The Buzz on Business for June 5^th, 2024

The all-new bad news is bad news narrative continues to take hold on Wall Street. We’ll get to the numbers in just a few minutes but weakness in the Labor Market reported before the Opening Bell Tuesday morning pushed stocks lower by mid-day.

We’ve worried on this podcast about the state of the economy over the last several months. Specifically, that cracks in housing, construction, manufacturing, or the job market, in the face of strengthening inflation pressures, were painting the Federal Reserve into a corner. A Stagflation corner.

But the market seems to have disagreed with us. Any sign of economic weakness, over the last several months, was rewarded on Wall Street as traders prioritized rate cuts or the potential for rate cuts.

That seems to have changed in recent days. From our perspective, the case for rate cuts has lately been strengthened. And yet the market seems newly ambivalent.

We aren’t drawing any conclusions. Yet! But this development is intriguing and bears watching.

Stock Market Report

Declining stocks outpaced advancers and volume fell as the indexes finished mixed yet again on Tuesday.

• The Dow Jones Industrial Average managed a gain of 140 points, or just shy of four-tenths of one percent and it closed at 38,711.
• The S&P 500 was up just eight points. That’s two-tenths and it closed at 5,291.
• The NASDAQ Composite was likewise up two-tenths of a percent. That’s twenty-eight points on the NASDAQ and it starts the day today at 16,857.
• Not so much the Russell 2000. The small caps were off 1.25%, that’s 26 points and it closed at 2,034.

Bond Market Report

Bonds continued their recent uptrend as rates were down across the board on Tuesday.

• The yield on the 2-year treasury fell by four basis points and it closed yielding 4.775%.
• The 20-year was off six ticks, and it now yields 4.558%.

Oil, Gold, and Bitcoin

• Oil! Oil was in the news, was it ever in the news.
  • Over the weekend, OPEC met and agreed to increase supply and, of course, an increase in supply translates into a decrease in price. In this case, a dramatic decrease in price!
  • So, oil got crushed.  It was off $3.82, and a barrel now changes hands at $73.30. That’s the lowest price we’ve seen for oil since February.
• Gold continued in a tight trading range. It was off $20.80, and a troy ounce will now set you back $2,347.20.
• And Bitcoin is back above $70,000 for the first time since April. It was up $1,087.29 and closed at  $70,322.29

More Mixed Economic Data

Two pieces of economic data were released yesterday morning: Factory Orders, a peek inside manufacturing, for April grew at 0.70%, precisely as expected.

The JOLTS report, a measure of job openings in the economy fell precipitously to its lowest level since November of 2021, and well below expectations. Unfilled jobs spiked dramatically as we exited the pandemic, and they are still well above trend, but another piece of the economic puzzle turns out to be a bit of bad news.

On Monday, we saw the release of the S&P and ISM Manufacturing Purchasing Managers Index. Recall, these data cancelled each other out. Later this morning the two organizations report on their Services PMI. Expectations are for some good news out of the services sector.

We also get the Nonfarm Payrolls Report for payroll processor ADP. Expectations are that the economy created 173,000 new jobs in May. That’s down from 192,000 in April.

The market seems on edge to us. It’s not making sense, not that it ever does.

Everyone here at the Ministry of Truth will be pawing through all of the economic tea leaves to see what all of it means so we can report all of it, to you, here on the Buzz.