Weekly Market Watch

Tech Check

Global equities took a breather last week as the S&P 500^® ended its streak of nine consecutive weekly gains. Amid a value rotation, Technology stocks in the U.S. and emerging markets (EM) led the pullback, following torrid returns since the end of March.

Solid economic data releases, including above-expectation U.S. manufacturing and payrolls reports, pointed to a resilient macro backdrop. Oil prices moved slightly lower with little progress in the U.S.–Iran conflict negotiations. U.S. Treasury yields increased following the release of strong labor market data, leading markets to fully price in a 25-basis-point Federal Reserve (Fed) rate hike by year end.

Market Outlook

This week, investors are focused on Friday’s SpaceX initial public offering (IPO), which will be the largest IPO in history. Global technology and artificial intelligence (AI)-related stocks took a pause last week, with significant growth already priced into the AI trade. However, strong earnings expectations and continued AI infrastructure-related capital expenditures continue to support our tilt towards equities with an overweight to U.S. and EM technology and AI leaders.

Chart of the Week

Strong Payrolls

Job growth has rebounded during the past few months, with the three-month average of payrolls now at its highest level in two years.
A solid labor market provides more flexibility for the Fed to focus on the inflation side of its mandate, which remains above the 2% target.
The recent payroll report supports resilient consumer spending in the face of still-elevated gasoline prices.

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