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The Conference Board’s Consumer Confidence Index® decreased in May to 102.3 (1985=100), down from April’s upwardly revised 103.7 reading. The report measures the level of consumer confidence in economic activity and is a leading indicator that predicts consumer spending and overall economic activity. The Expectations Index, based on consumers’ short-term outlook for income and business, ticked down to 71.5, from 71.7 the previous month. A reading of 80 tends to signal a recession within a year. The index has been below 80 for 14 of the last 15 months. “Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, Senior Director, Economics at The Conference Board. Consumers’ inflation expectations remained elevated but stable, with a majority expecting inflation to average 6.1% over the next 12 months, slightly lower than the peak of 7.9% reached in 2022. In addition, consumers that plan to purchase homes over the next six months held steady at about 5.6%, while plans to purchase autos and big-ticket appliances increased as compared to April.
The ISM® (Institute for Supply Management®) Manufacturing PMI® reported in at 46.9% for May, as business activity dropped 0.2 percentage points from the previous month. A value below 50% is indicative of a shrinking economy. This marks the seventh consecutive month in contraction territory after 30 months of growth, and represents the longest stretch since the Great Recession. “The U.S. manufacturing sector shrank again, with the Manufacturing PMI® losing a bit of ground compared to the previous month, indicating a faster rate of contraction. The May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period.”, said Timothy Fiore, chairman of the ISM® Manufacturing Business Survey Committee. Of the six largest manufacturing industries, only transportation equipment, recorded growth in May. The forward-looking new orders sub-index which has been in contraction territory for 9 consecutive months, tumbled 3.1 percentage points, dropping to 42.6%. The Prices Index which measures what companies pay for raw materials and other supplies showed prices dropping, decreasing 9 percentage points to 44.2%. The Employment Index expanded for the second straight month, increasing by 1.2 percentage points to 51.4%. The Backlog of Orders Index declined 5.6 percentage points to 37.5% and has now contracted for the eighth consecutive month following 27 months of expansion.
The U.S. Bureau of Labor Statistics reported 339,000 jobs were added as the unemployment rate increased to 3.7% in May from 3.4% the previous month. March and April’s employment readings were revised upward for a combined (+52,000) more jobs. The number of unemployed workers increased to 6.1 million from 5.7 million the previous month, while employment levels declined (-310,000) to 160.72 million. Professional and business services added (+54,000) jobs, followed by government (+56,000), health care (+52,000), leisure and hospitality (+48,000), and construction (+25,000). Employment was little changed in other major industries, including mining, quarrying, and oil and gas extraction, manufacturing, wholesale trade, retail trade, information, financial activities, and other services. The number of people jobless for less than 5 weeks increased slightly (+217,000) to 2.1 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million, accounting for 19.8% of the total unemployed. The U-6 unemployment rate, which includes those who have stopped looking for work and those working part-time, rose to 6.7% from 6.6% in April. The labor force participation rate held steady at to 62.6%, leaving it still below the pre-pandemic level of 63.4%. Average hourly earnings increased by 0.3% in May. At $33.44 average hourly earnings are up 4.3% from a year ago.
Monday June 5 – Factory Orders (MoM) (April)
Wednesday June 7 – Trade Deficit (April)
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