Jobs Report Not As Weak As Feared

Market Commentary – June 9, 2025

Last week’s ADP report was weak, leading to the market acting worried that the job market was weakening.

However, the opposite happened with the jobs report – it showed that the U.S. labor market, in fact, remains robust, with jobs still growing and the unemployment rate remaining steady at 4.2%. Wages did tick up a bit and that tells us that the consumer is making money. Remember: a strong labor market leads to a strong economy, and a strong economy leads to growing corporate profits, and growing corporate profits lead to stocks moving higher.

Stocks Can Trade Sideways With Summer Rally To New Highs Expected

Despite all the tariff noise, the equity market has rallied sharply and is only 2.5% from record highs. Short-term, stocks are overbought, and price momentum is slowing, as we approach the previous highs. It is normal for markets to get choppy before breaking to new highs, so the month of June will likely see much back-and-forth trading, but we expect new highs to be reached this summer. In our reports, we have highlighted how the market this year has been trading in a pattern very similar to 2018, during President Trump’s first term in office. After a bear market correction, the S&P 500 rebounded to record highs within four months. If the S&P 500 continues to track this pattern, the index should be at a record high in August. Seasonally, equity markets tend to peak in the summer, with August often marking the seasonal high point. We raised our S&P 500 target last week to 7200 over the next 12 months. We originally thought we could reach this target by the end of this year, but we think the tariffs have just postponed this move. In our view, the tariffs have temporarily interrupted the market’s bull rally. At a 12% growth rate, 2Q25 earnings were much stronger than expected. We believe earnings will continue to grow as the economy is still expanding strongly, and because the job market also remains strong, the consumer still has discretionary spending money.