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Market Recap – June 10, 2024

Keel Point

June 10, 2024

The unexpectedly strong 272,000 new jobs in May – compared to 165,000 added in April — and wages up 4.1% over the prior year surprised financial markets.  Treasury yields rose, U.S. stock prices were slightly negative, and expectations of Fed cuts in September cooled. 

  • For workers benefitting from robust labor demand and rising wages, this is good news. For those hoping for inflation and interest rates to come down more quickly, it signals further delay.
  • The unemployment rate rose to 4%, ending its 27 straight months below 4%, last experienced in the 1960s. The unemployment rate comes from household survey data which showed employment declining by 408,000, largely in the 16-19 age group.

  • Friday, stock prices closed higher last week. So far in 2024: ACWI +10%, S&P 500 +12%, Nasdaq +14% and DJIA +2.9%.
  • Yields on Treasury securities rose after the May jobs news last Friday, notably on the 10-year and 2-year Treasury notes.
  • While a further delay in the Fed cutting interest rates disappointed financial markets, the stronger employment market and higher wage gains support stronger consumer spending and economic growth.

The interest rate cutting cycle has picked up, with the European Central bank and the Bank of Canada cutting rates last week.  The U.S. is likely to follow as soon as the core Personal Consumption Expenditures inflation measure, and other economic data, show a good 2-3 months of steadily declining inflation.

  • The outlook for earnings per share (“EPS”) growth remains strong. In the U.S., BofA Global Research forecasts 2024 EPS growth at 10.3% and 2025 at 14.3%.  Including Europe and Asia Pacific, the estimates for the world total EPS growth are +9.6% in 2024 and +13% in 2025.
  • On a foundation of strong earnings, the outlook for global equities performance remains positive and is enhanced by higher share buybacks, rising global investments in AI, an expected increase in cash flowing into risk assets, and likely Fed interest rate cuts later in 2024 / 2025.

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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