US Stock Market Overview – Stocks Surge With One of Biggest Weekly Rallies of the Year

Weak payroll data drives stocks higher
David Becker
U.S. Dollar Index

US stocks surged on Friday, rallying in the wake of the worse than expected US payroll report. Yields tumbled with the 10-year touching 2.05%. The yield curve continues to invert, but the weak data, has not put the Fed in play in both the June and July meetings. While most now believe the Fed will cut rates during the summer, if other data continues to be soft, they could pull the trigger earlier. Gold prices continued to move higher, dragging up miners. Fedex announce that it would no longer work with Amazon delivering packages for the online giant. Revolve was the latest IPO that saw its stock price nearly double on the first day of trading. Sectors were mixed, with Healthcare and Technolgoy leading the broader market higher, Utilities and Financial bucked the trend.

For the week the Dow Industrials were up 4.85% or nearly 1,000 points. The S&P 500 index rose by 4.41% and the Nasdaq rallied by 3.88% for the week. The best performing sector for the week in the S&P 500 index was the technology sector rising 6.32%. The worst performer was energy up 1.96%.

Payrolls Fell Shy of Expectations

Non-farm payrolls rose by 75,000 jobs in May, according to the Labor Department compared to the expectation that it would increase by 175,000. The last two months were revised lower by a combined 75,000 jobs whichput the last 3-months near 150,000 for the quarter. The 75,000 increase was one of the weakest monthly gains since the recession ended, according to the Labor Department. The unemployment rate held steady at 3.6%, a half-century low. The labor-force participation rate, or the share of Americans holding or seeking a job, clocked in at 62.8% in May, unchanged from the previous month. Private-sector workers saw average hourly earnings rise 3.1% from a year earlier, or 0.2% month over month. By comparison, in May 2018, wages climbed 2.9% annually. The broadest measure of unemployment, the U6 fell to 7.1% in May from 7.3% the prior month.

The weaker than expected data has created a goldilocks scenario as long as the President does not levy tariffs on Mexico over the weekend. Trump seems to want to use any piece of good news for political gains on either immigration or trade. If he does not bring any new issues to the table the stock market is likely to run higher.

FexEx and Amazon Split

FedEx Corp announced on Friday that it is ending its air-shipping contract with Inc. in the U.S., signaling the delivery company no longer wants to fly packages for an online retailer that is developing its own delivery network. This surprised the markets. FedEx said it won’t renew the domestic contract, which runs through June 30, for its Express unit. It will still have other shipping contracts with Amazon, including through its ground network and international services.

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