After its strongest monthly rally since November 2023, Wall Street is shifting its focus to June, with a packed week of economic data, Federal Reserve commentary, and earnings reports ahead.
Investors are bracing for Friday’s nonfarm payrolls report, expected to show a slowdown in hiring.
Deutsche Bank forecasts a gain of 125,000 jobs, down from April’s 177,000, with the unemployment rate holding at 4.2%. “At present there are no obvious signs of a meaningful deterioration in the labor market,” Deutsche Bank analysts noted, though wage growth and hours worked will be closely watched.
The week will also bring insights from several Fed officials, including Chair Jerome Powell, who speaks Monday at a Washington conference. Markets will be listening for clues on the Fed’s policy stance ahead of the June FOMC meeting.
Deutsche Bank’s AI tool recently flagged the Fed’s tone as “the most hawkish since early 2023.”
Meanwhile, tariff tensions are bubbling back up. “The US President doubled tariffs on steel and aluminum over the weekend,” said Kathleen Brooks, research director at XTB. “This could lead to retaliation from China and renewed equity volatility in June.”
Brooks also highlighted the tech sector’s strong performance in May, with the Nasdaq outpacing the S&P 500 and semiconductor stocks leading the charge. Broadcom, a top performer last month, reports earnings Thursday alongside other heavyweights like Lululemon and DocuSign.
On the macro front, Tuesday’s JOLTS report, Wednesday’s ADP private payrolls data, and ISM surveys will set the tone ahead of Friday’s big jobs number. “Firms are not eager to hire, but neither are they looking to fire,” said Deutsche Bank, noting stability in layoff rates.
Brooks pointed to bond market risks and diverging paths for equities and Treasuries: “The biggest tech names have bulletproof balance sheets – some even have stronger credit ratings than the US government.”
As for the dollar, “We do not think it is ripe for a recovery,” she added, warning that more tariff headlines could pressure the greenback further.
With Powell’s remarks, trade tensions, and the all-important jobs report on deck, volatility could return quickly. “2025 is becoming the year not to take anything for granted,” said Brooks.