Stocks Down For The Week, But Friday's Employment Report Beat Expectations  Image: Shutterstock Stocks closed lower on Friday and for the week. Even though the markets were not able to make it two up weeks in a row, they were able to hold onto the majority of the previous week's sharp gains. And over the last two weeks, the Dow is up a solid 5.24%, the S&P is up 5.31%, and the Nasdaq is up 5.80%. Friday's Employment Situation report came in better than expected with 390,000 new jobs created in May (333K in the private sector and 57K in the public), vs. the consensus for 325,000 (310K private and 15K public). The unemployment rate held steady at 3.6% (a near 50-year low), even though expectations were looking for 3.5%. But the participation rate ticked up from 62.2% to 62.3%. It was also nice to see April's job tally revised up from 428K to 436K. The industries with the biggest job gains were: Leisure and Hospitality with 84,000 new jobs; Professional and Business Services with 75,000 jobs; Transportation and Warehousing added 47,000 jobs; Construction increased by 36,000; Education was up 83,000 (36K for state government education, 14K for local government education, and 33K for private education); Health Care rose by 28,000; Manufacturing gained 18,000; Wholesale Trade was up 14,000; and Mining added 6,000 new jobs. Interestingly, Retail Trade declined by -61,000. But overall, it was another big jobs report. So why the dip on Friday? Likely some profit taking from Thursday's strong gains. And the previous week's strong gains. With another strong jobs report behind us, the market will shift its attention to next week's FOMC announcement on June 15th , when the Fed is expected to raise rates another 50 basis points. The interest in the next announcement has less to do with June's expected half-point increase, and July's expected half-point increase, since the Fed has essentially told us that's what they plan on doing. What traders really want to know is what is the outlook for September's meeting (and even the November and December meetings)? Fed Vice Chair, Lael Brainard, last week, said she doesn't see the Fed pausing their rate hikes, but she hinted at the idea that they could switch back to the more traditional 25 basis point hike vs. 50 basis points after July. And that's what everyone will be watching. And you can be sure, that's what people will be asking Fed Chair, Jerome Powell, at the Press Conference that will follow the June 15th announcement. While it was disappointing to see the markets finish down last week, all of the major indexes have surged from their recent lows just a few short weeks ago. This week is a new week. Inflation will continue to be a headwind for now. But there's plenty of tailwinds that have been ignored for too long, namely the strength of the economy and the growth outlook. But given the rally off the lows, it looks like some are starting to price that back in. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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