June 6th Market Overview

Happy Friday.

Strong finish to the week as the May jobs report delivered exactly what the market wanted to hear. The economy added 139,000 jobs versus 125,000 expected. Solid labor data, along with Trump’s announcement of U.S.-China trade talks next week brought some serious postive sentiment before the weekend!

Rick Rieder (BlackRock director guy) said the jobs report gives the Fed exactly what they want.

VIX is back down to pre-tariff levels - feels like we're getting some normalcy back.

Let's dig in...

Executive Summary

1. Jobs data delivered with 139,000 positions beating 125,000 consensus while unemployment held at 4.2%, driving S&P500 above 6000 for the first time since February’s tariff selloff.
   

2. Tesla bounced back hard after losing $152 billion yesterday when Musk and Trump’s public battle spooked investors, with Deepwater calling it an overreaction.
   

3. China trade breakthrough as Trump announced London talks Monday with top officials Bessent, Lutnick, and Greer meeting Chinese counterparts after Xi call resolved rare earth disputes.
   

4. Fear gauge plunged with VIX hitting lowest levels since pre-tariff days while twenty $SPY names reached fresh highs, showing broad market confidence returning.

Market Overview

Key Market Drivers

1. Labor Market Goldilocks: May jobs came in at 139,000 versus 125,000 expected, down from April’s revised 147,000. Health care led with 62,000 new jobs, leisure and hospitality added 48,000. Unemployment held at 4.2%, exactly where Fed officials want it for a non-inflationary economy.
   

2. China Diplomacy: First concrete trade engagement since tariff escalations began. Monday’s London talks follow Trump-Xi call that reportedly resolved rare earth export license disputes, removing a key escalation point.
   

3. Tech Recovery: Microsoft reclaimed largest U.S. company status from Nvidia while Tesla bounced back from its worst single-day loss in company history.

Stock Spotlight

Tesla $TSLA ( ▲ 3.67% ) staged a dramatic recovery after CEO Elon Musk and President Trump traded public attacks yesterday. The stock lost $152 billion in market value Thursday as investors worried about potential government retaliation against Musk’s business empire. Deepwater Asset Management’s Gene Munster called the selloff an “overreaction.”

Lululemon $LULU ( ▼ 19.81% ) cut full-year earnings guidance to $14.58-$14.78 per share from $14.95-$15.15, citing tariff pressures on its Southeast Asia supply chain. The company plans price increases to offset costs.

Broadcom $AVGO ( ▼ 5.0% ) fell despite beating earnings estimates, with free cash flow of $6.41 billion missing the $6.98 billion consensus. High expectations drove the disappointment though analysts maintain the AI narrative remains strong.

Petco $WOOF ( ▼ 23.34% ) crashed after reporting a 4-cent loss versus 2-cent loss expected, with same-store sales declining more than forecast. The company assumes current China tariff levels remain unchanged in its guidance.

Big Name Updates

Microsoft $MSFT ( ▲ 0.58% ) hit fresh record highs and reclaimed its position as America’s most valuable company, overtaking Nvidia $NVDA ( ▲ 1.24% ) on enterprise AI adoption and cloud infrastructure demand.

Apple $AAPL ( ▲ 1.64% ) faces scrutiny ahead of next week’s Worldwide Developers Conference, with investors concerned the event may expose the company’s AI development lag versus competitors.

Trump Media $DJT ( ▲ 3.88% ) recovered alongside Tesla $TSLA ( ▲ 3.67% ) after both fell yesterday when the Musk-Trump feud also pressured Trump Coin cryptocurrency.

Other Notable Company News

Brown-Forman $BF.B ( ▲ 3.16% ) heads toward its worst weekly performance since 1987 despite Friday’s modest bounce. The Jack Daniel’s maker cited an “exceptionally challenging macroeconomic environment” in disappointing quarterly results.

Omada Health $OMDA ( ▲ 21.05% ) debuted on Nasdaq at $23 after pricing its IPO at $19, giving the virtual chronic care company a premium market entry.

Twenty S&P 500 components reached new 52-week highs including Mastercard $MA, Paychex $PAYX, RTX $RTX, IBM $IBM, and Jabil $JBL.

Sector Watch

Bond Market

Treasury yields jumped across the curve as solid jobs data reduced expectations for aggressive Fed easing. The 10-year note hit 4.512% while the 2-year climbed higher.

• BlackRock’s Rick Rieder called the jobs report “music to the ears” of the Fed

• Yield curve steepened as investors gained confidence in economic durability

• Corporate credit spreads tightened on improved risk appetite

Policy Watch

Fed policy expectations shifted as traders dialed back rate cut bets following strong employment data. Fed funds futures show zero probability of June cuts.

• Trump demanded Fed Chair Powell cut rates by “a full point” despite solid jobs data

• Monday’s London trade talks mark first concrete US-China diplomatic engagement since tariff escalations

• Treasury Secretary Bessent’s participation signals focus on economic solutions over political posturing

• Deutsche Bank warned declining immigration poses greater economic threat than tariffs, with labor force growth slowing by 2+ million workers

• Federal payrolls shrank fourth straight month, down 22,000 jobs in May

What to Watch

1. Apple’s AI Reveal: Monday’s Worldwide Developers Conference could determine whether Apple $AAPL can catch up in the artificial intelligence race against Microsoft $MSFT and Google $GOOGL.
   

2. Inflation Data Drop: Tuesday’s CPI and Wednesday’s PPI reports will provide crucial readings following solid jobs data. Any acceleration complicates Fed policy decisions.
   

3. London Trade Talks: Monday’s US-China discussions could provide relief for companies like Lululemon $LULU and Nike $NKE that rely heavily on Asian manufacturing.
   

4. Earnings Outlook: With the lowest growth projections since Q4 2023, early corporate guidance will signal how tariffs and uncertainty impact business outlooks.
   
   
   Thanks for reading 🙂
   
   - John
   

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