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6/3/24 Weekly Market Commentary

6/3/24 Weekly Market Commentary

June 03, 2024

What happened last week…         

All three major indices finished higher in May, rebounding from the down month of April. Monthly performances for May were as follows: DJIA (2.30%), S&P 500 (4.80%), NASDAQ (6.88%). Each of the three indices have landed in positive territory in six of the previous seven months.

 

The Federal Reserve Bank of Cleveland has named Beth M. Hammack as the successor to outgoing president Loretta Mester, who will retire at the end of June after serving in her role since 2014. Hammack spent three decades at Goldman Sachs and will be a voting member on the Federal Open Market Committee starting in August.

 

Activist investor Elliott Investment Management has taken a $2.5 billion position in Texas Instruments (TXN) and has urged the company to improve its free cash flow. In a letter, Elliott proposed that the company strive to push the metric to $9 per share by 2026. Free cash flow was $1.47 per share in 2023. 

 

Merck (MRK) announced that it will purchase EyeBio, which develops eye disease drugs, for a $1.3 billion upfront payment and up to $1.7 billion in future milestone payments. The deal should close in Q3 2024.

 

The GDP growth rate (second estimate) for Q1 2024 matched expectations as it decreased to 1.3% from the prior estimate of 1.6%, which was a decrease from the Q4 2023 reading of 3.4%. The 1.3% rate is the lowest growth since the contractions seen during the Covid pandemic.


This week…

The following company reports earnings this week: LULU.

 

On Monday, the manufacturing PMI for May is expected to increase to 49.8 from 49.2, which pushed the metric back into contraction after the prior figure snapped a streak of 16straight readings below 50. On Wednesday, the non-manufacturing PMI for May is expected to increase to 50.5 from 49.4, which snapped a streak of 15 straight months of an expansionary reading and was the first contraction since December 2022.

 

On Wednesday, the ADP employment change may decrease to 180,000 from 192,000. On Friday, the unemployment rate is expected to remain at 3.9%, nonfarm payrolls are forecasted to increase to 180,000 from 175,000, and average hourly earnings month-over-month are expected to increase to 0.3% from 0.2%.


Thanks for reading!

- The Rockline Team