New month, new highs

  • Stocks hit fresh 2023 highs, tech rally slows, VIX tumbles
  • Market takes hot jobs number in stride, small caps jump
  • This week: Factory orders, service economy performance

Some hotter-than-anticipated jobs data may have increased the odds the Fed will raise interest rates again, but that didn’t prevent traders from pushing stocks to fresh highs for the year.

At the end of a week that hinted the labor market was still going strong, the monthly jobs reports showed the US economy added far more jobs in May than analysts had expected. The S&P 500 (SPX) responded with its biggest up day since May 5 and a fresh year-to-date high:

Chart 1: S&P 500 (SPX), 4/20/23–5/26/23. S&P 500 (SPX) price chart. Ups and downs (and ups)

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.) Note: It is not possible to directly invest in an index.

The headline: Best week for S&P 500 since March.

The fine print: The tech sector rallied with the rest of the market, but it didn’t outperform the way it had in previous weeks. Also, some of the AI-focused stocks that had recently posted outsized gains paused or pulled back last week.

The number: 339,000, the number of jobs the US economy added in May—74% more than expected. The unemployment rate rose from 3.4% to 3.7%.

The move: The Cboe Volatility Index (VIX) closed below 15 on Friday—the first time it’s done that since February 2020. The small-cap Russell 2000’s (RUT) 3.6% rally on Friday—its biggest up day since November.

The scorecard: The RUT was the strongest US index, ending the Nasdaq 100’s (NDX) streak of market-leading weeks at five:

US stock index performance for week ending 6/2/23. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector returns: The strongest S&P 500 sectors last week were consumer discretionary (+5.8%), real estate (+4.4%), and information technology (+4.1%). The weakest sectors were consumer staples (+0.7%), utilities (+0.7%), and energy (+0.9%).

Stock movers: C3 AI (AI) +33% to $43.95 on Tuesday (then down 27% the remainder of the week), Samsara (IOT) +28% to $24.31 and MongoDB (MDB) +28% to $376.30, both on Friday. MDU Resources Group (MDU) -33% to $19.68 on Thursday, SentinelOne (S) -35% to $13.44  on Friday.

Futures: After falling into a -6.3% hole for the week last Wednesday, July WTI crude oil (CLN3) rebounded more than 5% to close Friday at $71.74. August gold (GCQ3) hit a one-week high of $2,000.70 on Thursday, but sold off sharply Friday to end the week only modestly higher at $1,969.60. Week’s biggest up moves: July hogs (HEN3) +9.6%, July pork cutout (PRKN3) +7.2%. Week’s biggest down moves: June VIX (VXM3) -17%, July natural gas (NGN3) -12%.

Coming this week

This week’s numbers include:

Monday: S&P Global Services PMI, ISM Services Index, Factory Orders
Wednesday: Trade Balance, Consumer Credit
Thursday: Wholesale Inventories

This week’s earnings include:

Monday: Science Applications (SAIC), Gitlab (GTLB), HealthEquity (HQY)
Tuesday: J.M. Smucker (SJM), THOR Industries (THO), Casey’s General Stores (CASY)
Wednesday: Campbell Soup (CPB), Ollie’s Bargain Outlet (OLLI), Verint (VRNT)
Thursday: DocuSign (DOCU)
Friday: Hurco (HURC)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Let’s talk tech momentum

What goes up in the market eventually goes down—although to what extent, and when, can’t be predicted. Given tech’s robust run so far this year, many contrarian-minded traders may be expecting the sector to at least pause, if not give back some of its gains. The sector did cool off a bit last week, but it remains to be seen whether that trend continues or turns into something more significant.

To get an idea of how unusual this run has been, the NDX rallied 7.3% in May—only the 16th time since 1985 the index has followed a six-month (or longer) high with a 7% (or larger) monthly gain.1 Although that’s not much evidence to go on, the tech index didn’t appear to perform worse than usual over the next year. While the NDX’s average 12-month return since October 1986 is 16.7%, its average 12-month return after the 16 other months like May was 23%, with 11 positive returns and five negative.


Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.

1 All figures reflect Nasdaq 100 (NDX) monthly closing prices, October 1985–May 2023. Supporting document available upon request.

What to read next...

Certain options spreads are designed to take advantage of the way different options lose value over time.

Looking to expand your financial knowledge?