Wall Street Sees Dismal End to May, Start of June

Grim predictions from JPMorgan's CEO weighed on sentiment this week

Digital Content Manager
Jun 3, 2022 at 1:57 PM
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Despite being shorter, Memorial Day week was rife with volatility. Stocks returned from the holiday weekend to close May with stiff daily losses. Inflation and recession fears, as well as the European Union's (EU) Russian oil ban, were the main drivers behind investor pessimism, and the Nasdaq ultimately logged its second-straight monthly loss. Wariness over the state of the economy extended into Wednesday, with the three major indexes seeing a dismal start to June, especially after JPMorgan (JPM) CEO Jamie Dimon predicted an economic "hurricane." 

While interest rate concerns persisted on Thursday, the benchmarks were able to snap their two-day losing streak. Investors also brushed off a dismal guidance warning from Microsoft (MSFT), though the broader tech sector was strong. Elsewhere, the ADP report for May showed jobs were created at the slowest pace since April 2020. Stocks were lower again on Friday afternoon, pacing for weekly losses despite an upbeat jobs report that showed nonfarm payrolls rising a better-than-expected 390,000 in May.

Tech Stocks Take the Stage

It was a busy week for tech stocks. Zoom Video Communications (ZM) earned a rare double upgrade from Daiwa Securities, with the firm noting the latest tech selloff provides a "good entry point" for the security. Electric vehicle (EV) names were in focus as well, with Morgan Stanley deeming Nio (NIO) a research tactical idea amid easing Covid-19 restrictions in China, while Li Auto (LI) and Xpeng (XPEV) popped on upbeat delivery data. DocuSign (DOCU) might be a name to avoid, though, after the security neared a historically bearish trendline.

Meanwhile, Salesforce (CRM) surged after a first-quarter earnings and revenue beat, and raised its full-year adjusted profit forecast. Digital Turbine (APPS) saw a fiscal fourth-quarter earnings miss, however, but still caught attention of options traders. Software name C3.ai's (AI) options pits were jumping as well, while Twilio (TWLO) brushed off a Barclays downgrade.

 

 

Retail Stocks Making Moves

Though most retail stocks already reported quarterly results, some are still making headlines. In fact, Morgan Stanley came for American Eagle Outfitters (AEO), downgrading the equity after calling the company's 2023 targets "lofty." Elsewhere, options bears were blasting Chewy (CHWY) ahead of its earnings call. Apparel retailer Lands' End (LE) attempted to brush off mixed quarterly results, while Lululemon Athletica (LULU) edged higher on a beat-and-raise. Kohl's (KSS) attracted attention as well, after buyout bids from private equity name Sycamore Partners and Franchise Group (FRG) reportedly rolled in. 

Key Inflation Data on Tap Next Week

Next week brings a slew of inflation data. More specifically, the monthly and year-over-year consumer price index (CPI) are due out, as well as five-year inflation expectations. Investors will also be eyeing jobless claims, and a federal budget balance update. While the earnings season has come and gone, Bilibili (BILI), Coupa Software (COUP)Dave & Buster's (PLAY)Docusign (DOCU), Five Below (FIVE), Nio (NIO)Ollie's Bargain Outlet (OLLI)Signet Jewlers (SIG), Stitch Fix (SIFX) and Thor Industries (THO) are still slated to report quarterly results. Before then, dive into this week's guideposts for equity bulls and the SPDR S&P 500 ETF Trust's (SPY) recent options volume.

 

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