Market Update – June 9th, 2025

Financial Markets

The market continued its V-shaped recovery from the tariff shock of early April, boosted by a stronger-than-expected jobs report for May that bolstered stocks last week. As of Friday, June 6th, the Nasdaq Composite rose 2.2%, the S&P 500 gained 1.5%, and the Dow Jones Industrial Average increased 1.2%. In the bond market, the Barclays Aggregate Bond Index declined by 0.8%.

Source: Zacks

Market News

May Jobs Report

The May jobs report came in better than expected on Friday, lifting stocks and providing a dose of optimism amid mixed economic indicators. Nonfarm payrolls rose by 139,000 jobs, compared with estimates of 125,000. Job gains came from healthcare, which added 62,000 jobs, leisure and hospitality with 48,000, and social assistance with 16,000. Federal government employment continued falling, losing 22,000 jobs in May. Other industries saw little change.

The unemployment rate remained stable at 4.2%, a relatively healthy level, and average hourly earnings rose to $36.24, up 3.9% from a year ago, outpacing inflation. The average workweek held steady at 34.3 hours for the third consecutive month. Despite several other economic indicators appearing bearish, the May jobs report signaled near term stability in the labor market.

Source: Bureau of Labor Statistics

ISM Manufacturing

The ISM Manufacturing Index came in at 48.5% in May, a slight decline from April and a signal of continued contraction in the sector. This marks the third consecutive month of declining economic activity in manufacturing, following a brief two-month expansion that was preceded by 26 straight months of contraction.

The downturn was driven by falling inventories and new export orders, while prices improved but continued to reflect an inflationary environment. Modest gains in production, supplier deliveries, and new orders helped to partially offset the overall weakness.

Source: Institute for Supply Management

ISM Services

The ISM Services Index fell to 49.9% in May, signaling a contraction in the services sector for the first time since June 2024. The decline was driven by weaker business activity, softer new orders, lower inventories, and a reduced backlog of orders.

While increases in employment, supplier deliveries, and inventory sentiment helped to partially offset the weakness, the overall reading points to slowing momentum. This contraction in services, combined with other economic indicators suggesting slower growth, raises concern despite a relatively strong May jobs report.

Source: Institute for Supply Management

Recession Indicators

Recession indicators are turning increasingly bearish, with five now signaling contraction and three showing neutral readings—the most negative outlook in several quarters. Bearish indicators include the ADS Index, ISM Manufacturing, LEI, CFNAI, and the Anxious Index. The LEI dropped sharply in April, tied to that month’s market selloff and weaker consumer sentiment.

Neutral indicators include the ISM Services Index, which is nearly bearish, just below 50, the Philadelphia Fed’s Business Outlook Survey, and the Employment Trends Index, supported by May’s strong jobs report. There remains a risk is that the U.S. is already in a recession, though it could pan out to be another growth scare similar to 2022, when many indicators looked very bearish, but no recession followed.

Source: Synergy Asset Management, LLC

Tesla Shares Fall. Tesla shares fell sharply last week, dropping as much as 14% amid a public feud between CEO Elon Musk and President Donald Trump. The two exchanged heated comments on social media, with Trump even suggesting the government should halt all contracts with Musk’s companies. With the recent volatility, Tesla’s stock remains down nearly 30% year to date, as Musk’s political activities appear to have negatively impacted sales volumes across several key customer demographics.

Source: Y-Charts

Summary

Markets advanced last week, continuing their recovery from April’s tariff-driven selloff, as a stronger-than-expected May jobs report boosted investor confidence. However, economic data painted a mixed picture—manufacturing and services both showed signs of contraction, and several key recession indicators turned more bearish. Lastly, Tesla shares slid sharply in the second half of last week based on political tensions.

We appreciate your continued trust.

Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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