The U.S. stock market seems set for a constructive opening today, as the month of June gets started. This week, the broader economy and the labor market will be the major areas of focus for traders. The political landscape at home and ongoing developments in the Middle East may also be worth watching. As we were writing this report, the S&P 500 Index futures were ahead roughly 12 points (0.25%) in pre-market trading. The NASDAQ futures were also nicely higher.
In economic news, a few important reports will be released this week. This morning, the ISM (Institute for Supply Management) Manufacturing Index for the month of May will be published, followed by the ISM Services Index on Wednesday. These reports can provide a quick look into the broader economy, and should warrant some attention from investors. Meanwhile, the main event will take place on Friday morning, when the government delivers the latest monthly employment figures. Analysts currently think roughly 185,000 jobs were added to the economy in May, up slightly from the 175,000 figure logged in April. The headline unemployment rate is expected to remain unchanged at the 3.9% level. In addition, investors will want to see that wages are not rising too much, especially since wage inflation is an area of concern for the Federal Reserve.
In the corporate sector, there are not too many companies set to post profit reports this week. However, tomorrow we will hear from CrowdStrike Holdings (CRWD), a leader in the cybersecurity arena. On Wednesday, Lululemon Athletica (LULU), a manufacturer of yoga apparel, will deliver its report. Corporate profits have been holding up relatively well lately, which has helped support equity valuations in the face of ongoing inflationary pressures and elevated interest rates.
Technically, the stock market hit new high ground in late May, but has since pulled back slightly. On Friday, the S&P 500 Index moved down to its 50-day moving average, and managed to find some support at this key technical level. From a sector perspective, the technology stocks have provided clear market leadership lately. However, these gains have been partly fueled by excitement surrounding artificial intelligence applications, and some traders seem concerned that the move could be exaggerated. As a result, investors will likely want to see other market sectors also making healthy contributions. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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