Before The Bell - The stock market finished positively for the day and the month of May on Friday, after having a very positive morning and an afternoon of risk reduction ahead of the three-day Memorial Day Holiday weekend. The final hour of trading sent the markets lower, but ultimately all three major indices regrouped and finished above the prior day’s close. The Dow Jones Industrial Average was up 65 points ahead of its 125th anniversary on Saturday, while the S&P 500 rose three points and the NASDAQ gained 12 points. REITs were among the best performers, while communications stocks were among the laggards.
The futures market started strongly on Sunday night ahead of yesterday’s Memorial Day holiday. Traders bid up the prices of stocks on improving sentiment toward an infrastructure framework, as Transportation Secretary Buttigieg stated that talks between the congressional parties “cannot go on forever.” The futures traded into the green on a larger potential infrastructure bill. However, on Monday, the futures fell in sympathy with the Asian markets. Lackluster economic data were released in Asia, including weaker-than-expected growth in factory outputs in Japan and flat manufacturing growth in China. Still, by the end of the Monday, contracts were at break even. By this morning, the futures market was decidedly in the green, suggesting a positive start to the first trading day of the June.
A few economic releases today will probably dictate market direction. These include the ISM manufacturing index for May (due at 10:00 A.M. EDT), while construction spending is also slated for release. Additionally, a few companies with large capitalizations are slated to release quarterly results, though there is far less reporting than a few weeks ago.
Later this week, more reports from the business beat will show how well the U.S. labor market is faring. These will include the Automatic Data Processing (ADP) employment report for May and initial jobless claims on Thursday, while nonfarm payrolls and hourly earnings will be released on Friday. We also will receive the latest Beige Book summation of economic conditions from the Federal Reserve on Wednesday afternoon and the May reading on nonmanufacturing activity (Thursday morning). Meantime, earnings reports from a few retailers will trickle in throughout the week. All told, we think that trading will largely depend on how the economy is doing and the outlook for an infrastructure bill on Capitol Hill. - John E. Seibert III