Economic Update 6-8-2026

Economic data included improvement in manufacturing and services ISM indexes, in addition to strong gains in the May employment situation report, led perhaps some temporary factors.

Equities fell back for the first time in weeks as technology-related sentiment paused. Bonds also lost ground as interest rates rose. Commodities were mixed with gains in energy being offset by weakness elsewhere.

U.S. stocks started the week positively, but ended negatively for the first time in weeks, as markets were less enthused about the overly-strong jobs report, as it confirmed the low likelihood of Federal Reserve cuts anytime soon, at least based on weak labor conditions. Then again, after a strong stock market run as of late, it often doesn’t take much to generate a reason to take a bit of a breather. By sector, gains were led by energy and health care, up over 2% each, while recent leaders technology (Microsoft and Intel), consumer discretionary (Amazon and Tesla), and communications all fell back by -4% to -6%. Semiconductors pulled back especially late in the week, in contrast to their exceptional upward run since the end of March. Real estate also saw gains of over a percent.

Foreign stocks fell back in similar fashion to U.S. markets last week, with developed markets outperforming emerging. International markets reacted to track Middle East developments, an estimated outright shrinkage of the Eurozone economy by a few tenths of a percent in Q1, and also the new U.S. administration’s new proposed tariff against imports ‘produced with forced labor,’ which would effectively raise the tariff level by about a half-percent to just above 11%. In the latter, a sell-off in technology-related names especially punished recent favorites South Korea and Taiwan. The South Korean index has become increasingly concentrated towards Samsung and SK Hynix, which together represent nearly 50% of the country’s market cap, being pushed upward by semiconductor demand in recent months.

Bonds fell back again as interest rates ticked up along the yield curve, not helped by the strong employment report. Governments outperformed corporates slightly, except for floating rate bank loans, which were little-changed for the week. International bonds on the unhedged side were pulled down by a stronger dollar as well.

Commodities were mixed, with slight gains in energy offset by sharp declines in precious metals (higher interest rates) and agriculture (wheat, corn, and soybeans, due to signs of favorable U.S. growing conditions and higher supply). Crude oil rose another 3% last week to just over $90/barrel, as Middle East tensions remained high.

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.