The May jobs report headlines a quieter week as investors look for confirmation the Federal Reserve will raise rates in the coming month.
This month's nonfarm payrolls report, out Friday, is expected to demonstrate continued strength in the labor market. The U.S. economy is expected to have added 175,000 jobs in May, while the unemployment rate is forecast to hold at 4.4%, according to FactSet estimates. Hourly earnings are anticipated to have risen 0.2% in May.
A robust jobs numbers would cement the chances of a Fed move at the next meeting in June. But even if the jobs reports number is abysmal, it will take more than that to derail the Fed from its plans to hike two more times this year. A June rate hike is a likelihood members have been telegraphing since the May meeting resulted in no change to monetary policy.
"They're pretty steady in raising rates regardless of the jobs report," Ken Mahoney, CEO of Mahoney Asset Management, said in a phone call. "They're pretty strong willed about getting this up and I think they should because if they do falter or the economy does slow down, they'll have some arrows in the quiver to work with."
The Federal Open Market Committee, the decision-making arm of the central bank, is next set to meet June 13-14. Markets already have high expectations for an interest-rate increase at the next meeting of the Federal Open Market Committee, the second of three expected hikes this year. Wall Street has priced in a nearly 88% chance of a 25-basis-point increase to the federal funds rate when the FOMC meets, according to CME Group fed funds futures.
Elsewhere on the economic calendar in the coming week, personal income and outlays for April, the S&P Corelogic Case-Shiller home price index for March, and consumer confidence for May will be out on Tuesday; Chicago PMI for May, the pending home sales index for April, and the Beige Book on Wednesday; the ADP Employment Report and the PMI Manufacturing Index for May, productivity and costs for the first quarter, construction spending for April on Thursday; and international trade for April on Friday.
A more subdued Donald Trump should keep markets on their upward trajectory in the coming week. Trump is due to return to the U.S. after a nine-day international trip, his first since taking office in January. During the trip, Trump attended a G-7 meeting in Sicily, met NATO members in Brussels, sat with the Pope in Vatican City, and engaged in talks with leaders of Saudi Arabia and Israel.
"We are seeing a much more scripted President Trump and, because of that, we are also having less controversy," Ken Moraif, senior advisor at Money Matters, told TheStreet. "If this continues, it will strengthen the conviction of the market that [he] will be successful in getting his agenda passed by the August recess. Should this be the case, I see the market continuing its ascent and we very well could see the S&P at 2500 over the next three months."
Political machinations will be in particular focus in the coming weeks with few earnings to distract markets. More than 95% of S&P 500 companies have already reported earnings with the bulk beating estimates. Earnings at U.S. companies have risen at their fastest pace in nearly six years this reporting season.
In earnings in the coming week, Analog Devices (ADI - Get Report) , Box (BOX - Get Report) , Hewlett Packard Enterprises (HPE - Get Report) , Michael Kors (KORS) , Palo Alto Networks (PANW - Get Report) , and Vera Bradley (VRA - Get Report) will report on Wednesday; Broadcom (AVGO - Get Report) , Ciena (CIEN - Get Report) , Dollar General (DG - Get Report) , Express (EXPR - Get Report) , Five Below (FIVE - Get Report) , Lululemon (LULU - Get Report) , VMWare VMW, and Workday (WDAY - Get Report) on Thursday; and Hovnanian Enterprises (HOV - Get Report) on Friday.
Markets will be closed on Monday in honor of Memorial Day before reopening as normal on Tuesday.
As we head into the three-day weekend, the indices are up six days in a row and hitting all-time highs. Does this mean a correction is on the horizon? James "Rev Shark" Deporre discusses over on our premium site for investors, Real Money. Get his insights with a free trial subscription.
Editors' pick: Originally published May 28.