Weekly Market Update – June 5, 2026

Quick Takes

• Wall Street stumbled to end the week, as a surprisingly strong U.S. jobs report muddied the outlook for interest rates and dampened early enthusiasm around artificial intelligence. Rising Treasury yields, profit-taking in high-growth stocks, and geopolitical tensions weighed on sentiment.
• After nine straight weeks of gains, U.S. equities finally lost momentum. The S&P 500 fell -2.6%, its worst week since May 2025, while the Nasdaq Composite plunged -4.7%, marking its steepest decline since April 2025. Small-cap stocks also struggled, with the Russell 2000 down -2.9%.
• Bond markets struggled as yields climbed in response to the strong economic data and persistent inflation concerns. The 2-year Treasury yield rose to 4.15% and the 10-year Treasury yield increased to 4.53%. The Bloomberg U.S. Aggregate Bond Index fell -0.5%, reversing some of its prior week’s +0.8% gain.

Source: Bloomberg. Data as of June 5, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

Stocks Slide as Strong Jobs Data Clouds Rate Outlook

Wall Street stumbled to end the week, as a surprisingly strong U.S. jobs report complicated the outlook for interest rates and dampened early enthusiasm around artificial intelligence. While investors initially cheered AI-driven optimism, markets turned volatile as rising Treasury yields, profit-taking in high-growth stocks, and geopolitical tensions weighed on sentiment.

U.S. Stocks: Tech Pullback Leads Broad Decline

After nine straight weeks of gains, U.S. equities finally lost momentum. The S&P 500 fell -2.6%, its worst week since May 2025, while the Nasdaq Composite plunged -4.7%, marking its steepest decline since April 2025. Small-cap stocks also struggled, with the Russell 2000 down -2.9%.

The pullback was particularly sharp in mega-cap technology and chip stocks. The Bloomberg Magnificent 7 Index dropped -5.8%, as investors took profits in some of the market’s biggest winners and reassessed elevated earnings expectations tied to artificial intelligence.

A key catalyst was the stronger-than-expected labor market data. Nonfarm payrolls increased by 172,000 in May, more than double expectations, signaling economic resilience but also raising fears that inflation could remain persistent. This pushed Treasury yields higher and led markets to price in a better-than-50% chance of a Federal Reserve rate hike by October.

Despite the broad sell-off, investors didn’t flee equities entirely. Instead, there was a clear rotation into defensive areas. The S&P MidCap 400 Index fell just -0.9%, outperforming large caps, while the S&P 500 Low Volatility Index rose +1.6%. Income-focused strategies also gained traction, with the MSCI USA High Dividend Index up +0.5%. This shift suggests a potential change in market leadership rather than the start of a major downturn.

Meanwhile, energy markets added another layer of volatility, with West Texas Intermediate crude rising +3.6% to $90.54 per barrel, reflecting ongoing geopolitical concerns.

International Stocks: Holding Up Better, But Still Under Pressure

Markets outside the U.S. also declined, though losses were generally more modest. Developed-market stocks, measured by the MSCI EAFE Index, fell -1.4%.

Performance varied across regions. Japan held up relatively well, slipping just -0.5%, while Germany dropped -2.7%. The broader MSCI Europe ex-U.K. Index fell -1.7%.

Economic concerns weighed on sentiment in Europe. Inflation in the eurozone accelerated to 3.2% in May from 3.0%, while the core rate rose to 2.5% from 2.2%, both marking the highest levels in nearly three years. At the same time, economic growth slowed to 0.3% year-over-year in Q1, with a -0.2% quarter-over-quarter contraction. These conditions have led markets to fully anticipate a quarter-point rate hike from the European Central Bank at its upcoming meeting.

Emerging markets fared worse overall, with the MSCI Emerging Markets Index down -2.0%. However, performance diverged significantly. China (+0.2%) and Taiwan (+0.1%) posted small gains, while South Korea sank -6.5%, hit hard by weakness in the memory chip sector.

A strengthening U.S. dollar added pressure globally, with the U.S. Dollar Index rising +1.1%, making international assets less attractive and tightening financial conditions abroad.

Bonds: Rising Yields Deliver Losses

Bond markets struggled as yields climbed in response to strong economic data and persistent inflation concerns. (Bond prices move inversely to yields.)

The 2-year Treasury yield rose to 4.15% from 4.01%, reflecting expectations for tighter monetary policy. The benchmark 10-year Treasury yield increased +9 basis points to 4.53%, while the 30-year yield edged up +2 basis points to 5.0%.

The rise in yields translated into negative returns for fixed-income investors. The Bloomberg U.S. Aggregate Bond Index fell -0.5%, reversing some of its prior week’s +0.8% gain. Investment-grade corporate bonds underperformed Treasuries, indicating some credit spread pressure.

Global bonds performed even worse, with the Bloomberg Global Aggregate ex-U.S. Index declining -1.2%, following a +1.1% gain the week before. Currency effects and rising global yields contributed to the underperformance.

Economy: Strong Labor Market Signals Resilience—and Persistent Inflation

Economic data painted a picture of a resilient U.S. economy, though one still grappling with inflation pressures.

The headline report showed the economy added 172,000 jobs in May, while revisions added 93,000 more jobs to prior months. The unemployment rate held steady at 4.3%, and the labor force participation rate remained unchanged at 61.8%. Since the onset of geopolitical tensions tied to the war with Iran, payroll growth has averaged a robust 188,000 per month.

Further evidence of labor market strength came from job openings. The JOLTS report showed openings surged to 7.618 million in April, far exceeding expectations and marking the highest level in nearly two years. Notably, job openings outnumbered job seekers for the first time in nearly a year, underscoring tight labor conditions.

At the same time, the data revealed mixed signals beneath the surface. The quits rate fell to 1.9%, suggesting reduced worker confidence, while initial jobless claims rose to 225,000, the highest since early February.

Business activity remained strong. The ISM Manufacturing PMI climbed to 54.0, its highest level in four years, while the Services PMI rose to 54.5. Both reports indicated expanding activity and continued growth in new orders. However, price pressures remained elevated, with both surveys showing ongoing increases in costs.

The Federal Reserve’s regional economic survey echoed these trends, noting expanding activity across most districts but highlighting that “prices increased at a moderate to strong pace overall.”

The Bottom Line

The week’s developments highlight a delicate balancing act for investors. A strong economy is good news—but it may also keep interest rates higher for longer. As a result, markets are adjusting, with some investors rotating toward defensive sectors and away from high-growth names.

For now, the message is clear: resilience in the economy may come at the cost of tighter financial conditions—and continued market volatility.

Chart of the Week

The May Employment Situation Report delivered a third consecutive upside surprise, after the much better-than-expected job creation in March and April. U.S. employers reported Nonfarm Payrolls growth of +172,000 for the month, far above the +88,000 new payrolls Wall Street expected. Moreover, April’s reading was revised up to 179,000 from 115,000, and March was revised higher to 214,000 from 185,000. That is the first three-month streak in a year. The breadth of job gains improved in May, with multiple sectors seeing solid advances. Leisure and Hospitality led all sectors with +70,000 jobs, well above the +14,000 per month average over the past year and likely a result of hiring needed for the World Cup. Local government added +55,000 jobs, and Health Care, which has been the leading sector, contributed +35,000 new hires, about in line with its average. Social Assistance added +12,000. On the downside, there were job losses in several industries including the retail trade (-1,100), information (-2,000), and financial (-22,000) industries. The Unemployment Rate remained steady at +4.3% (unrevised) as expected. The Labor-Force Participation Rate, which is the share of Americans working or looking for work, was also unchanged, remaining at 61.8%, which is its lowest level since the fall of 2021. The Employment-Population Ratio increased a tick to 59.2% from 59.1% the prior month. Average Hourly Earnings (AHE) rose +0.3%, matching expectations and up from an unrevised +0.2% the prior month. On an annual basis, AHE were up +3.4%, in line with expectations and down from an unrevised +3.6% the prior month. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked remained at 34.3 hours, matching expectations. May Private Sector Payrolls increased by 120,000, much more than the 89,000 Wall Street was expected. April Private Sector Payrolls were revised to 177,000 from 123,000, and March private payrolls were revised to 202,000 from 190,000. The bottom line is the May employment report was solid and had decent upward revisions from the prior two months. However, the lack of real average hourly earnings, although good from an inflation standpoint, may be a headwind for future consumption.

Fed’s Preferred Inflation Gauge Moderates for a Third Straight Month

Monthly job creation in the U.S. (Jan. 2022–May 2026)

Source: U.S. Bureau of Labor Statistics via FRED, CNBC.
Note: All employees on private nonfarm payrolls, seasonally adjusted

The Week Ahead

With a hat trick of better-than-expected labor market data last week (nonfarm payrolls, JOLTS job openings, and ADP employment change), Wall Street will turn its attention to the other side of the Federal Open Market Committee’s dual mandate: inflation (price stability).

The Bureau of Labor Statistics (BLS) will release the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday. Both inflation measures are running at multi-year highs, and core CPI hasn’t been at or below the Federal Reserve’s two percent target in more than five years. Before the inflation data, Tuesday will bring NFIB Small Business Optimism and New Home Sales, plus Trade and Wholesale Inventories. The week’s economic data concludes Friday with Consumer Sentiment from the University of Michigan.

This week also brings the highly anticipated SpaceX Initial Public Offering (IPO) on Friday, expected to be the largest IPO in history. The company plans to raise $75 billion at a valuation approaching $1.8 trillion, more than double the current record held by Saudi Aramco’s IPO from early 2020. A parade of mega-cap technology company IPOs is expected to follow as Anthropic also filed a draft registration statement this week. Not to be outdone, Google parent Alphabet began the first leg of an $85 billion share sale on Thursday. Late last week, S&P Global announced that it will not fast-track the inclusion of mega-cap IPOs in the S&P 500 Index—they’ll have to wait at least a year before being added.

Six S&P 500 index companies report results this week, among them Oracle on Wednesday and Adobe and Lennar on Thursday.

Beyond financial markets, the World Cup kicks off on Thursday, creating potential tailwinds for travel, media, and sports betting companies.

Did You Know?

$1,000 CAR PAYMENTS – In Q1 2026, 19% of all new vehicle loans included monthly payments of at least $1,000, up from just 5.4% in Q1 2021. Of those loans, 74% were for non-luxury models, and the five models with the highest percentage of $1,000+ monthly payments were all pickup trucks. (Source: Experian)

$7 GROUND BEEF? – After first surging past $5/lb. in June 2023, then $6/lb. in June 2025, the retail price for USDA Ground Beef jumped 20 cents to $6.90/lb. in April and is on pace to hit $7 this summer. Beef prices have jumped $1.10/lb. (+18.9%) over the last year and have doubled since the end of 2013. (Source: USDA)

MORE EGG SALAD, LESS BURGERS – The price of a dozen large eggs at the wholesale level fell to just $0.50 during the week of May 1st, the lowest since August 2019. Since USDA price data began in 2014, a dozen eggs have cost $0.50 or less in just 15 out of 624 weeks. (Source: USDA)

This Week in History

RECESSION REVIEWER – On June 3, 1980, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), the official arbiter of U.S. economic recessions and expansions, finally declared that a recession had begun in January of that year. (Source: The Wall Street Journal)

Economic Review

• The Institute for Supply Management’s (ISM) Manufacturing PMI increased to 54.0% in May, above expectations for 53.0% and up from an unrevised 52.7% the prior month. That is now five straight months solidly above 50%, following 11 consecutive months below 50% (above 50% indicate economic expansion, levels below 50% indicate contraction). New Orders, a sign of future demand, increased to 56.8% from 54.1% the prior month. The Production index rose to 54.3% from 53.4%. The New Export Orders index improved to 50.6% from 47.9%. The Employment component rose to 48.6% from 46.4% the previous month. Regarding the inflationary aspect of the report, the Prices index fell to 82.1% from 84.6% the prior month.  
• The ISM Services PMI also improved, up to 54.5% in May from 53.6% the prior month (unrevised). That is the 23rd consecutive month in expansion and easily beats expectations to come in at 53.8%. Service-oriented companies, such as restaurants and retailers, employ the majority of Americans. To be sure, this report was mixed. The New Orders index jumped to 57.3% from 53.5% the prior month, and the Business Activity/Production component increased to 57.7% from 55.9%. The Employment index slipped a tick to 47.9% from 48.0%, Supplier Deliveries fell to 55.2% from 56.8%, and the Backlog of Orders component dipped to 51.3% from 53.0%. The Prices index increased to 71.3% from 70.7%, marking the 18th consecutive month above 60.0%. 
• The Bureau of Labor Statistics reported the Job Openings Labor Turnover Survey (JOLTS) showed that Job Openings rose to 7.618 million in April, the highest level in nearly two years. That was up from 6.887 million the prior month after being revised higher from 6.866 million, and beat Wall Street estimates for 6.866 million. The increase in openings was driven primarily from an increase in professional/business services which is where most of the decline came from in the prior month. The ratio of Job Openings to Unemployed Workers was 1.03, up from 0.95 the prior month and down from a peak of 2.0 in July 2022, which is the prepandemic level the Fed wants to see it at. The Hiring Rate fell to 3.2 from 3.5 the prior month. It typically ranges from 3.7% to 4.0% in a strong economy. The Number of People Quitting Jobs was 2.977 million, down from 3.160 million the prior month (revised lower from 3.171 million). The record was 4.5 million job quitters in late 2021. The Quits Rate ticked down to 1.9% from an unrevised 2.0% the prior month, which is where it was expected to remain. The Layoffs Rate was also down a tick to 1.1% from 1.2%, remaining below the 1.4% annual average from 2010 to 2019. 
• Outstanding U.S. Consumer Credit increased by $20.7 billion in April (+4.8%), well above expectations for a +$17.370 billion increase, but down from $22.226 billion (+5.2%) the prior month (revised down from the initially reported +$24.855 billion). Growth for Revolving Credit, such as credit cards, rose +$11.6 billion (+10.4%) for the month, following a +$11.6 billion (+9.4%) increase the previous month. Nonrevolving Credit, which tends to be much less volatile than revolving credit and includes auto as well as school loans, rose by +$9.1 billion (+2.9%) following the prior month’s +$10.4 billion (+11.9%) increase. The data from the Federal Reserve is not adjusted for inflation and does not include mortgage loans, which is the largest category of household debt. 
• The Commerce Department reported that Factory Orders ramped up +4.8% in April, beating expectations to rise +4.6% and up from +1.8% the prior month (after being revised higher from +1.5%).  Factory Orders Excluding Transportation were up +1.3%, beating expectations to rise +0.8%, but down from +1.8% the prior month (revised higher from the originally reported +1.6%). The final read for April Durable Goods Orders (long-lasting items such as televisions, appliances, and transportation equipment) was +8.0%, a tick higher from the advance report two weeks earlier of +7.9%, which is where they were expected to stay. That followed a +1.3% increase the prior month. Durable Goods Orders Excluding Transportation were up +1.1%, unchanged from the advance reading and up from +0.9% the prior month. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), and a proxy for business spending, slid -1.0%, a tick above the -1.1% advance reading and down from a +3.8% increase the previous month. Core Capital Goods Shipments, which are factored into GDP, rose +0.4%, unchanged from the preliminary read and compared to a +1.3% rise the month before. The inventory-to-shipments ratio was 1.50 compared to 1.51 the month before. A key takeaway from the report is that the headline number masked some weak internals, particularly business spending.
• The Commerce Department reported Construction Spending for April increased +0.4%, better than the +0.2% expected which is where it was the previous month after it was revised sharply lower from the originally reported -0.3%. On a year-over-year basis, Construction Spending was up +0.9% following the +1.6% annual rate the prior month. Total Private Construction was up +0.4% in April, following a +0.8% increase the previous month. Total Public Construction also increased +0.4%, up from the -0.2% decrease the prior month. Private Residential Spending was up +0.8% after a +1.7% in March. Private Nonresidential Spending was up +0.1% after a -0.2% dip in March. The report showed that Single-Family Construction was up +1.4% following a +2.7% increase in March. 
• Weekly MBA Mortgage Applications fell -2.5% for the week ending May 29, following a -8.5% drop the prior week. The Purchase Index fell -2.9% after slipping -0.4% the prior week. The Refinance Index dipped -2.3% after an -18.1% plunge the prior week. The average 30-Year Mortgage Rate rose to 6.57 % from 6.65% the prior week.
• Weekly Initial Jobless Claims rose by +13,000 to 225,000 for the week ending May 29, which was worse than expectations for 215,000. The prior week was revised down by -1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) fell by +8,000 to 1,777,000 for the week ending May 22, which was better than expectations for 1,780,000. The prior week’s reading was revised lower by -1,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% U.S. Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.