By Jack Kraft, CFA, Vice President, Investment Strategist
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U.S. equities rallied last week, with stocks just a few percentage points shy from notching a new all-time high. Strong corporate earnings, resilient economic data and easing trade tensions have been the catalysts for stocks to make a V-shape recovery from April lows. In fact, the S&P 500 is officially back in a bull market territory, or 20% above the April 8 lows. Last week, small caps saw the largest rally, with the Russell 2000 jumping 3.3%. Meanwhile, the Nasdaq Composite added 2.1%, and the S&P 500 increased 1.5%. The Dow Jones underperformed with a gain of 1.2% for the week.
Eight of 11 S&P 500 sectors finished the week in positive territory, with technology leading with a more than 3% gain. Stocks saw a strong risk-on environment with the semiconductor industry adding 7% last week amid strong earnings reports that reiterated the demand for artificial intelligence. The path of least resistance remains to the upside as the CBOE VIX, commonly referred to as Wall Street’s fear gauge, fell to its lowest level since February. Bucking the uptrend were the traditionally more defensive sectors, with both utilities and consumer staples ending the week negatively. Consumer discretionary also finished in negative territory, but the overall sector was weighed on by Tesla after the stock slipped 15% on the week following a fallout between Elon Musk and President Trump.
Let’s take a look at the recent developments that quickly whipsawed investor sentiment from doom to boom. First and probably the most important is how resilient corporate earnings were this past quarter. According to FactSet, the S&P 500 grew earnings by 13.3% in the first quarter of 2025, with technology companies doubling down on artificial intelligence spending. Additionally, earnings estimates for 2026 anticipate a reacceleration in growth, with consensus estimates at 10%. This tells a similar story to U.S. gross domestic product forecasts, which are expected to double from about 1% in 2025 to roughly 2% in 2026. All this taken together indicates that the markets are likely to look through to the positive developments in 2026.
Economic data has exceeded expectations, indicating that the economy has successfully absorbed the effects of tariffs up to this point. Garnering attention last week was the May jobs report, which showed an increase in nonfarm payrolls of 139,000, better than economists’ expectations. Overall, the report showed strength, with the unemployment rate remaining at 4.2%, despite a combined 95,000 downward revision to prior months. The three-month average is sitting at 135,000, lower than the average monthly payroll growth in all of 2024, which was 161,000. The labor market is showing signs of cooling but remains about 35,000 above the breakeven point, where the unemployment rate starts moving higher. Comments at the upcoming U.S. Federal Reserve (Fed) meeting on the labor market could help give some insight into future monetary policy, especially if we see a continued downward trend in inflation numbers this week.
Investors are pointing to positive developments on the U.S.-China trade front as support for the market’s recent rally. Last week, news broke that the President Trump and Chinese President Xi had a “very good” call that “resulted in a very positive conclusion for both Countries.” Positive momentum is progressing into this week as the two countries are scheduled to meet on Monday in London. A sticking point in the talks has been rare earth negotiations, as China granted three U.S. auto suppliers a six-month permit. According to JPMorgan, negotiation risks include China making a trade deal with a Western ally prior to a deal being sealed with United States. Meanwhile, U.S. is in ongoing talks with other countries that look promising such as Japan and South Korea, ahead of the upcoming Group of 7 Leaders’ Summit (June 15-17) where trade will be a focal point.
Looking forward to this coming week, economic data will be a key area of focus, with the Fed entering into a quiet period ahead of its June 18 meeting. Headlining the calendar will be the Consumer Price Index (CPI) release on Wednesday, which is expected to rise 0.2% in May. On Thursday, investors will get a second inflation update with the release of the Producer Price Inflation (PPI), which offers insight into “pipeline inflation.” This data point is especially important given the uncertainty surrounding tariffs as we will see if companies plan to pass on price increases to consumers. Rounding out the calendar will be the NFIB optimism index on Tuesday and the June preliminary update on consumer sentiment on Friday. Earnings reports will be relatively quiet with Oracle and Adobe on Wednesday and Thursday, respectively. Other notable reports include Casey’s General Store, Chewy, Dave and Busters, Academy Sports and Outdoors, and Restoration Hardware.
Economic Calendar June 9 – June 13
| Time (ET) | Report | Period | Median Forecast | Previous |
| MONDAY, JUNE 9 | ||||
| 10:00 AM | Wholesale inventories | April | 0.00% | 0.40% |
| TUESDAY, JUNE 10 | ||||
| 6:00 AM | NFIB optimism index | May | 96 | 95.8 |
| WEDNESDAY, JUNE 11 | ||||
| 8:30 AM | Consumer price index | May | 0.20% | 0.20% |
| 8:30 AM | CPI year over year | 2.50% | 2.30% | |
| 8:30 AM | Core CPI | May | 0.30% | 0.20% |
| 8:30 AM | Core CPI year over year | 2.90% | 2.80% | |
| 2:00 PM | Monthly U.S. federal budget | May | -$318B | -$347B |
| THURSDAY, JUNE 12 | ||||
| 8:30 AM | Initial jobless claims | 7-Jun | 242,000 | 247,000 |
| 8:30 AM | Producer price index | May | 0.20% | -0.50% |
| 8:30 AM | Core PPI | May | — | -0.10% |
| 8:30 AM | PPI year over year | — | 2.40% | |
| 8:30 AM | Core PPI year over year | — | 2.90% | |
| FRIDAY, JUNE 13 | ||||
| 10:00 AM | Consumer sentiment (prelim) | June | 55 | 52.2 |
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