigan’s consumer sentiment survey for the month is also due for release at the end of the week.
In corporate news, earnings from GameStop (GME), Oracle (ORCL), and Adobe (ADBE) highlight a sparse week of planned quarterly releases. Apple’s (AAPL) Worldwide Developers Conference will also be in focus.
The wait continues
On Friday, the May jobs report showed the US labor market added 139,000 jobs in the month, while the unemployment rate held flat at 4.2%. The data largely cooled fears that the US economy is rapidly deteriorating. Economists mostly said the report would prompt the Federal Reserve to hold interest rates steady when it announces its next policy decision on June 18.
Still, some economists continue to highlight cracks emerging underneath the surface. Renaissance Macro head of economics Neil Dutta noted that Friday’s report contained significant downward revisions to the prior month’s payroll additions, a falling employment rate for workers aged 25 to 54, and an increasing unemployment rate on the margin.
Unrounded, the unemployment rate increased to 4.244% in May from 4.187% in April.
“The Fed and the markets appear to be looking at labor market conditions at a surface level while ignoring some obvious signs of weakness under the surface,” Dutta wrote. “The pressure will keep building the longer the Fed waits.”
Trump vs. Musk
The CEO of one of the world’s largest companies and President Trump are full-on feuding.
After days of Tesla (TSLA) CEO Elon Musk bashing Trump’s tax bill, the president responded in scathing fashion on Thursday.
Trump wrote in a Truth Social post that the easiest way to save money in the budget is to “terminate Elon’s Governmental Subsidies and Contracts.”
He added in a separate post, “Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!”
The spat drove Tesla stock down more than 14% in its worst single-day market cap loss in history. The decline helped drag down both the S&P 500 and Nasdaq on Thursday. On Friday, Tesla stock rallied modestly, rising almost 4%.
But investors shouldn’t consider the fallout to be over.
“As a shareholder, [this] couldn’t be worse for Elon and his properties and his investments and the future that he has because Trump’s got another three and a half years,” Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management, told Yahoo Finance. “Elon, in his ego and sort of weird haze of reality, actually thinks he’s more powerful than Trump. This is now a showdown.”
Price check
After several encouraging prints in a row, the May Consumer Price Index (CPI) is expected to show price increases accelerated amid tariff uncertainty. Wall Street economists expect headline inflation rose 2.5% annually in May, an increase from the 2.3% seen in April. April’s report had shown the slowest annual price increase since February 2021.
On a “core” basis, which strips out food and energy prices, CPI is expected to have risen 2.9% over the last year in May, up from the 2.8% increase seen in April. Monthly core price increases are expected to clock in at 0.3%, above the 0.2% seen the month prior.
“Tariffs should have a clearer impact on goods, but seasonal factors on autos and modest services will keep a lid on core [price increases],” Bank of America US economist Stephen Juneau wrote in a note to clients.
Uncertainty abates
In April, negative tariff headlines regularly rattled markets. Lately, that’s been the case to a lesser degree. This was on display Wednesday, when stocks managed to close higher despite an escalation of trade tensions.
Barclays head of US equity strategy Venu Krishna told Yahoo Finance that the recent market action has been a part of the “broad realization” that the extreme levels of tariffs can’t be taken at face value.
Krishna and other strategists have also pointed out that the peak level of tariff uncertainty, which came when Trump increased the effective US tariff rate to its highest level in more than a decade on April 2, has already passed.
Morgan Stanley chief investment officer Mike Wilson showed this by looking at how market volatility, as measured by the CBOE Volatility Index, or VIX, has moved lower in tandem with Bloomberg’s US Trade Policy Uncertainty Index, which analyzes news articles for mentions of trade policy and uncertainty.
“The bottom line is that while uncertainty remains high around the eventual tariff outcome, the rate of change on policy headwinds has become much less onerous.” Wilson wrote. “This has reduced recession risk and is giving corporates and consumers more confidence in the forward looking outlook.”
Weekly calendar
Monday
Economic data: New York Fed one-year inflation expectations, May (3.63% previously); Wholesale trade sales month-over-month, April (+0.3% expected, +0.6% prior)
Earnings: Casey’s (CASY)
Tuesday
Economic data: NFIB small business optimism, May (95.9 expected, 95.8 prior)
Earnings: Academy Sports and Outdoors (ASO), Dave & Buster’s (PLAY), GameStop (GME), The J.M. Smucker Company (SJM), Stitch Fix (SFIX)
Wednesday
Economic data: Consumer Price Index, month over month, May (+0.2% expected, +0.2% previously); Core CPI, month over month, May (+0.3% expected, +0.2% previously); CPI, year over year, May (+2.5% expected, +2.3% previously); Core CPI, year over year, May (+2.9% expected, +2.8% previously); Real average hourly earnings, year over year, May (+1.4% previously); MBA Mortgage Applications, week ending June 6 (-3.9% previously)
Earnings: Chewy (CHWY), Oracle (ORCL), Vera Bradley (VRA), Victoria’s Secret (VSCO)
Thursday
Economic data: Producer Price Index, month-over-month, May (+0.3% expected, -0.5% previously); PPI, year over year, May (+2.4%); Core PPI month-over-month, May (+0.4% expected, -0.4% prior); Core PPI year-over-year, May (+3.1%); Initial jobless claims, week ending June 7 (247,000 previously); Continuing claims, week ending May 31 (1.904 million prior)
Earnings: Adobe (ADBE), Lovesac (LOVE), RH (RH)
Friday
Economic data: University of Michigan Consumer Sentiment, June preliminary (52 expected, 52.2 prior)
Earnings: No notable earnings releases.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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