Stocks advanced this week and the major averages closed at record high levels despite data that showed wage growth and hiring missed forecasts in May. Additionally, a number of U.S. CEOs expressed their dissatisfaction with President Trump’s decision to withdraw the U.S. from the Paris climate agreement, with two high-profile ones citing the withdrawal as reason to quit the president’s advisory councils.
MACRO NEWS: In the U.S., nonfarm payrolls grew by 138,000 in May, versus expectations for the addition of 182,000 jobs. That level of job additions was down from the downwardly revised 174,000 jobs added in April, which had previously been estimated at 211,000. The unemployment rate moved to 4.3% from the prior month’s 4.4%. The U.S. trade deficit rose to $47.6B in April from $43.7B in March. The S&P Case-Shiller 20-city composite home price index was up a seasonally adjusted 0.9% month over month, roughly in-line with the consensus forecast. The Conference Board’s consumer confidence index fell 1.5 points to 117.9 in May, though that is still its third highest going back to June 2001. Markit’s manufacturing PMI dipped to 52.7 in the final May reading versus April’s 52.8. The ISM manufacturing index inched up 0.1 points to 54.9 in May, versus expectations for it to remain flat with last month. Construction spending dropped 1.4% in April, which was worse than the expected 0.5% increase.
The Federal Reserve’s latest Beige Book said that most Fed districts expanded at a modest or moderate pace from early April through late May. Consumer spending softened with many districts noting little or no change in non-auto retail sales, while auto sales were noted to have declined from last year’s record highs in several districts.
In Europe, the Eurozone unemployment rate came in a bit lower than anticipated, falling to 9.3% in April to hit its post-crisis low. Euro area annual inflation is expected to be 1.4% in May, down from 1.9% in April, according to a flash estimate from Eurostat. The overall Eurozone manufacturing PMI for May came in at 57, inline with the flash reading.
