Stocks rose Friday and edged higher during the holiday-shortened week. Throughout the week, there were mixed reports on the state of the economic recovery, particularly in the labor market. Meanwhile, meme stocks returned with a vengeance as AMC took off throughout the week and nearly doubled during trading Wednesday.
While memes and economic reports were the main drivers of the market this week, global politics had their place in the conversation this week as well with two strained international relationships making headlines this week.
Ahead of the summit between President Biden and Russian leader Vladamir Putin, Russia announced plans to ditch U.S. dollar holdings in its $119 billion oil fund if sanctions on Russia continue. The Russian government will make this move to reduce the fund’s vulnerability to current and potential future sanctions.
Meanwhile, the U.S. and China’s relationship faced strains this week as well, after President Biden banned investments in 59 Chinese companies that are allegedly tied to the Chinese military and surveillance. This move was an expansion of former-President Trump’s ban and was put in place by the U.S. to prevent U.S. based investments from being made in companies that undermine the security and/or democratic values of the U.S. and its allies.
Return of the Meme
Despite plenty of international and economic news, retail investors united - again - this week to drive fan-favorite meme stocks to ridiculous heights this week. AMC (AMC), Express (EXPR), and Bed, Bath, and Beyond (BBBY) were all winners this week as the Reddit-championed stocks took a quick trip to the moon.AMC was the biggest mover this week. It gained 95% on Wednesday alone, before pulling back hard on Thursday afternoon and into Friday. AMC still finished the week up 50.05%, despite The company's sellling 11.5 million new shares, which all sold during a single day of trading and at an average price of $50.85 per share. The offering raked in $587.4 million for the company during a three-hour period.
Bed, Bath, and Beyond soared alongside AMC Wednesday, rising 62.1% to $44.19 a share. Since then, the stock has stumbled lower to much more modest levels of $31.69 a share. Despite rising more than 60% in a day, BBBY is finishing the week with single digit gains of 8.67%.
Express, which soared in line with AMC and BBBY Wednesday, rose as much as 48.96% to its peak on Wednesday, before tumbling back down for more modest gains of 11.54% on the week.
Econ Review
Jokes aside, we learned some interesting things about the health of the economy this week.The short week kicked off Tuesday with the ISM Manufacturing Index for May. A reading of 61.2% which slightly beat consensus estimates for 61%. This is the twelfth straight month that the ISM has reported an expansion, which is signified by a reading over 50%. The main takeaway from this report was that suppliers and companies are continuing to struggle to meet the increasing levels of demand that they are being faced with. This is echoed by the fact that deliveries were shown to be slowing at a faster rate than the previous month, while backlogs are growing as material shortages continue. These shortages are also pushing prices higher in some cases.
In the services sector, the ISM Non-Manufacturing Index also beat estimates (63.0%), with a reading of 64.0%. This is, again, the twelfth straight month of expansion as services expand at a record high pace as life gets back to normal.
Meanwhile, in the labor market, weekly jobless claims numbers fell on Thursday to another pandemic low. Net claims for the week ended May 29 were 385,000, which was below 400,000 claims for the first time since March 2020.
Friday’s monthly jobs report for May showed the economy adding 559,000 non-farm jobs last month, which was a big improvement for 266,000 in April, but still short of the 720,000 analysts had expected.
So what's the takeaway from the jobs report? Well, probably the main takeaway from the numbers themselves should be that things are slowly getting better and that it is really hard to predict job numbers during a pandemic.
Nonfarm Private Payrolls increased by 492,000, while the public sector, which includes public schools, helped get the total up to that 559,000 figure. This return to work for educators hopefully helps clear the decks for more people to return to the labor force next month as childcare has been one reason cited by people for not returning to work.
All told, stocks rose this week with the S&P 500 rising 0.61%, while the Dow posted with a gain of 0.68%, the Nasdaq underperformed with 0.41% gains, and the Russell 2000 out-did the lot with 0.68% growth this week.