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Weekly Market Update – June 3, 2016

The Dow finished 32 points lower on Friday after a disappointing May nonfarm payrolls report. For the week the Dow was largely unchanged and year-to-date the index is up 2.2%.

May nonfarm payrolls recorded a surprisingly low increase of 38,000 jobs on Friday, compared to the consensus expectation of 160,000.  The data recorded the poorest job creation level in five years, even though a strike at Verizon helped explain some of the weakness. Due to the soft jobs report and renewed concerns about England’s vote to stay in or leave the European Union, the Fed might delay its interest rate hike until at least the July meeting. Accordingly, 10 year Treasury bonds rallied, rising by 1.3% for the week. The US Preferred index PFF rose .4% for the week in reaction to the news. However, contrasting economic data throughout the week still portrayed a healthy economy: unemployment rate fell to a new low of 4.7%, April consumer spending rose the fastest since August 2009, and May’s manufacturing index marked a third month of expansion after five months’ consecutive contractions.

Crude oil was down 1.1% for the week, reaching $48.83 after OPEC failed to implement a production ceiling on Thursday. Iran was a key opponent, rejecting any cap on production, while Saudi Arabia’s oil minister was optimistic that oil prices would continue to recover. US inventory data showed an unexpected decline on Thursday, partially offsetting the negative headlines from the OPEC meeting.

Next week’s economic calendar highlights include productivity and unit labor costs (June 7), jobless claims (June 9) and wholesale inventories (June 9). The Fed meeting is June 14 & 15.

Have a good weekend,

Natalie Do


Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464