Weekly market wrap

Last week closed the market's books on May and opened the curtain on the latest reading on the jobs market. The former was benign, with the TSX and S&P 500 logging small moves on the month1. The latter, however, exhibited more movement, with the underpinnings of the labour market beginning to reveal a more mixed picture, including some signs of softening. The domestic May employment report will be released on June 9, so this piece will focus on the details of last week's U.S. employment report.
Context is important here, as the labour market is still in very healthy shape, with unemployment only slightly up from this year's low of 3.4%, a rate you'd have to go back to 1953 to beat1,2. But Friday's release of the May U.S. employment figures signals to us that the jobs market will become a slightly softer wind at the economy's back as we advance. Here are three takeaways from the latest employment data:
Job growth picked up in May, though we expect it to gradually slow this year.
Image Description: This chart illustrates monthly change in U.S. payrolls. After a downward trend in recent months, May's payroll report showed a reacceleration in payroll gains.
Image Description: This chart illustrates monthly change in U.S. payrolls. After a downward trend in recent months, May's payroll report showed a reacceleration in payroll gains.
The rate of workers quitting their jobs is falling, signaling less availability and slower wage gains.
Image Description: This chart illustrates monthly job quit rates in the U.S. The jobs quit rate has fallen in recent months from highs in 2022.
Image Description: This chart illustrates monthly job quit rates in the U.S. The jobs quit rate has fallen in recent months from highs in 2022.
Moderating wage growth ahead bodes well for further declines in inflation.
Image Description: This chart illustrates year-over-year change in U.S. hourly wages and the consumer price index (excluding food and energy). Both have been trending downward in recent months.
Image Description: This chart illustrates year-over-year change in U.S. hourly wages and the consumer price index (excluding food and energy). Both have been trending downward in recent months.
The unemployment rate remains historically low, which has traditionally been supportive of market returns.
Image Description: This chart illustrates monthly U.S. unemployment rate and states that the average S&P 500 annualized return when the unemployment rate was below 4.5% is approximately 6%.
Image Description: This chart illustrates monthly U.S. unemployment rate and states that the average S&P 500 annualized return when the unemployment rate was below 4.5% is approximately 6%.
Craig Fehr, CFA
Investment Strategist
Sources: 1. Factset 2. Edward Jones
INDEX | CLOSE | WEEK | YTD |
---|---|---|---|
TSX | 20,002 | 0.4% | 3.2% |
S&P 500 Index | 4,282 | 1.8% | 11.5% |
MSCI EAFE * | 2,097.69 | 0.8% | 7.9% |
Canada Investment Grade Bonds | 1.2% | 1.2% | |
10-yr GoC Yield | 3.23% | -0.1% | -0.1% |
Oil ($/bbl) | $71.94 | -1.0% | -10.4% |
Canadian/USD Exchange | $0.74 | 1.5% | 0.8% |
Source: Factset. 06/02/2023. Bonds represented by the S&P Canada Agg index. Past performance does not guarantee future results. * Source: Morningstar, 06/05/2023.
Important economic data coming out this week includes the Bank of Canada interest rate announcement and labor market data.
Craig Fehr is a principal and the leader of investment strategy for Edward Jones. Craig is responsible for analyzing and interpreting economic trends and market conditions, along with constructing investment strategies and asset allocation guidance designed to help investors reach their financial goals.
He has been featured in Barron’s, The Wall Street Journal, the Financial Times, SmartMoney magazine, MarketWatch, the Financial Post, Yahoo! Finance, Bloomberg News, Reuters, CNBC and Investment Executive TV.
Craig holds a master's degree in finance from Harvard University, an MBA with an emphasis in economics from Saint Louis University and a graduate certificate in economics from Harvard.
The Weekly Market Update is published every Friday, after market close.
This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
Past performance does not guarantee future results.
Market indexes are unmanaged and cannot be invested into directly and are not meant to depict an actual investment.
Diversification does not guarantee a profit or protect against loss.
Systematic investing does not guarantee a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining.
Dividends may be increased, decreased or eliminated at any time without notice.
Special risks are inherent to international investing, including those related to currency fluctuations and foreign political and economic events.