By Rick Schwerd |
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on June 26.
Labor Market Report
The economy added a healthy 172,000 jobs during May, following a gain of 179,000 the previous month. This exceeded estimates and marked the third straight month with job gains above 170,000, and the average monthly gain of 114,000 for the year. The unemployment rate remained at 4.3 percent.
We also saw a large jump in job openings, increasing from 6.9 million openings to 7.6 million.
The numbers point to a solid labor market and are another sign that the economy remains healthy. High gas prices, elevated mortgage rates and geopolitical uncertainty are weighing on the collective psyche. However, a stable labor market, strong consumer spending and surging corporate earnings point to continued economic growth.
Stocks Continue Strong Run
Depending on how markets finish today, the S&P 500 could record 10 positive weekly closes for the first time since 1985. The index closed above 7,600 for the first time this week and is now 11 percent higher this year. The tech-heavy Nasdaq hit new highs this week and is up nearly 16 percent year to date. The more value-oriented Dow Jones Industrial Average is also having a good year, hitting 51,000 for the first time last Friday rising more than 7 percent in 2026.
Earnings continue to be the driving force behind the historic run. With nearly 90 percent of the S&P 500 having wrapped up first-quarter reporting, the blended year-over-year earnings growth rate has accelerated dramatically. According to research provider Earnings Scout, corporate earnings are up 21 percent for the quarter, compared to 11.5 percent for the fourth quarter and the three-year average of 5.8 percent.
Strong earnings provide a solid basis for higher stock prices. Even with the S&P 500 up 27 percent over the last 12 months, the average price-to-earnings ratio for S&P 500 companies is nearly the same as it was a year ago. Given the historic nature of the current run, we would not be surprised if stocks take a bit of a breather and enter a period of consolidation. However, earnings expectations for the final three quarters of the year continue to increase, providing a healthy tailwind for the remainder of 2026.
Looking Ahead
We continue to keep an eye on inflation, bond yields and oil. Next week, we will receive the May Consumer Price Index (CPI) and Producer Price Index (PPI) data. The reports are likely to show that inflation continues to increase, though the question is how much. Bond yields and oil have been moving similarly since the onset of the Iran War. Both remain significantly higher than before the war began but are also down considerably from the highs reached shortly after the war began.
The Federal Reserve meets the following week. This will be the first meeting led by new Fed Chairman Kevin Warsh. No changes to the federal funds rate are expected at this meeting and the Committee is likely to remain on hold until we see some resolution in the Iran War and inflation begins to trend lower. Markets will watch Chairman Warsh's post meeting press conference closely.
Have a great weekend and as always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415‑4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not‑for‑profit relationships.