Markets traded flat to start the shortened trading week after honoring Memorial Day on Monday. This week is very light on earnings reports but dense with economic data as the Employment Situation Report for May will come out Friday morning. Additionally, the ADP Employment Change and unemployment claims data will be released on Thursday. As investors take in new employment data as well as inflation trends, many traders are keeping an eye out on cryptocurrencies and reddit stocks with large price fluctuations recently.
Jobs Report
The monthly jobs report is expected to show 720,000 jobs added last month after just 266,000 were added in April. The ADP Employment Change on Thursday is meanwhile expected to show an increase of 675,000 jobs in May in private sector employment following a 742,000 rise the previous month. The expected dip in ADP Employment Change for May still remains higher than the private sector jobs added in March (517,000) and far above the change in January (174,000) and February (117,000) this year.In addition to just employment change, the May jobs report is estimated to show a 5.9% unemployment rate. That rate would represent a 0.2% drop from the previous month as unemployment has stayed above 6% since last October and actually increased from March to April going from 6.0% and inching higher to 6.1%. The economy has a long way to go to reach pre-pandemic levels of sub 4% unemployment but is far lower than the more than 10% experienced at the beginning of the coronavirus. The jobs report is also expected to show a 0.2% increase in average hourly earnings after a 0.7% rise in April.
Finally, unemployment claims will be released at the same time as the ADP Employment Change with estimates for 395,000 initial claims, down from 406,000 new claims the previous week.
Crypto and Meme Stocks
Cryptocurrencies seem to have finally stabilized somewhat with Bitcoin (BTC) trading in the mid $30,000 range over the past week and Ethereum (ETH) trading between $2,200 and $2,900 over that same period. These assets remain more volatile than most investments and are down significantly from early in May where Bitcoin was near $60,000 and Ethereum traded over $4,000. However, they have somewhat stabilized recently while the Reddit fueled meme stocks seem to be going on yet another run.AMC Entertainment Holdings (AMC) stock has been on a strong upward climb over the past month, rising from $9 a share to over $31 as of today. The stock in particular jumped today with a 22% gain off news it was selling 8.5 million shares at a 4% premium to Mudrick Capital. The stock had been surging even before the recent announcement with most likely Reddit momentum after its original spike in January this year alongside other stocks such as GameStop (GME).
Speaking of GME, the granddaddy of meme stocks has been on a similar rise to AMC going from around $150 a share early in May to right around $250 currently. GME remains well below the high set back in January but is rising once again and remains WAY above its trading price before the Reddit pump of roughly $18 a share.
Impressively these meme stocks have managed to hold their own for an extended period as many analysts expected AMC and GME to fall back near where they were before the Reddit bonanza. Neither stock remains a good value or smart long term investment at this price but short-term traders looking to speculate on volatility have an alternative to cryptocurrency in these stocks. Speculative investors may also try to bet on what the next meme investment will be as Dogecoin has reached resistance for now and Reddit looks for another vehicle to pump. For everyone else, the impact of these meme stocks seems to mostly be negligible to the overall market and aren’t likely to cause any massive collapse anytime soon.
Economic Events this Week
Wednesday - 7:00 a.m.- MBA Mortgage Applications IndexThursday - 8:15 a.m. - ADP Employment Change - 8:30 a.m. - Initial Claims - 8:30 a.m. - Continuing Claims
Friday - 8:30 a.m. - Nonfarm Payrolls - 8:30 a.m. - Unemployment Rate - 8:30 a.m. - Avg. Hourly Earnings