Stocks Up To Start The Week  Image: Bigstock Stocks closed modestly higher yesterday to start the week. In the morning, all of the indexes were up by more than 1%. But those gains were trimmed by noon, before closing at the lower end of the day's session. But green is green, and it was nice to see. Friday's better than expected Employment Situation report lent support to Monday's session, even if it didn't do much for Friday. Nonetheless, it was a solid report 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), with the unemployment rate holding steady at 3.6% (a near 50-year low). With the Fed getting aggressive on rates, some have worried that it could have a detrimental effect on the economy. But the exceptionally strong jobs market shows no sign of cooling, especially with literally millions more jobs available than unemployed people to fill them. And that underscores the strength in the economy, while undermining worries of recession. St. Louis Fed President, James Bullard, recently shared those sentiments when he said that he does not see a recession this year or next, and sees the economy growing by 2.5% to 3% this year, with a "pretty good second half," driven by "strong consumption this year." That was echoed in the latest FOMC minutes where the Fed acknowledged the strength in the economy, and that they anticipate GDP to 'advance at a solid pace over the remainder of the year.' All eyes will be back on the Fed next week (Wednesday, 6/15), when they're expected to raise rates another 50 basis points. (And they are expected to follow that up with another 50 basis points at their July meeting as well.) But what most traders are interested in hearing about is what does the Fed do afterwards (at their September, November and December meetings)? Curiosity was piqued last week when Fed Vice Chair, Lael Brainard, 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. That's what everyone really wants to know. Much will depend on what inflation readings say by the time September rolls around. So you can be sure every inflation report will be watched like a hawk until then. The next inflation reading will come on Friday, 6/10, with the Consumer Price Index. In the meantime, we've got the report on International Trade in Goods and Services, along with Consumer Credit today. Then MBA Mortgage Applications, and Wholesale Inventories tomorrow. And then Weekly Jobless Claims on Thursday. And we'll see if the markets can extend their rally from the correction lows made just a few weeks ago. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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