Good Morning,
I hope everyone had a chance to enjoy some of the sunshine this past weekend. It looks like we may see our first 90° day on Wednesday!
Markets appear poised to bounce back this morning after last week’s stronger than expected May jobs report increased expectations for a rate hike and sparked volatility. As we’ve seen in recent years, what would typically be considered good news (strong labor market) can sometimes negatively impact equities when it raises the likelihood of higher interest rates.
The ongoing conflict with Iran, along with the resulting fluctuations in oil prices, remains a key driver of inflation. Headlines continue to evolve following strikes between Iran and Israel over the weekend. Additionally, several corporate earnings reports have pointed to a more strained consumer, which I believe will become more evident in future earnings if a resolution to reopen the strait remains elusive.
This is an important week for domestic markets, with the latest CPI report due on Wednesday and the anticipated SpaceX IPO on Friday. While near-term momentum could build around SPCX, I expect focus will ultimately shift back to the AI narrative, balance sheet fundamentals, and geopolitical developments.
Overall, I remain constructive on the path forward, though I see oil prices becoming an increasingly significant factor in corporate profitability.
Attached is this week’s Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!