What to watch in the markets, week beginning May 31
US stocks’ rebound last week cut a seven-week losing streak for the S&P 500 and Nasdaq, while the Dow posted gains for the first time in eight weeks.
These gains ended the longest streak of weekly losses in more than a decade for the S&P 500 after the index reached bear market territory. The three major indices posted weekly gains of at least 5%, buoyed by a batch of upbeat economic data and more positive earnings reports from the retail sector.
The S&P 500 has only cut a losing streak of this length three times in history – 1970, 1980 and 2001 – and the index has twice risen by 33% over the next 12 months, According to data from LPL Financial.
“Of course, to keep things honest, [performance after] The [decline] LBL’s Ryan Detrick noted that 2001 was a rough slide. Over the next six months, the S&P 500 fell another 14%.
Wall Street is closed on Monday in observance of the Memorial Day holiday.
Investors are expected to benefit from a series of key employment data in the last shortened week of the May holiday when trading resumes on Tuesday.
The closely watched jobs report from the Labor Department will provide a snapshot of employment in the US as concerns grow over uncertainty in the economic outlook. Jobs data for May is expected to reflect a slowdown in employment from the previous hot reading of 428,00 jobs, as economists look for 325,000 jobs added or created last month, according to Bloomberg estimates.
With a number of big-name companies reporting inflation-related earnings pressures and seeing their shares plummet in recent weeks, market participants’ caution has heightened companies’ ability to lay off workers and pause hiring to cut costs.
On the employment front, investors also have the ADP’s private payroll report – a precursor to the government’s flagship jobs report – the Department of Labor’s Employment and Turnover Survey, or JOLTS, and weekly unemployment claims on hold.
Tuesday’s Consumer Confidence Index will serve as another important gauge of economic confidence, as investors keep a close eye on consumer resilience amid continued recession talk.
In recent trading days, a favorable batch of quarterly results from major retailers helped at least temporarily alleviate concerns about losses from inflationary headwinds that could take away profit margins.
“Based on their earnings, along with other trends such as declining consumer confidence and real income, the consumer suddenly seemed more vulnerable,” said Brad MacMillan, chief investment officer at Commonwealth Financial Network, in a note. “As the consumer goes, the economy and the market eventually go.”
In fact, if the company’s forecast proves correct, it is likely that macroeconomic pressures will appear more meaningfully in the second quarter results.
The term “inflation” was mentioned at least once during 398 earnings calls made by S&P 500 companies from March 15 through May 24, research from FactSet indicated, with a similar number — 338 — referring to “supply chain” in about the same period.
Furthermore, the S&P 500 reported earnings growth of 9%, the lowest since the fourth quarter of 2020, and the 68 companies the index tracked provided negative earnings per share guidance for the first quarter, the highest since the 2019 quarter, according to FactSet.
“If the economy is approaching the door of recession, job layoffs will increase, and it is too early to rule out further employee cuts in the coming weeks and months,” Christopher Robke, chief economist at FWDBONDS, said in a recent note. “Tech companies that are skyrocketing in their stock prices have seen a sharp decline that will force management to tighten their belts, and labor is always the biggest cost to most companies.”
Earnings season is over, but more reports are scheduled in the four-day week, with companies like Salesforce.com (CRM), GameStop (GME) Chewy (CHWY) and HP (HPQ) reporting quarterly.
Eddie Ghabbour, co-founder and managing partner of Key Advisors Group, told Yahoo Finance Live: “This is nothing more than a bear bounce in our opinion. When you look at these bounces that we’ve seen, very light volume, there’s not much conviction.
Ghabbour also explained that the data that led to intense selling across stocks in the past weeks was the first quarter data, and that the numbers for the current quarter may be worse, warning of a “very treacherous market in the next few months.”
Monday: Memorial Day. There are no notable reports scheduled for release.
Tuesday: FHFA House Price IndexMoM, March (2.0% expected, 2.1% over the previous month); home purchase price indexQuarterly, Q1 (3.3% over the previous quarter); S&P CoreLogic Case-Shiller 20 City CompositeMoM, March (1.90% expected, 2.39% over the previous month); S&P CoreLogic Case-Shiller 20 City CompositeYoY, March (19.85% expected, 20.20% over previous month); S&P CoreLogic Case-Shiller US National Home Price IndexYoY, Mar (19.80% over the previous month); MNI Chicago PMIMay (expect 55.5, 56.4 over the previous month); Consumer confidence in the conference boardMay (expect 103.5, 107.4 over the previous month); Conference board current situationMay (152.6 over the previous month); Conference Board ExpectationsMay (77.2 at previous reading); Federal Reserve Manufacturing Activity in DallasMay (expected 1.5, 1.1 over the previous month)
Wednesday: Mortgage Applicationsweek ending May 27 (-1.2% over the previous week); Standard & Poor’s global manufacturing in the United Statesfinal May (expect 57.5, 57.5 over the previous month); Construction spendingMoM, Apr (0.6% expected, 0.1% over prior month); Manufacturing ISMMay (expect 54.5, 55.4 over the previous month); ISM rates paidMarch (expect 80, 84.6 previous month); New ISM commandsMay (53.5 over the previous month); ISM RecruitmentMay (50.9 over the previous month); JOLTS job opportunitiesApril (11.400 million expected, 11.549 million over the previous month); WARDS TOTAL VEHICLE SALESMay (expect 14.30 million and 14.29 million in the previous month); Federal Reserve releases beige book
Thursday: Challenge Mission DiscountsYoY, May (6.0% over the previous month); ADP . Recruitment ChangeMay (300,000 expected, 247,000 over the previous month); non-agricultural productivityfinal first quarter (expected -7.5%, 7.5% over previous month); Labor costs per unit first quarter final (11.6% expected, 11.6% final); Unemployment Complaint Ratesweek ending May 28 (expect 210,000, 210,000 over the previous week); Ongoing Claimsweek ending May 21 (1.346 million expected, 1.346 million over the previous week); Factory orders excluding transportationApr (2.5% over the previous month, adjusted to 2.1%); Factory ordersApr (expect 0.7, 2.2% over the previous month, revised to 1.8%); durable goods ordersApril Final (0.4% forecast, 0.4% over the previous month); Durable goods excluding transportationfinal April (0.3% over the previous month); Non-defense capital goods orders excluding aircraftfinal April (0.3% over the previous month); Shipments of non-defense capital goods excluding aircraftApril Final (0.5% expected, 0.8% over the previous month)
Friday: Change in non-farm payrollMay (325,000 expected and 428,000 over the previous month); Change in own payrollMay (303,000 expected, 406,000 over the previous month); Change in manufacturing payrollMay (expect 37,000, 55,000 over the previous month); Unemployment rateMay (expect 3.5%, 3.6% over the previous month); Average earnings per hourMoM, May (0.4% expected, 0.3% over the previous month); Average earnings per hourYoY, May (5.2% expected, 5.5% previous month); Average weekly hours for all employeesMay (expect 34.6, 34.6 over the previous month); Labor force participation rateMay (expect 62.3%, 62.2% over the previous month); Underemployment rateMarch (7.0% previous month); S&P Global Manufacturing PMIMay final (expect 53.5, 53.5 over the previous month); S&P Global US Composite PMIfinal May (expect 53.8, 53.8 over previous month); ISM Services Index (Expect 56.5, 57.1 over the previous month)
Memorial Day. There are no notable reports scheduled for release.
Before the market opens: kirkland (Kirk)
After market close: HP (HPQ), Salesforce.com (CRM), Victoria’s Secret (VSCO), charge point (CHPT), Ambarella (AMPA)
Before the market opens: There are no notable reports scheduled for release.
After market close: Jim Stop (GME), rubbery (You are), PVH (PVH), Hewlett-Packard projects (HPE), pure storage (Pacific Time), American superconductor (AMSC)
Before the market opens: Hormel Foods (HRL)
After market close: Lululemon (Lulu), octa (OKTA)
There are no notable reports scheduled for release.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
Read the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on TwitterAnd the InstagramAnd the YoutubeAnd the FacebookAnd the FlipboardAnd the LinkedIn