Market Outlook For Next Week

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U.S. stocks rose this week, with major moving averages snapping recent losses. The Dow broke its longest eight-week losing streak in nearly a century. For the week, the Dow was up 6.2%, the S&P 500 was up 6.6% and the Nasdaq was up 6.8%. The yield on the 10-year U.S. Treasury note fell to 2.74% as Treasuries and safe-haven assets rose on growing fears of recession risks. Crude oil prices were higher this week as global supplies tightened and U.S. crude inventories fell. WTI crude closed the week at $115 a barrel, its highest level since early March. Gasoline prices set new records this week, with the national median price for a gallon rising to $4.60, according to the AAA.

It will be a shortened trading week as U.S. markets are closed on Monday for the Memorial Day holiday. Investors can look forward to the latest home price update on Tuesday with the release of the March Case-Shiller National Home Price Index. A number of key economic indicators are scheduled for release, including purchasing managers’ index surveys, consumer confidence and key labor market news. Next week’s labor report will include the latest Job Openings and Labor Market Survey (JOLTS), ADP’s private sector employment report and the Labor Department’s official nonfarm payrolls report for May. Companies reporting earnings include Salesforce, HP, Chewy, Gamestop, PVH, Broadcom, and Lululemon, among others.

Central thesis

Expect corporate earnings reports from companies like Salesforce, HP, Chewy, Gamestop, Broadcom, and Lululemon
The March update of the Case-Shiller National Home Price Index is expected to be released on Tuesday and will show annual increases in home prices.
A major update to the labor market is expected with the release of JOLTS job openings, hiring and departures, ADP private payrolls and the official nonfarm payrolls report for May.

Events Calendar:

Monday, May 30

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US market holidays

Tuesday, May 31

Salesforce (CRM) and HP (HPQ) reporting results
S&P Case-Shiller National Home Price Index (March)
FHA Home Price Index (March)
Dallas Fed Manufacturing Index (May)
CB Consumer Confidence Index (May)
Chicago PMI (May)

Wednesday 1 June

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Chewy (CHWY), Gamestop (GME) and PVH (PVH) report profits
S&P Global Manufacturing PMI (May)
JOLTS vacancies and layoffs (April)
Dallas Fed Services Index (May)
Federal Reserve Beige Book.

Thursday, June 2

Broadcom (AVGO), CrowdStrike (CRWD) and Lululemon (LULU) report earnings
ADP Private Sector Employment (May)
Factory Order (April).

Friday, June 3

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Nonfarm Payrolls (May)
S&P Global Aggregate PMI – Finals (May)
ISM Non-Manufacturing PMI (May).

National house price update

On Tuesday, S&P will release the latest monthly update of its Case-Shiller National Home Price Index, which tracks home price gains in March. After rising 20.2% in February, the 20-city composite index is on track to rise to an all-time high of 20.5% year-on-year. Home prices have been rising across the country since mid-2020, with Phoenix, Tampa and Miami seeing the biggest increases.

Also on Tuesday, the Federal Housing Finance Agency (Freddie Mac) will release its national home price index, which tracks price increases for single-family homes with lender-guaranteed mortgages. The housing market is showing signs of cooling as rising mortgage rates and a lack of affordability increasingly discourage new home buyers. New and pending home sales fell sharply in April, with new home sales falling to their lowest level since April 2020.

Important Labour Market Reports

Market watchers can expect several important updates next week assessing the strength of the U.S. job market. On Wednesday, the U.S. Bureau of Labor Statistics (BLS) will release its monthly Job Openings and Labor Turnover Report (JOLTS), which measures job openings, hiring and layoffs in April. In a historically tight job market, job openings hit a record 11.5 million in March. The forecast for April assumes a slight reduction to 11.4 million job openings. Meanwhile, job attrition was 3% as employee turnover remained high during the Great Retirement and workers continued to seek cheaper employment.

Payroll provider ADP will release its monthly national employment report on Thursday, which will track private sector payrolls. The consensus view was for an increase of 280,000 after April’s increase of 247,000 was less than expected. The BLS will also release its May nonfarm payrolls report on Friday. The forecast calls for an increase of 310,000 jobs, compared with 428,000 in March and April. Nonfarm payrolls totaled 151.3 million in April, 0.8% below the pre-pandemic peak of 152.5 million recorded in February 2020.

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