• Stocks waver with geopolitical tensions back in focus – Equity markets closed lower on Wednesday as a flare-up in geopolitical tensions weighed on investor sentiment. The U.S. launched strikes against Iran overnight in retaliation for Iran’s downing of a U.S. helicopter, adding uncertainty to an already fragile geopolitical backdrop. Sentiment was further pressured after President Trump suggested Wednesday morning that negotiations have been taking too long. The S&P 500 finished lower by 1.6%, while the tech-heavy Nasdaq declined by 2%. Despite the geopolitical escalation, oil prices closed only modestly higher, with WTI crude finishing just above $90 per barrel. On the economic front, May CPI inflation was in line with expectations, with headline CPI rising 4.2% year-over-year and core CPI increasing 2.9% annually. Bond yields closed slightly higher, with the 10-year U.S. Treasury yield closing near 4.55% and the 2-year yield around 4.13%.
   
• May inflation data gives the Fed room to remain patient – Headline CPI for May was in line with expectations, rising 0.5% month-over-month and 4.2% year-over-year, marking the strongest annual increase since April 2023. A key driver of the headline increase was a 3.9% monthly rise in energy prices. However, inflation trends looked more encouraging beneath the surface. Core CPI, which excludes food and energy, rose 0.2% in May and 2.9% from a year ago, with the monthly gain coming in below expectations for a 0.3% increase. Additionally, core goods prices posted their first monthly decline since May 2025, while services inflation remained contained, rising 0.3% on the month. From a Fed policy perspective, we expect policymakers to acknowledge that upside risks to inflation have increased in recent months, and they are likely to remove the easing bias from their policy statement at next Wednesday's meeting. However, we believe the bar for a Fed rate hike remains high in the near term, particularly given signs that inflation has not yet broadened meaningfully beyond energy.
   
• Central bank watch – Global monetary policy is in focus this week with the Bank of Canada leaving its policy rate unchanged this morning, while the European Central Bank meets tomorrow and is expected to deliver a 0.25% rate hike, taking the deposit rate to 2.25%. Next week brings decisions from the Bank of Japan, Bank of England and Federal Reserve. The Fed and BoE are expected to stay on hold, while the BoJ is expected to raise its policy rate by 0.25% to 1% — which, if delivered, would mark its highest level since 1995 — as Japan continues to show signs of emerging from decades of sluggish growth and deflation. For the Fed, next week’s meeting will be Kevin Warsh’s first as chair and will include an updated set of economic projections. We are aligned with markets in expecting the Fed to remain on hold next week, and we believe policymakers are likely to stay on hold in the near term. While risks of a hike have risen amid ongoing uncertainty in the Middle East and inflation that has been above target since 2021, we think the Fed will be willing to look through an oil-price-driven spike in inflation.
  
  Looking at the bigger picture, while the global monetary policy backdrop is likely set to tighten at the margin, we expect any renewed rate-hiking cycles to be relatively short-lived — particularly if geopolitical tensions in Iran ease and global oil flows normalize. The global economy also appears to be entering this period on solid footing. In the U.S., job growth has reaccelerated in recent months, while signs of broad-based layoffs remain limited and the unemployment rate stands at 4.3%. Overseas, the eurozone unemployment rate remains near historic lows, and manufacturing activity in Japan has been resilient in recent months. Against this backdrop, we continue to believe opportunities remain attractive across global equity markets.

Brock Weimer, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Markets close lower as technology rebound loses momentum - Equity markets finished lower on Tuesday as weakness in technology stocks offset gains across most other sectors. Bond yields declined, with the 10-year U.S. Treasury yield at 4.52%. Internationally, Asian markets finished mixed overnight, while Europe moved lower. In energy markets, WTI oil prices fell below $90 per barrel, likely reflecting cautious optimism after President Trump suggested that an agreement to reopen the Strait of Hormuz could be reached soon. A sustained decline in oil prices would likely help ease inflation concerns, though geopolitical risks remain a potential source of volatility. Meanwhile, the U.S. dollar weakened against major currencies but has remained broadly rangebound in recent trading.
   
• Employment data point to steady job growth – U.S. private employers added an average of 29,000 jobs per week for the four weeks ending May 23, down modestly from 30,500 in the prior report. This reading appears consistent with other recent indicators showing a labor market characterized by slower hiring but limited layoffs. While the pace of job creation remains subdued by historical standards, it appears sufficient to support near-full employment, particularly as labor-force growth slows due to tighter immigration enforcement and an aging workforce. For the Fed, this backdrop suggests that its maximum-employment mandate is largely being met. With the unemployment rate contained at 4.3%, and 7.6 million job openings exceeding unemployment of 7.3 million, policymakers are likely to remain focused on inflation in the near term.
   
• Attention shifts to inflation – The May U.S. consumer price index (CPI) inflation report will be released Wednesday. Consensus forecasts call for headline inflation to rise to 4.2% year-over-year, up from 3.8% in the prior month. If realized, that would mark the highest reading in three years. Core inflation, which excludes the volatile food and energy categories, is expected to edge higher to 2.9% from 2.8%, which would be the highest reading since September 2025. We believe the composition of the CPI report will be important: a rise driven mainly by energy would likely be viewed as less persistent, while broader pressure in core services could carry more significance for Fed policy. In our view, headline inflation is likely to remain elevated for the next several months, largely reflecting the rise in oil prices. However, we expect inflation to moderate heading into year-end and 2027 if energy prices continue to cool. With inflation remaining above the Fed's 2% target for more than five years and the labor market stable, we expect policymakers to keep interest rates on hold in the near term.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.} 

• Markets close mixed after sharp sell-off on Friday- Stock markets were mixed on Monday after selling off sharply on Friday. The technology-heavy Nasdaq was higher, up over 0.8%, after falling over 4% on Friday. The S&P 500 was up modestly, up around 0.3%, while the Dow Jones was lower by around 0.16%. The semiconductor sub-index, which fell by over 10% on Friday, led the rebound on Monday. This comes as Iran announced it was halting its strikes against Israel, although uncertainty around the ceasefire remains elevated. WTI oil prices, which had risen as high as $95 on Monday morning, have settled in the low $91 range, still higher by nearly 60% this year. Meanwhile, U.S. Treasury bond yields rose again modestly, after rising on Friday on the back of a stronger-than-expected U.S. jobs report. Overall, after a strong move higher in the broader markets and especially parts of the technology and semiconductor sectors, we believe some period of consolidation or market volatility may be likely. However, we don't yet see any pullbacks morphing into a deep or prolonged bear market, and thus investors can use volatility to seek opportunities for diversifying portfolios or adding quality investments at better prices, based on their investment objectives and risk tolerance. (View our latest Bloomberg TV clip addressing the recent sell-off here: Monthly Stock Market News | Edward Jones)
   
• Inflation in focus this week – The U.S. consumer price index (CPI) inflation report for May will be out on Wednesday this week. Forecasts are calling for headline inflation of 4.2% year-over-year, above last month's 3.8%. A reading over 4.0% would be the highest since April 2023. Core inflation is expected to be 2.9%, also above last month's 2.8% reading and at the highest level since September 2025. In our view, headline inflation is likely to remain above 4% for the next several months, given the sharp rise in oil prices, but may start to fade heading into year-end and 2027. Nonetheless, from the perspective of the Federal Reserve, higher inflation and a rebounding labor market make the case for a rate cut unlikely. In our view, the Fed remains firmly on hold for the remainder of the year, barring any outsized shocks to the economy.
   
• Market leadership broadens as tech rally goes in reverse - After a strong multi-week run in the technology sector, led by AI-related companies, investors have turned more cautious in recent days. The semiconductor index, which had rallied roughly 50% since April, is now cooling after Broadcom’s chip sales outlook fell short of elevated expectations, triggering profit-taking in the U.S. and global markets. Encouragingly, as tech takes a breather to digest recent gains, other sectors have begun to lead, resulting in broader market participation. Before Friday's drop, both the Dow Jones Industrial Average and the equal-weight S&P 500 reached fresh highs, reflecting this shift. We view this rotation as a healthy development that supports the durability of the current bull market. We expect this trend to continue in the near term, particularly if the consumer and labor market continue to remain resilient, which helps support positive corporate earnings trends, and if progress is made toward reopening the Strait of Hormuz, which could help ease pressure on oil prices and bond yields.

Mona Mahajan;
Investment Strategy

^{Source for all data: Bloomberg.} 

• Markets drop as strong jobs data shift rate expectations - Stocks and bonds moved sharply lower today after a stronger-than-expected jobs report pushed rate expectations and bond yields higher. Technology weakness from the prior session carried over, with the Nasdaq 100 falling 4% and the semiconductor index declining nearly 9%. Overseas, South Korea’s equity index, which has doubled this year and includes Samsung as a major constituent, closed down 5.5%. Defensive areas of the market held up better, with consumer staples and other defensive sectors finishing higher and providing a partial offset to the tech-led weakness. The Dow was more resilient, posting only a modest weekly loss, while the S&P 500’s historic nine-week winning streak came to an end. Elsewhere, oil prices fell 3% on the day, while the 10-year Treasury yield rose to 4.54%.
   
• Blowout jobs report pushes rates higher - The U.S. economy added 172,000 jobs in May, well above expectations of 90,000, while the unemployment rate held steady at 4.3%. Revisions to the prior two months were also positive, adding a combined 93,000 jobs. Job gains were broad-based, led by leisure and hospitality and healthcare. Taken together, today’s report helps reinforce other indicators suggesting the labor market has strengthened this year after a weak 2025. While this acceleration is positive for the economy, it also makes less of a case for the Fed to cut interest rates. Markets reacted accordingly, with stocks extending their pullback and bond yields moving higher as investors increasingly price in the possibility of one additional Fed rate hike by year-end. Encouragingly, there is still no evidence of a wage-price spiral. Average hourly earnings rose 3.4%, in line with expectations and down from the prior month’s 3.6% pace. In our view, the Fed is likely to remove its easing bias at its meeting in two weeks, while maintaining a patient stance as it assesses whether inflation peaks this quarter before responding to any energy-driven price pressures.
   
• Market leadership broadens as tech rally goes in reverse - After a strong multi-week run in the technology sector, led by AI-related companies, investors have turned more cautious over the past two days. The semiconductor index, which had rallied roughly 50% since April, is now pulling back after Broadcom’s chip sales outlook fell short of elevated expectations, triggering profit-taking in the U.S. and global markets. Encouragingly, as tech takes a breather to digest recent gains, other sectors have begun to lead, resulting in broader market participation. Before today's drop, both the Dow Jones Industrial Average and the equal-weight S&P 500 reached fresh highs, reflecting this shift. We view this rotation as a healthy development that supports the durability of the current bull market. We expect this trend to continue in the near term, particularly if progress is made toward reopening the Strait of Hormuz, which could help ease pressure on oil prices and bond yields.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source for all data: Bloomberg.} 

• Markets close higher as sector performance broadens - Equity markets finished higher on Thursday, with the Dow Jones Industrial Average reaching a record high. Strength in health care, financials and communication services offset weakness in technology stocks, where semiconductor manufacturer Broadcom weighed on the sector. Broadcom shares fell about 13% after the company reported fiscal second-quarter revenue that came in slightly below expectations and left its AI chip outlook unchanged. The disappointment appeared to spill over into other semiconductor and AI-related companies. Bond yields declined, with the 10-year U.S. Treasury yield at 4.47%. Internationally, Asian markets finished mostly lower overnight, while Europe advanced. In energy markets, WTI oil prices pulled back, likely reflecting cautious optimism around U.S.-Iran diplomatic talks and the potential for reduced geopolitical risk. Meanwhile, the U.S. dollar was modestly lower against major currencies but has remained largely rangebound recently.
   
• Jobless claims edge higher but remain consistent with a stable labor market – Initial jobless claims rose to 225,000 last week, above the consensus estimate of 211,000. While the increase bears watching, the reading remains low by historical standards and well below the 20-year average of roughly 365,000. Continuing claims, which reflect the total number of people receiving benefits, declined to 1.78 million, suggesting displaced workers are finding new employment. Taken together, the data remain broadly consistent with other recent indicators pointing to a stable labor market. Friday's employment report should provide additional insight, with consensus estimates calling for 105,000 job gains in May, enough to keep the unemployment rate steady at 4.3%.
   
• Productivity slows, but labor costs contained – Nonfarm business sector productivity, which measures output per hour worked, was revised down to a 0.3% annualized gain for the first quarter of 2026. This compares to expectations to remain unchanged from the preliminary reading of 0.8%. While productivity slowed in the first quarter, we believe AI adoption could help drive improvements over time. Hourly compensation rose 2.1% year-over-year, providing growing disposable income that should help support consumer spending and the broader economy. Unit labor costs, which measure wage gains adjusted for changes in productivity, increased 1.8% annualized, below expectations for a 2.3% gain. In our view, the softer unit labor cost reading is encouraging from an inflation perspective, as it suggests wage-related cost pressures remain contained.

Brian Therien, CFA;
Investment Strategy

^{Source for all data: FactSet.}