Market Update – Week of June 7th

The Newday Team - Newday

Hiring Slows in May

The unemployment rate, which classifies those in the workforce that are actively seeking for work but are jobless, is currently at 3.6%––an all-time low. Yet, for the month of May, the U.S. saw a slowdown in the number of job openings across the labor market. May registered 75,000 jobs, way below the 180,000 expectation. This signals that companies are taking a more cautious approach at a time where global economic growth is cooling, and trade tensions are on the agenda. This adds up to other economic data that depicts an economy that is still growing but losing the momentum it had for the past decade. For the 1-month change in employment, sectors like Professional/Business Services, Leisure/ Hospitality, and Healthcare saw an increase in job openings, while Government, Retail Trade, and Information saw a decrease in openings.

Generally, the unemployment rises or falls in the wake of changing economic conditions, rather than anticipating them. A movement in unemployment may trigger a movement in inflation, yet inflation remains muted. Workers aren’t seeing significant price increases.

Hiring Slows? Stocks Rally!

The Dow Jones extended this week’s rally on Friday, having its best week in more than six months, after the low employment figures raised investor’s expectations on a loosened monetary policy. This means that investors expect the Federal Reserve (Fed) to consider lowering the cost of short-term borrowing or the money supply in the U.S. The Chairman of the Fed Jerome Powell said on Tuesday that the central bank would act as appropriate to sustain the expansion, suggesting a possible lower on the short-term borrowing rate as a solution to the slowing economy. Since then, the major indexes (think S&P500, Dow Jones, Nasdaq) have been in rally mode.

A rate decrease or rate cut generally increases the demand for borrowing and spending, which lifts the market value of stocks and bonds in the capital markets. Low interest rates have been fueling the market for the past 10 years.

Mexico Passes by

And you saw it coming… Trade tensions are still on the news, now more than ever. Trade tensions between the U.S. and China remain unresolved. Mexico came in this week and out this Friday when President Trump threatened Mexico with tariffs in an effort to stem immigrants from trying to enter the country. Today, the U.S. has reached a deal to avoid tariffs on Mexican imports. Mr. Trump mentioned Mexico had agreed to take “strong measures” to slow migration over the southern U.S. border. As a result, the tariffs, which were set to go into effect Monday, were “indefinitely suspended.”

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