June 9, 2025

“The desire to perform all the time is usually a barrier to preforming over time”

Robert Olstein

Well, the first week of June is in the books and it was a good one. Here are the numbers. The S&P 500 finished the week up 1.76%, the Dow Jones Industrial Average gained 1.3%, the Nasdaq led up 2.45%. Internationally the FTSE 100 was in the black + .75% and the MSCI-EAFE added 1%. The 2-year Treasury yield was 4.037% and the 10-Year paid 4.506%.

So, what happened? Last Friday marked the first time since Feb. 21 that all three equities benchmarks closed in positive territory on a year-to-date basis, according to Dow Jones Market Data. The S&P 500 ended 2.3% below its record closing peak notched Feb. 19. As MarketWatch reports, The S&P 500 finished just a hair above 6,000 Friday — a key psychological level that technicians see potentially setting the stage for a possible run back to a record high as investors continue to shake off tariff jitters and recession fears that rocked the market earlier this year. After its February record, the S&P 500 began a pullback that took it nearly 20% lower — the threshold for a bear market — on April 8, before it subsequently set off on a recovery. That bounce has seen stocks take back all of their tariff-induced April losses and then some, with the S&P 500 coming within a whisker of 6,000 and hitting an intraday high of 5,999.70 in last Thursday’s session before turning back. It finally pushed back above the threshold last Friday as investors cheered the May jobs report, trading as high as 6,016.87 in early trading before trimming its gain.

The side show going on now is the fraught discussions playing out between President Donald Trump and one of the world’s most powerful figures Elon Musk, could shape his presidency and the direction of the market. However, Trump’s call with Chinese leader Xi Jinping last Thursday was boosting markets before the blowup with Tesla CEO Musk grabbed everyone’s attention. In the long-term, the U.S.-China negotiations are still where investors should be focused. We still maintain it is theater and will fade soon. But negotiations with China as an adversary not competitor will underlie US foreign and trace policy in the coming year. The White House also said there were would be more trade talks this week with China, soothing the market’s other big worry. The U.S. will send Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer to meet with China’s negotiators in London.

Speaking of foreign policy and trade, Global trade tensions are visibly affecting economic data across major regions. In Europe, newly imposed US tariffs led to a sharp contraction in German exports to the US (-10.5%) and a narrowing of Germany’s trade surplus. France also posted a wider trade deficit due to export declines. The European Central Bank acknowledged tariff-related risks while lowering policy rates, warning that prolonged trade disputes could dampen growth and inflation prospects. Industrial output in Germany and France is already weakening, signaling further struggles ahead for the Eurozone.

In the US, this week’s CPI report will be critical for the Federal Reserve’s upcoming policy decisions. The labor market is softening, but inflation dynamics remain uncertain due to staggered tariff impacts and pre-tariff stockpiling by businesses. Asia faces its own challenges; Chinese and Indian inflation data remain subdued, while weakening trade conditions hint at broader regional slowdowns. Japan’s economy posted its first contraction in a year, driven by declining net exports and cautious domestic demand. Across all regions, trade disruptions are reshaping economic forecasts and raising uncertainty for the months ahead.

Labor news was good, Reuters reported, “U.S. job growth slowed in May amid headwinds from tariff uncertainty, while the unemployment rate held steady at 4.2%, potentially giving the Federal Reserve cover to delay resuming interest rate cuts for a while. Nonfarm payrolls increased by 139,000 jobs last month after rising by a downwardly revised 147,000 in April, the Labor Department’s Bureau of Labor Statistics said in its closely watched employment report last Friday. Economists had forecast 125,000 jobs added after a previously reported 177,000 rise in April. Estimates ranged from 75,000 to 190,000 jobs. The unemployment rate remained at 4.2% for the third straight month. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working age population. That number could decline as President Donald Trump has revoked the temporary legal status of hundreds of thousands of migrants amid an immigration crackdown. Much of the job growth this year reflects worker hoarding by businesses amid Trump’s flip-flopping on tariffs, which economists say has hampered companies’ ability to plan ahead. Opposition to Trump’s tax-cut and spending bill from hardline conservative Republicans in the U.S. Senate and billionaire Elon Musk adds another layer of uncertainty for businesses. Employers’ reluctance to lay off workers potentially keeps the U.S. central bank on the sidelines until the end of the year. Financial markets expect the Fed will leave its benchmark overnight interest rate unchanged in the 4.25%-4.50% range this month, before resuming policy easing in September.” Health care led May’s job growth with 62,000 new positions, followed by hospitality, which added 48,000 jobs, reflecting continued strength in service-related sectors. Average hourly earnings also rose 15 cents to $36.24, pushing the annual wage growth rate from 3.8% to 3.9%. All good news.

Economists expect the Fed to hold interest rates steady, citing concerns over tariff-driven inflation despite strong job growth, steady unemployment, and continued economic resilience.

Other key developments, The Supreme Court handed the Department of Government Efficiency (DOGE) two big wins late on June 6 in its effort to reduce the size of the federal government. The first order lifts a lower court order preventing DOGE staffers from accessing confidential data at the Social Security Administration (SSA). The second order formally blocks lower court orders requiring DOGE to respond to freedom of information requests in a pending lawsuit.

Finally, mortgage rates fell last week, that with the prospect of lower interest rates and increasing inventory will help buyers in the coming months. The average mortgage rate decreased this week, the 30-year average rate was 6.85% the 15-year dropped to 5.997% which is welcome news to potential homebuyers who also are seeing inventory improve and house price growth slowing.

Mike