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Stock Prices Decline on Investor Skepticism

Market Data as of Week Ending: 06/03/2022 unless noted otherwise

Equities

U.S. stock prices declined as investor sentiment shifted back toward skepticism around the Fed’s ability to restrain inflation. Now that the first quarter reporting cycle
has effectively ended, analyst expectations for the second quarter have come into focus. S&P 500 earnings are expected to grow by 4% for the second quarter
despite a nearly 10% growth in revenue. Growth stocks were able to outpace value and smaller companies generally outperformed their large company peers. It was
another solid week for the energy sector, one of only three sectors that delivered gains. Consumer discretionary and industrials were the other two sectors that edged
out a small gain while health care, real estate, and financials lagged. Developed foreign and emerging market stocks underperformed the U.S.

Bonds

Volatility picked up in the bond market as the 10-year treasury yield increased 0.20% and ended the week at 2.94%. Credit sensitive bonds outperformed while higherquality
government bonds lagged. Among high quality investment grade bonds, those with shorter durations generally outperformed. Yields on investment grade
corporate bonds and high yield corporate bonds narrowly edged higher, and finished the week at 4.3% and 7.3%, respectively.

Macroeconomic Data

Economic data releases were sparse this week and were headlined by a better-than-expected jobs report for the month of May. The U.S. added 390,000 jobs and the
unemployment rate remained unchanged at 3.6%. Job openings decreased from 11.9 million to 11.4 million. Those figures are aligned with Fed expectations given
tighter financial market conditions and recent interest rate hikes to help offset inflation. ISM reported that the manufacturing sector grew for the 24th consecutive
month in their PMI survey that increased to 56.1%. According to ISM, growth in the manufacturing sector remains challenged by excess demand in a supply-chain
constrained environment. Inflation in the European Union soared and reached a record high of 8.1%, putting more pressure on the ECB to begin raising short-term
interest rates.

 

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