Commentary
Last week, America got good news and immediately pulled a hamstring celebrating it. The May jobs report blew through expectations on Friday—great for the economy, bad for anyone holding bonds. Tech stocks, which had been having a perfectly good week, heard about it and spent the afternoon having a very public breakdown.
- U.S. stocks had a week that started like a highlight reel and ended like blooper outtakes. The S&P 500 fell by over 2% and the Nasdaq Composite dropped by nearly 5% after Friday’s May jobs report came in at more than double expectations. Technology and consumer discretionary led the way down, while energy, financials, and consumer staples (the defensive, unglamorous sectors that nobody talks about until everyone needs them) held up. Value beat growth. Small caps beat large. International beat U.S.
- U.S. bond prices fell across the board. The 10-year U.S. Treasury yield climbed to 4.55% and the 20 and 30-year both cleared 5%. Strong jobs data means the Fed stays put…which means yields rise…which means bond prices fall. Bond yields and bond prices always move in opposite directions, which is the fixed income market's way of making sure nobody ever fully relaxes.
- In commodities, the strong jobs report calmed the fear trade last week, which is how it's supposed to work, and yet somehow it still felt suspicious. Gold fell nearly $700 from its three-month high. Crude slipped to $90.54, gasoline to $4.66. The U.S. dollar strengthened against most major currencies.
- The May jobs report came in at 172,000—more than double the consensus of 80,000. The unemployment rate held at 4.3%. Since March, interest rate cut expectations have flipped entirely; the market has moved from pricing in 50 basis points of cuts to nearly 30 basis points of hikes by year end. The market wants the economy to do well…just not this well.
- The April Job Openings and Labor Turnover Survey (JOLTS) showed that job openings jumped to 7.6 million, a near two-year high. Hiring fell to 5.1 million. In other words, lots of auditions, but no one’s getting the part.
- The May purchasing managers’ indexes (PMI) for manufacturing and services—monthly surveys of business activity—both came in strong. Manufacturing hit 54, its highest reading since May 2022. The factory floor has now expanded for five consecutive months, which in this economy qualifies as a dynasty. Services rose to 54.5 (its strongest reading in three months), with new orders at 57.3. The World Cup kicks off in three days. The services sector has already checked everyone in, confirmed the reservation, and is running 80% of the American economy while the rest of us figure out which time zone Mexico City is in.
- 1Q26 corporate earnings season is just about finished. With 99% of S&P 500 companies reporting, 1Q26 blended earnings growth came in at 29.4% and 84% beat estimates. Technology grew nearly 57% with a 99% beat rate—meaning the sector has now beaten estimates so consistently that missing would qualify as a plot twist at this point.