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June 8, 2026
Good morning,
Markets
For the week ending 6/5/2026:
- The S&P 500 decreased 2.6% to close at 7,383.74.
- The yield of the 10-year Treasury bond increased from 4.45% to 4.54%.
- Oil increased from $87.36 to $90.54.
- The CBOE Volatility Index (VIX) increased from 15.32 to 21.51.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.16 (USD stronger from a week ago)
- GBP/USD: 1.34 (USD stronger from a week ago)
- USD/JPY: 159.99 (USD stronger from a week ago)
Market Headlines
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Stocks Streak Ends: After nine consecutive weeks of gains, the S&P 500 closed 2.6% lower on Friday. The Nasdaq fell 4.7%, while the Dow slipped just 0.2%. The stock market experienced a massive sell-off primarily because a surprisingly strong U.S. jobs report reduced expectations for future interest rate cuts, pushing Treasury yields higher.
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Jobs Remain Strong: Friday’s jobs report showed that the labor market remained strong throughout May, as the U.S. economy added 172,000 jobs, surpassing economists’ expectations for the third consecutive month. March and April payroll figures were also revised significantly higher, adding a combined 93,000 previously uncounted jobs to the prior two months. The unemployment rate remained at 4.3%, and while average hourly earnings rose 3.4% year-over-year, wage growth continued to lag inflation. Investor focus remains on how persistent labor market strength could influence the Federal Reserve’s timeline for potential interest rate cuts.
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Bond Yields Rise: U.S. government bond yields rose following Friday’s better-than-expected jobs report, reigniting the recent bond market sell-off that had paused over the prior two weeks. Stronger labor market data led investors to scale back expectations for near-term Federal Reserve interest rate cuts, putting renewed upward pressure on Treasury yields across the curve.
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Volatile Oil: Oil prices were volatile throughout the week, peaking on Wednesday following an escalation in Middle East tensions, including attacks on sites in Kuwait and subsequent U.S. responses. However, prices retreated on Friday, with Brent crude falling roughly 2% to the $92–$93 per barrel range and WTI crude slipping to just above $90, amid ongoing diplomatic efforts between the U.S. and Iran. Despite the pullback, energy markets remain sensitive to geopolitical developments and concerns over potential disruptions to global oil supply.
Key Takeaway
As momentum in the labor market continues to build and inflation risks remain persistent, investors are increasingly concerned that the Federal Reserve could raise interest rates later this year. Following Friday’s stronger-than-expected U.S. jobs report, equity markets sold off sharply, with major indexes closing lower for the first time in nine weeks. May’s employment data provided further confirmation that hiring has accelerated significantly throughout 2026, marking a sharp reversal from expectations at the start of the year. In 2025, hiring activity had largely stalled, strengthening the case for looser monetary policy and potential rate cuts. At the time, then-Fed Chair Jerome Powell indicated that the softening labor market was a key factor behind the FOMC’s expectation for rate cuts in 2026. Now, just six months later, the U.S. economy has added more than 500,000 jobs, nearly double the 300,000 jobs created during all of 2025. While the rebound in hiring should help support consumers whose budgets have been strained by higher energy prices amid ongoing Middle East tensions, it has also heightened concerns that the Fed may need to tighten policy further to prevent inflation from reaccelerating. Investors are now pricing in at least one 0.25% rate hike by the end of 2026, with the possibility of another quarter-point increase in 2027. Although the Fed is widely expected to leave interest rates unchanged at its upcoming June meeting, markets will closely watch whether newly sworn-in Fed Chair Kevin Warsh signals that additional rate hikes remain on the table later this year.
The Week Ahead: June 8 – 12
- Monday: No major reports scheduled
- Tuesday: Wholesale inventories, Existing home sales
- Wednesday: Consumer Price Index (CPI), Federal budget
- Thursday: Producer Price Index (PPI), Initial jobless claims
- Friday: Consumer sentiment
Until next week,
Weller Financial Group
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