• Markets close mixed after sharp sell-off on Friday- Stock markets in the U.S. and Canada were mixed on Monday after selling off sharply on Friday. The technology-heavy Nasdaq was higher, up over 0.8%, after falling over 4% on Friday. The S&P 500 was up modestly, up around 0.3%, the Canadian TSX was up about 0.16%, while the Dow Jones was lower by around 0.16%. The semiconductor sub-index, which fell by over 10% on Friday, led the rebound on Monday. This comes as Iran announced it was halting its strikes against Israel, although uncertainty around the ceasefire remains elevated. WTI oil prices, which had risen as high as $95 on Monday morning, have settled in the low $91 range, still higher by nearly 60% this year. Meanwhile, U.S. Treasury bond yields rose again modestly, after rising on Friday on the back of a stronger-than-expected U.S. jobs report. Overall, after a strong move higher in the broader markets and especially parts of the technology and semiconductor sectors, we believe some period of consolidation or market volatility may be likely. However, we don't yet see any pullbacks morphing into a deep or prolonged bear market, and thus investors can use volatility to seek opportunities for diversifying portfolios or adding quality investments at better prices, based on their investment objectives and risk tolerance.
   
• Inflation in focus this week – The U.S. consumer price index (CPI) inflation report for May will be out on Wednesday this week. Forecasts are calling for headline inflation of 4.2% year-over-year, above last month's 3.8%. A reading over 4.0% would be the highest since April 2023. Core inflation is expected to be 2.9%, also above last month's 2.8% reading and at the highest level since September 2025. In our view, headline inflation is likely to remain above 4% for the next several months, given the sharp rise in oil prices, but may start to fade heading into year-end and 2027. Nonetheless, from the perspective of the Federal Reserve, higher inflation and a rebounding labour market make the case for a rate cut unlikely. In our view, the Fed remains firmly on hold for the remainder of the year, barring any outsized shocks to the economy.
   
• 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 in recent days. The semiconductor index, which had rallied roughly 50% since April, is now cooling 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 Friday'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 the consumer and labour market continue to remain resilient, which helps support positive corporate earnings trends, and if progress is made toward reopening the Strait of Hormuz, which could help ease pressure on oil prices and bond yields.

Mona Mahajan;
Investment Strategy

^{Source for all data: Bloomberg.} 

• 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.}