Weekly Market Recap: Tech Struggles, Treasury Yields Rise, and Consumer Sentiment Softens

Market Overview

U.S. equities struggled with higher yields and mixed earnings results, ending a five-week win streak for the S&P 500 and Nasdaq Composite. The S&P 500 Index fell about 1.3% in the holiday-shortened week. Earnings disappointments and profit-taking hit the technology sector, with Salesforce (CRM) dropping about 15%, while NVIDIA (NVDA) saw gains. The Russell 1000 Value Index outperformed the growth side, aided by strength in energy, real estate, and utilities. International developed markets fell less than U.S. equities, with Japan and Switzerland seeing gains, while declines in China and technology-oriented markets in South Korea and Taiwan pulled the emerging markets index down about 3%.

Federal Reserve Insights and Economic Roundup

The Bloomberg Aggregate Bond Index was slightly lower as Treasury yields were mixed, with intermediate to longer-maturity yields rising slightly. Tepid demand for over $180 billion in Treasury auctions signaled that yields may need to stay elevated to attract buyers. The ongoing success of Treasury auctions will influence prices amid large budget deficits and potential volatility.

Consumer sentiment showed fewer job opportunities, with the highest number of consumers since early 2021 indicating jobs are not plentiful. Real final sales to domestic purchasers in Q1 were revised down, reflecting weaker momentum, but business investment in technology was a positive note. Inflation measures were revised downward, suggesting a potential reprieve for markets.

The Week Ahead

Key economic data to watch in the upcoming week includes:

Monday: Manufacturing PMI (May final), Construction Spending (Apr), ISM Manufacturing (May)

Tuesday: JOLTS Job Openings (Apr), Factory Orders (Apr), Durable Goods Orders (Apr final)

Wednesday: MBA Mortgage Applications (May 31), ADP Employment Change (May), Services PMI (May final), ISM Services (May)

Thursday: Challenger Job Cuts (May), Nonfarm Productivity (Q1 final), Trade Balance (Apr), Initial Claims (June 1)

Friday: Nonfarm Payrolls (May), Unemployment Rate (May), Wholesale Inventories (Apr final), Consumer Credit (Apr)