In a week shortened by Monday’s Memorial Day holiday, Investors’ focus turns to the May’s nonfarm payrolls report to see if the unexpectedly weak April employment report was just a one-time blip
Meanwhile, the ISM PMI surveys should signal solid manufacturing and service growth rates during May, on the back of the country’s re-opening efforts, the ongoing government support. Energy traders will be eyeing Tuesday’s OPEC+ meeting and the euro zone is to release inflation data against a backdrop of concerns over what rising price pressures could mean for expansionary monetary policy.
Here is what you need to know to start your week
The benchmark index ($SPX) erased all losses for the month of May, re-gaining +1.07% (+44.4 points) during the week.
$SPX have successfully broke out of its sideway box range channel that was highlighted last week, infusing clarity on its short term trading direction for the month of June. $SPX is currently just 20 points away (+1.00%) from its all time high level of 4,245 level.
In the meanwhile, $SPX is reflecting a minor two weeks bearish divergence within its falling price volatility along with daily trading volume on its up-days. The immediate support to watch for $SPX is remains at 4,110 level, a potential renewed test of both 20D and 50D moving averages.
May jobs report could echo April weakness
Friday’s May jobs report will indicate whether the unexpected weakness seen in the April jobs report was a one-off or the start of a more persistent slowdown the labor market recovery.
The economy is expected to have added 650,000 new jobs in May.
Just 266,000 jobs were created in April, far short of the nearly one million expected. The economy is still more than 8 million jobs short of where it was before the pandemic.
Economists generally are still expecting strong job growth in the months to come, as the economy reopens.
ISM PMIs, Fed speakers
ISM manufacturing data is scheduled for release on Tuesday, followed by ISM services data on Thursday. Both readings are expected to be strong, but to highlight supply chain issues that are leading to shortages and higher prices.
ADP nonfarm payrolls data is due on Thursday, one day later than usual due to Monday’s holiday, along with the weekly figures on initial jobless claims.
The Fed’s beige book on the economy is due out on Wednesday and several Federal Reserve officials are scheduled to speak during the week, including Chair Jerome Powell. The Fed Chair will participate in a panel at a climate change conference on Friday together with International Monetary Fund chief Kristalina Georgieva and European Central Bank President Christine Lagarde.
Wary stock market
Stock market investors will be closely watching economic data and comments from Fed officials amid ongoing concerns the central bank may begin to pull back on its massive stimulus measures as price pressures rise.
Inflation concerns have persisted for several weeks and weighed on growth names, pulling down the tech-heavy Nasdaq, which posted its first monthly decline since October.
Volatility has risen even as the S&P 500 has rebounded to less than 1% below its May 7 record high, and the index saw its smallest monthly gain in the past four in May.
The U.S. stock market will be closed on Monday for the Memorial Day holiday.
