• Markets drop as strong jobs data shift rate expectations - Stocks and bonds moved sharply lower today after stronger-than-expected jobs reports in Canada and the U.S. pushed rate expectations and bond yields higher. Technology weakness from the prior session carried over, with the Nasdaq 100 falling 4% and the semiconductor index declining nearly 9%. Overseas, South Korea’s equity index, which has doubled this year and includes Samsung as a major constituent, closed down 5.5%. Defensive areas of the market held up better, with consumer staples and other defensive sectors finishing higher and providing a partial offset to the tech-led weakness. The Dow was more resilient, posting only a modest weekly loss, while the S&P 500’s historic nine-week winning streak came to an end. Elsewhere, oil prices fell 3% on the day, while the 10-year GoC yield rose to 3.48%.
   
• Blowout U.S. and Canada job reports push rates higher - Canada’s economy added 87,800 jobs in May, far exceeding expectations of 10,000, while the unemployment rate declined to 6.6% from 6.9%. The strength was driven by a surge in full-time employment and was broad-based, led by gains in construction and information, culture & recreation. In our view, today’s data provides reassurance that, despite two consecutive quarters of contraction, the Canadian economy is not on the verge of a recession. However, we think the decline in unemployment may also strengthen the case for the Bank of Canada to resume rate hikes, particularly if the energy price shock persists.
  
  South of the border, today's data revealed similar trends. The U.S. economy added 172,000 jobs in May, well above expectations of 90,000, while the unemployment rate held steady at 4.3%. Revisions to the prior two months were also positive, adding a combined 93,000 jobs. Job gains were broad-based, led by leisure and hospitality and healthcare. Taken together, today’s report helps reinforce other indicators suggesting the labour market has strengthened this year after a weak 2025. While this acceleration is positive for the economy, it also makes less of a case for the Fed to cut interest rates. Markets reacted accordingly, with stocks extending their pullback and bond yields moving higher as investors increasingly price in the possibility of one additional Fed rate hike by year-end. Encouragingly, there is still no evidence of a wage-price spiral. Average hourly earnings rose 3.4%, in line with expectations and down from the prior month’s 3.6% pace. In our view, the Fed is likely to remove its easing bias at its meeting in two weeks, while maintaining a patient stance as it assesses whether inflation peaks this quarter before responding to any energy-driven price pressures.
   
• Market leadership broadens as tech rally goes in reverse - After a strong multi-week run in the technology sector, led by AI-related companies, investors have turned more cautious over the past two days. The semiconductor index, which had rallied roughly 50% since April, is now pulling back after Broadcom’s chip sales outlook fell short of elevated expectations, triggering profit-taking in the U.S. and global markets. Encouragingly, as tech takes a breather to digest recent gains, other sectors have begun to lead, resulting in broader market participation. Before today's drop, both the Dow Jones Industrial Average and the equal-weight S&P 500 reached fresh highs, reflecting this shift. We view this rotation as a healthy development that supports the durability of the current bull market. We expect this trend to continue in the near term, particularly if progress is made toward reopening the Strait of Hormuz, which could help ease pressure on oil prices and bond yields.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.} 

• Markets close higher as sector performance broadens - Equity markets finished higher on Thursday, with the TSX and Dow Jones Industrial Average reaching record highs. Strength in health care, financials and communication services offset weakness in technology stocks, where semiconductor manufacturer Broadcom weighed on the sector. Broadcom shares fell about 13% after the company reported fiscal second-quarter revenue that came in slightly below expectations and left its AI chip outlook unchanged. The disappointment appeared to spill over into other semiconductor and AI-related companies. Bond yields declined, with the 10-year Government of Canada yield at 3.43% and the 10-year U.S. Treasury yield at 4.47%. Internationally, Asian markets finished mostly lower overnight, while Europe advanced. In energy markets, WTI oil prices pulled back, likely reflecting cautious optimism around U.S.-Iran diplomatic talks and the potential for reduced geopolitical risk. Meanwhile, the U.S. dollar was modestly lower against major currencies but has remained largely rangebound recently.
   
• Jobless claims edge higher but remain consistent with a stable labour market – U.S. initial jobless claims rose to 225,000 last week, above the consensus estimate of 211,000. While the increase bears watching, the reading remains low by historical standards and well below the 20-year average of roughly 365,000. Continuing claims, which reflect the total number of people receiving benefits, declined to 1.78 million, suggesting displaced workers are finding new employment. Taken together, the data remain broadly consistent with other recent indicators pointing to a stable labour market. Canada's employment report – to be released tomorrow - should provide additional insight, with consensus estimates pointing to 12,500 jobs added in May and the unemployment rate remaining unchanged at 6.9%. The U.S. jobs report will also be released Friday, expected to show 105,000 job gains in May, enough to keep the unemployment rate steady at 4.3%.
   
• Productivity slows, but labour costs contained – Nonfarm business sector productivity, which measures output per hour worked, was revised down to a 0.3% annualized gain for the first quarter of 2026. This compares to expectations to remain unchanged from the preliminary reading of 0.8%. While productivity slowed in the first quarter, we believe AI adoption could help drive improvements over time. Hourly compensation rose 2.1% year-over-year, providing growing disposable income that should help support consumer spending and the broader economy. Unit labour costs, which measure wage gains adjusted for changes in productivity, increased 1.8% annualized, below expectations for a 2.3% gain. In our view, the softer unit labour cost reading is encouraging from an inflation perspective, as it suggests wage-related cost pressures remain contained.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks in risk-off mode —U.S. and Canadian equity markets were lower on Wednesday after a nine-day winning streak for the S&P 500. The S&P fell about 0.7%, while the Canadian TSX was down about 1.0%. This comes as oil prices moved higher and U.S. bond yields climbed as well, dampening market sentiment. From a sector-leadership perspective, in the S&P 500, energy and consumer staples led the gains, while the technology and financials sectors lagged. U.S. small-cap stocks also underperformed on Wednesday, as uncertainty around U.S.-Iran negotiations and elevated oil prices likely weighed on the outlook for smaller companies. Overall, after a nice rally in U.S. and Canadian equities, we would expect some periods of volatility as investors digest recent gains. However, keep in mind that, historically, the period after U.S. midterm elections tends to be favourable for equity investors.
   
• Inflation remains uncomfortably elevated in Q1 — In last week's first-quarter U.S. GDP data, inflation saw a notable move higher. The personal spending deflator, the Fed's preferred measure of inflation, spiked to 3.5% over the first quarter as a whole. Worse, monthly data showed that this jumped even further in April, to 3.8%, and we expect another nudge higher in May. Some of this is an oil story, as gas prices push inflation higher. However, excluding energy prices, inflation was running at 3.3% in April, well above the Fed's target for 2%. Scratching further beneath the surface, core goods prices are running unusually hot at 2.8%, while core services inflation remains elevated at 3.5%. These data put the Fed in a tough spot, and it is interesting to see markets continue to price a hike within the next year, even as risk around oil prices seemingly ease. We think the bar for raising rates remains high, and we don't expect tighter policy unless we see signs of a further pick-up in price growth, particularly on the core side. Instead, we expect the central bank to stay on hold absent any growth scare. Bottom line, in our view: While bond yields have fallen from their highs, further material progress will likely be challenging in an environment of elevated inflation and solid growth.
   
• U.S. employment data takes centre stage — Labour-market data will be in focus for investors this week, beginning with Tuesday's JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labour, in our view. The ADP private employment report for May also pointed to steady gains, with 122,000 jobs added, versus forecasts for 120,000. The main event will be Friday’s nonfarm-payrolls and unemployment-rate data for May. Economists expect the recent trend of steady job growth and limited layoffs to have persisted, with nonfarm payrolls projected to rise by 100,000 and the unemployment rate holding at 4.3%. So far in 2026, job growth has stabilized, with payrolls averaging monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of firing also remain limited. The unemployment rate has held steady at 4.3% for two consecutive months and has been below 5% since 2021. Other measures of layoffs are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000. We continue to view 2026 as a year of modest nonfarm-payroll growth—likely in the 50,000 to 100,000 range per month—alongside restrained layoffs, keeping the unemployment rate relatively stable. The key takeaway, in our view, is that steady labour-market conditions should continue to support healthy consumer spending and broader economic activity through the remainder of the year.

Mona Mahajan;
Investment Strategy

^{Source for all data: FactSet.} 

• Stocks close mostly higher with key labour-market data on the horizon — North American equity markets finished mostly higher on Tuesday, as investors focused on a busy week of labour-market data. U.S. JOLTS job openings for April came in well above expectations, rising to 7.6 million — the highest level since May 2024 — and signaling steady demand for labour, in our view. Attention will then turn to Friday’s domestic labour-force survey and U.S. employment report, which will provide a read on employment growth and the unemployment rate. The TSX outperformed, gaining more than 1% on the day, supported by strength in the materials and energy sectors. In the U.S., most S&P 500 sectors finished higher; however, communication services was the notable laggard, weighed down by shares of Alphabet following the company’s announcement that it plans to raise $80 billion through an equity offering to support AI-related investments. In bond markets, yields were little changed, with the 10-year GoC yield closing at 3.41% and the 10-year U.S. Treasury yield at 4.45%. Oil prices edged higher, with WTI crude closing around $94 per barrel, as uncertainty remains around the path forward for U.S.-Iran negotiations.
   
• Stocks rallied through May—what does history suggest lies ahead? — U.S. equities posted strong gains over the first five months of 2026, as resilient economic data and solid corporate profit growth outweighed the headwinds from higher oil prices and geopolitical uncertainty. The S&P 500 Price Index rose 10.7% through May, marking the strongest start to a year since 2021. Since 1970, there have been 14 instances in which the S&P 500 gained 10% or more over the first five months of the year.* In those cases, the index delivered an average return of 7.2% over the remainder of the year, with positive returns in 11 of 14 instances (79%)*. Looking at the five most recent occurrences (2024, 2021, 2013, 1998, and 1997), equities went on to gain an average of 13.1%, with returns positive in each case from June through December.* While there's no guarantee history will repeat itself in 2026, we believe a solid fundamental backdrop—supported by strong profit growth, steady economic activity, and stable labour-market conditions—provides a constructive environment for equities over the remainder of the year.
   
• Employment data takes centre stage — Labour-market data will be in focus for investors this week, beginning with today's U.S. JOLTS job openings release for April. Job openings rose to 7.6 million— the highest level since May 2024 — and signaling steady demand for labour, in our view. The ADP private employment report for May follows tomorrow, with the main event coming Friday in the form of Canada’s labour-force survey and U.S. nonfarm-payrolls data. In Canada, economists expect employment to increase by 10,000 in May, following an 18,000 decline in April, while the unemployment rate is projected to hold at 6.9%. Year-to-date, employment has contracted by an average of 28,000 per month, likely reflecting ongoing headwinds from protectionist U.S. trade policies and uncertainty surrounding CUSMA negotiations. South of the border, labour-market conditions have been more resilient. U.S. nonfarm payrolls are expected to rise by 100,000 in May, with the unemployment rate holding steady at 4.3%. So far in 2026, payrolls have averaged monthly gains of 76,000—an improvement from roughly 10,000 per month in 2025. Signs of layoffs also remain limited. The U.S. unemployment rate has held at 4.3% for two consecutive months and has remained below 5% since 2021. Other measures of labour-market churn are similarly contained, with initial jobless claims averaging 211,000 this year versus a 30-year average above 300,000.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data not cited: FactSet. 
Source for data cited: *FactSet, Edward Jones. S&P 500 Price Index.}

• Stocks close mostly higher despite geopolitical uncertainty — The TSX was little changed, while U.S. markets moved broadly higher on Monday, despite ongoing uncertainty surrounding the path forward for U.S.–Iran negotiations, as well as reports that the U.S. struck Iranian radar and drone sites over the weekend. Despite the geopolitical flare-up, the TSX finished the day roughly flat, supported by strength in the energy and technology sectors. In the U.S., a rally in technology shares—driven by NVIDIA’s unveiling of a new semiconductor chip designed for personal laptops—pushed all three major indices higher. Outside of technology, energy was the only other S&P 500 sector to finish in positive territory on Monday. Overseas, European markets were mostly lower, while Asian equities moved higher overnight, led by South Korea’s KOSPI Index, which gained more than 3% amid continued strength in global technology shares. Oil prices also edged higher, with WTI crude rising to $92 per barrel. Bond yields increased alongside geopolitical uncertainty, with the 10-year GoC yield rising to 3.44% and the 10-year U.S. Treasury yield climbing to 4.46%.
   
• Markets are back at all-time highs. Can the rally continue? — Equity markets have staged an impressive rebound following the March pullback, with the S&P 500 gaining roughly 20%, including dividends, since March 30, while the technology-heavy Nasdaq has advanced nearly 30%. Strong technology earnings and a de-escalation in the war with Iran have been the primary catalysts behind the rally, supporting investor risk appetite over the past two months. Historical seasonality trends suggest the momentum could continue into June. Since 1970, the S&P 500 has generated an average June return of 0.5%, with positive returns occurring 61% of the time.* While those results are not meaningfully stronger than the average month, seasonal trends have been particularly favorable in recent years. Since 2015, the index has gained an average of 1.5% in June, with positive returns in 82% of those years.* That momentum has also tended to carry into July, as the S&P 500 has averaged a 3.2% gain and posted positive returns in every July since 2015.* While there's no promise history will repeat itself this year, we continue to believe the fundamental backdrop for equities remains supportive. Steady economic activity and resilient earnings growth should continue to provide a constructive environment for equity markets, in our view.
   
• May performance recap — Equity markets built on April’s strong momentum in May, with the TSX gaining 2.5% and the S&P 500 gaining 6.5% last month in Canadian dollar terms. Investor sentiment was supported by strong corporate earnings growth and expectations for a diplomatic resolution to the war in Iran, which helped drive oil prices lower during the month. However, strength in equities was not limited to North America. Emerging-market equities gained 11%, led by technology-heavy regions such as Taiwan and Korea, which also continue to benefit from ongoing AI-driven semiconductor spending. Overseas developed large-cap stocks — primarily companies in Europe and Japan — also moved higher, gaining more than 4.4% for the month and benefiting from lower oil prices. Despite the volatility experienced in March and continued geopolitical uncertainty, each of our recommended equity asset classes has returned more than 9% year to date. Given the sharp rebound from the March lows, we believe a period of consolidation would be normal. Even so, the fundamental backdrop for equities remains constructive in our view, supported by strong corporate profit growth and healthy economic activity.

Brock Weimer, CFA;
Investment Strategy

^{Source: FactSet. 
*FactSet, Edward Jones. S&P 500 Price Index.}