Market Pulse

In focus

Last week marked the end of May which consisted of a 0.25% rate hike from the Federal Reserve (Fed), concern and speculation over the debt ceiling, and some notable last inning earnings releases that moved markets. The S&P 500 ended the month of May with modest gains, while the technology sector returned 9.5%, fueled by a renewed enthusiasm over Artificial Intelligence.

While the S&P 500 was able to complete the month slightly positive, posting its third-consecutive month of gains, breadth within the index in May was narrow with only 25% of constituents posting positive performance. Technology, communication services, and consumer discretionary were the only sectors to move higher in May, while the other eight sectors ended markedly lower. Energy was the standout laggard with a double-digit loss to end the final month of the spring season.

Fixed income and equity markets have continued to disagree on the path forward as the 2-/10-year U.S. Treasury curve notched lower, and the 3-month/10-year spread remains at historically low levels while equities saw inflows for the first time in seven weeks. With a somewhat minor list of economic readouts this week, equity and fixed income markets will prepare for the upcoming Federal Open Market Committee meeting on June 14 where markets are currently expecting the Fed to pause their rate hikes 

A look back

• Global equity markets were positive across the board last week, and U.S. stocks led the move up with all 11 S&P 500 sectors finishing higher.
• After declining for most of the week, yields spiked last Friday leaving them only modestly lower. The 2-/10-year U.S. Treasury yield curve flattened slightly to -82 basis points.
• Over the weekend, President Biden signed a bipartisan debt ceiling bill, suspending the debt limit until 2025 and avoiding default. 

A look ahead

• Crude oil prices climbed after the weekend announcement from Saudi Arabia to voluntarily cut an additional one million barrels per day starting in July.
• The Fed entered its quiet period, so Fed speak should be scarce this week leading up to the Federal Open Market Committee meeting June 13-14.
• Economic releases: ISM & S&P Global U.S. Services, Factory Orders, Wholesale Inventories, Durable Goods Orders

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