As is typical on a “Jobs Friday,” markets are trading all over the map in the wake of today’s employment report. But as I write, equities are higher along with crude oil. Gold and silver are flattish along with the dollar, while Treasuries are weaker.
On the news front...
The ADP employment report came in stronger than expected yesterday. As for the “official” Labor Department data, it was more of a mixed bag. The economy created 339,000 jobs in May, easily beating the 190,000 gain that was forecast.
BUT unemployment spiked to 3.7%, compared with the 3.5% that was expected. Average hourly earnings rose an in-line 0.3% on the month, while the yearly increase slowed to 4.3% from 4.4% a month prior. Federal Reserve officials have been wrestling with whether to hike the funds rate again at their June 13-14 meeting. This data likely tilts the debate a BIT towards the “Let’s hike” camp.
Meanwhile, that’s that for the debt ceiling drama! The Senate followed the House in approving the spending bill agreed upon by President Joe Biden and House Speaker Kevin McCarthy. No more hurdles remain after the 63-36 vote, and Biden will sign the legislation soon. I explained yesterday why none of this was – or should have been – a surprise in this piece.
Did you hear how gobs of money is pouring into Artificial Intelligence (AI) stocks? And technology names in general? I’m sure. But now we have some actual numbers, courtesy of Bank of America. The firm’s strategist Michael Hartnett said a whopping $8.5 billion flooded into tech funds in the last week of May.
That’s an all-time high for such flows. It’s one reason why the Nasdaq 100 Index is now trading at a record high relative to the Russell 2000 Index. Or in other words, “Big Tech” names are beating the pants off of hundreds upon hundreds of regular ol’ small cap stocks.
Of course, it’s not JUST tech stocks that are taking off. Yoga pant retailer Lululemon Athletica (LULU) is also on fire after crushing sales and profit forecasts. Sales in both North America and China were strong, while better inventory control helped pad profit.
