Weekly Market Recap: Moderating Inflation and Upcoming Payroll Reports

Market Overview

The S&P 500 concluded the week slightly lower, breaking a three-week winning streak despite encouraging inflation data that suggests potential for rate cuts later this year. The Dow Jones Industrial Average (Dow) and the Standard & Poor’s 500 Index (S&P 500) both dipped 0.08%, while the Nasdaq Composite Index (NASDAQ) edged up 0.24%. Among sectors, Energy was the best performer with a 2.68% gain, whereas Materials lagged with a 1.11% loss.

Federal Reserve Insights and Economic Roundup

The core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, increased by 0.1% in May, marking the smallest rise since November 2020. This decline pushed the year-over-year core PCE rise to 2.6%, down from 2.8% in April, the lowest level since March 2021. Despite this positive trend, a rate cut is unlikely at the July FOMC meeting but could be considered in September.

The Week Ahead

Employment data will be the primary focus, with the nonfarm payrolls report for June expected to show an increase of 188K and the unemployment rate holding at 4.0%. Additional employment insights will come from the JOLTS Job Openings and ADP Employment reports. The ISM Manufacturing and ISM Services reports will provide further economic signals. Notably, Fed Chair Powell will speak in Sintra, Portugal, and the Fed will release the June meeting minutes. The stock market will observe early closure on Wednesday and remain closed on Thursday for the July 4th holiday.