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Stock Market News for Jun 5, 2023

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Wall Street closed sharply higher on Friday buoyed by impressive jobs data for May. A favorable jobs report on various metrics reduces to a great extent market participants’ fear of a near-term recession. Congressional deal on debt ceiling also bolstered investors’ confidence on risky assets like equities. All three major stock indexes ended in positive territory. For the week, these indexes also finished in positive zone.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) jumped 2.1% or 701.19 points to close at 33,762.76. Notably, 29 components of the 30-stock index ended in positive territory, while one in negative zone. The blue-chip index posted its best single-day performance since January.  

The biggest gainer of the Dow was 3M Co. (MMM - Free Report) , which surged 8.8%. 3M currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The tech-heavy Nasdaq Composite finished at 13,240.77, advancing 1.1% or 139.78 points due to strong performance of large-cap technology stocks. At intraday high, the tech-laden index reached at 13,256,21, its highest since April 2022.  

The S&P 500 climbed 1.5% to end at 4,282.37. All 11 broad sectors of the benchmark index closed in positive territory. The Materials Select Sector SPDR (XLB), the Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI), The Financials Select Sector SPDR (XLF), the Real Estate Select Sector SPDR (XLRE) and the Consumer Discretionary Select Sector SPDR (XLY) surged 3.4%, 3%, 2.9%, 2.2%, 2.1% and 2.4%, respectively.  

The fear-gauge CBOE Volatility Index (VIX) was down 6.7% to 14.60, marking its lowest level since Feb 19, 2020. A total of 11.05 billion shares were traded on Friday, higher than the last 20-session average of 10.58 billion. Advancers outnumbered decliners on the NYSE by a 4.75-to-1 ratio. On Nasdaq, a 2.73-to-1 ratio favored advancing issues.

Robust Nonfarm Payrolls in May

The Department of Labor reported that the U.S. economy added 339,000 jobs in May, surpassing the consensus estimate of 205,000. April’s data was revised upward too to 294,000 from 253,000 reported earlier. May marked the 29th straight month of positive job growth. May’s job gain was nearly in line with the 12-month average of 341,000.

However, the unemployment rate rose to 3.7% in May from 3.4% in April, beating the consensus estimate of 3.4%. The metric reached its highest in May since October 2022. The increase in jobless rate in primarily due to a stiff decline of 369,000 self-employed Americans.

The hourly wage rate increased 0.3% month-over-month in May, in line with the consensus estimate. April’s data was revised downward to 0.3% from 0.5% reported earlier. Year over year, wage rate increased 4.3% in May, marginally below the consensus estimate of 4.4%.

Average workweek dropped slightly to 34.3 in May from 34.4 in April. May’s data was the lowest since pandemic-era April 2020.

Debt Ceiling Deal

Investors also were upbeat after the U.S. Congress passed the Fiscal Responsibility bill, which will raise the debt ceiling and cap government spending for two years. On May 31, the U.S. House of Representatives passed the bill by a voting margin of 314-117. On Jun 1, the U.S. Senate voted in favor of the bill with a margin of 63-36.

This will now put the U.S. government on track to avoid a default by allowing the federal government to raise the legal borrowing capacity before June 5. The bill is on President Joe Biden’s desk for his signature to be converted as Fiscal Responsibility Act.

Weekly Roundup

Last week was a strong one for Wall Street supported by strong economic data and Congressional debt ceiling deal that removed the concerns of an imminent recession to a great extent. The Dow advanced 2%. The S&P 500 appreciated 1.8%, marking its third-straight week of gain. The Nasdaq Composite rallied 2%, to complete its six-straight weekly winning run, reflecting its longest winning streak since January 2020.

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