Market View: Week of Jun. 05, 2026
ECONOMIC REVIEW¹
The ISM Non-Manufacturing (Services) Index increased to 54.5 in May and exceeded consensus expectations of 53.8. (Readings higher than 50 indicate expansion, while readings below 50 represent contraction).
The advance in May saw new orders and business activity expand at a faster pace while the employment index remained mostly unchanged.
However, the prices paid index increased again from 70.7 to 71.3 in May, which marked its highest reading since August of 2022.
The ISM Manufacturing Index increased to 54.0 in May and exceeded the consensus expectation of 53.0.
May marked the fifth consecutive month the index was in expansion, which hasn’t happened since 2022.
The production and new orders index expanded at a faster pace in May while the employment index contracted less than the previous month (46.4 to 48.6).
Additionally, the prices paid index saw an improvement as the index fell from 84.6 to 82.1, however, it is still significantly higher from the reading of 58.50 at the end of last year.
The nonfarm payroll report for May increased by 172,000 jobs, far exceeding the expected rise of 88,000 jobs.
April and March data was also revised higher by 93,000 jobs; the unemployment rate stayed at 4.3%.
120,000 private sector jobs were added in May, notably the leisure and hospitality sector added 70,000 jobs, its highest reading in the last three months.
However, professional and business services only added 6,000 jobs and the financial activities sector lost 22,000 jobs, its third consecutive month of negative job growth.
How does the most recent economic data impact you?
The services sector remains resilient, posting its 23rd consecutive month of expansion, while manufacturing continues to recover. Improving activity, productivity, and output, along with convergence of public policy and private investment, continue to bolster U.S. manufacturing reshoring efforts.
The strong jobs report reinforced the market's shifting view that the Fed may keep rates elevated for longer. Expectations for two rate cuts in 2026 at the start of the year have disappeared, while the probability of a rate hike has increased.
A LOOK FORWARD¹
This week, investors will be closely watching inflation data for May and consumer sentiment readings.
How does this week’s slate of economic data impact you?
This week’s Consumer Price Index (CPI) report is expected to reflect a further uptick in inflation, driven in part by rising gasoline prices. A stronger than expected reading is likely to reinforce the Federal Reserve’s cautious approach towards future rate cuts and a more hawkish policy stance.
Consumer sentiment, already near historically low levels, is unlikely to improve meaningfully in the near term as elevated energy costs and the ongoing uncertainty surrounding the Iran conflict continues to weigh on household confidence.
MARKET UPDATE²
| Market Index Returns as of 6/05/26 | WTD | QTD | YTD | 1 YR | 3 YR | 5 YR |
|---|---|---|---|---|---|---|
| S&P 500 | -2.55% | 13.35% | 8.43% | 24.56% | 21.53% | 13.42% |
| NASDAQ | -4.65% | 19.22% | 10.92% | 32.46% | 25.51% | 14.06% |
| Dow Jones Industrial Average | -0.21% | 10.15% | 6.63% | 20.96% | 16.96% | 9.99% |
| Russell Mid-Cap | -1.01% | 9.28% | 10.69% | 19.25% | 16.58% | 7.83% |
| Russell 2000 (Small Cap) | -2.91% | 13.71% | 14.71% | 34.57% | 16.76% | 5.82% |
| MSCI EAFE (International) | -1.39% | 9.21% | 7.85% | 20.22% | 16.39% | 8.26% |
| MSCI Emerging Markets | -1.94% | 23.38% | 23.18% | 47.94% | 23.05% | 7.03% |
| Bloomberg US Agg Bond | -0.54% | -0.12% | -0.17% | 5.02% | 3.82% | 0.04% |
| Bloomberg High Yield Corp. | -0.42% | 1.77% | 1.26% | 6.77% | 8.87% | 4.25% |
| Bloomberg Global Agg | -0.89% | 0.68% | -0.40% | 2.41% | 3.35% | -1.73% |
OBSERVATIONS
Major U.S. large-cap equity indices ended the week lower as a stronger-than-expected employment report reinforced expectations that the Federal Reserve may maintain a more restrictive policy stance for longer, while weakness in technology stocks added further pressure on market performance.
The Nasdaq led the decline for the week (-4.65%), followed by the S&P 500 (-2.55%), and the Dow Jones (-0.21%).
Mid-cap stocks also finished the week in negative territory, declining -1.01%. Small-cap stocks were the second weakest performer for the week and posted a loss of -2.91.%.
Developed international markets posted lower returns for the week (-1.39%), while emerging markets also posted weaker returns (-1.94%) as the tech sell-off impacted markets such as South Korea and Taiwan.
Domestic and international fixed income indices fell on the week as interest rates rose. The U.S. Aggregate Bond Index dipped -0.54% as yields rose while high-yield corporate bonds also declined (-0.42).
International bonds underperformed for the week and finished down -0.89%.
BY THE NUMBERS
Trump Signals Interest in U.S. Owning Stakes in Top AI Labs:
President Donald Trump expressed interest in the US government holding equity stakes in leading artificial intelligence developers, saying that he planned to discuss the idea of a partnership with AI companies’ executives as soon as next week. In his remarks, he addressed news reports that the administration would put the stock into a government-run wealth fund that would redistribute some of the financial windfall to the public and signaled his openness to that idea. The president’s comments highlight how debate over how to share the potentially massive gains from the artificial intelligence boom is intensifying in Washington and around the world, ahead of a series of trillion-dollar initial public offerings by AI companies. Calls for profit sharing have escalated in recent months as fears grow over AI replacing human work and jobs³
Knicks Hold Off Spurs Comeback Attempt to Take Game 2 of NBA Finals:
The New York Knicks held off a furious fourth-quarter comeback from the San Antonio Spurs, winning 105-104 in Game 2 of the NBA Finals. The win extends the Knicks’ playoff win streak to 13, the second longest in NBA playoff history. With a 2-0 series lead, New York is now two victories away from not only tying an NBA record but from hoisting the Larry O’Brien Trophy for the first time since 1973. With the win, the Knicks became the third team to win the first two games of an NBA Finals on the road, joining the 1993 Chicago Bulls and the 1995 Houston Rockets. Game 3 is scheduled for Monday at Madison Square Garden in New York at 8:30 p.m. ET.⁴
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1 Data obtained from Bloomberg as of 6/05/26.
2 Data obtained from Morningstar as of 6/05/26.
3 Trump signals interest in US owning stakes in top AI labs
4 Knicks hold off Spurs comeback attempt to take Game 2 of NBA Finals | CNN
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