June 2 New York

Pinestone Investments

On Thursday and Friday, all three major U.S. stock indexes rewrote their record highs two consective days.  The DJIA rose by 135.53 points Thursday and by 62.11 points Friday, closing at 21206.29 on June 2.  The SP500 gained by 9.01 points to 2439.07 on June 2 while the Nasdaq Composite Index added by 58.97 points on Thursday and by 48.31 points on Friday respectively, closing at 6305.80 on June 2.  the ten year treasury yield was 2.16%.  The rate of the U.S. dollar to the yen was 111.33 and 110.40 on Thursday and Friday respectively.  Crude Oil closed down more than 1 percent on Friday for a second straight week of losses, on worries that U.S. President Donald Trump’s withdrawal from the Paris climate accord could accelerate U.S. production and flood the global oil market.  WTI futures declined 70 cents to settle at $47.66 per barrel or 1.5 percent, ending the week down more than 4 percent.  U.S. job growth slowed in May and employment gains in the prior two months were not as strong as previously reported, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.  Nonfarm payrolls increased 138000 last month, the Labor Department said on Friday.  The economy created 66000 fewer jobs than previously reported in March and April.  138000 job increase in May could still be sufficient for the Federal Reserve to raise its short term interest rates at its June 13-14 FOMC (Federal Open Market Commitee).  The economy needs to create 75000 to 100000 jobs per month to keep up with growth in the working-age population.  Monthly payroll gains are averaging 162000 this year, a step down from the 2016 pace of 187000, following a below-forecast rise last month and downgrade revisions to March and April in Labor Department figures released Friday.  If there is a developing shortage of labor that makes it harder for employers to fill vacancies, that would mean slower payroll gains, along with a declining unemployment rate and faster wage growth.  So, the latest data should not be interpreted as an indication that the labor market has turned sour.  Businesses are reluctant to expand headcounts until they see more evidence the Trump administration’s plans are translating into legislation that will reduce taxes and stimulate more growth.

Kazuhide Matsuishi

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