Despite last week's latest employment report showing that the US labor market is cooling, the cooling rate has not reached the speed that economists are concerned about. US stocks closed near historic highs for another week.

The Nasdaq Composite Index rose by about 2.3%, the S&P 500 Index rose by about 1.3%, and the Dow Jones Industrial Average rose by about 0.3%.

As a new week begins, the market is shifting its focus to data such as the June Fed interest rate decision and key inflation data to be released on Wednesday. The preliminary value of the June Consumer Confidence Index is also expected to be released on Friday.

In terms of corporate news, large technology companies will kick off this week,$NVIDIA (NVDA.US)$a 10-for-1 stock split,$Apple (AAPL.US)$and the Worldwide Developer Conference (WWDC) are scheduled for Monday. In addition,$Tesla (TSLA.US)$CEO Musk's $56 billion sky-high salary plan is expected to be voted on Thursday.

At the same time, as the "big brother" of 2021 Meme stocks Keith Gill returns,$GameStop (GME.US)$its trend continues to attract investors' attention.

The Fed, inflation, and interest rate path

The employment report for May released last Friday showed that the number of new jobs exceeded expectations, providing further support for Federal Reserve officials' general view that the job market still has a solid foundation and interest rates can be maintained at current restrictive levels. For economists, the latest data simply emphasizes that the Fed needs to see further inflation decline before it cuts interest rates.

"Policymakers need to see some slowing inflation reports this summer before they cut rates before autumn," said Sarah House, senior economist at Wells Fargo.

The latest inflation data is expected to be released on Wednesday of this week, when the May Consumer Price Index (CPI) will be released. Wall Street expects overall CPI, including food and energy prices, to increase by 3.4% year-on-year, unchanged from April, and to rise by 0.1% month-on-month, lower than April's 0.3%.

Excluding volatile food and energy prices, inflation is expected to rise by 3.5% year-on-year, lower than the 3.6% increase in April. It is expected that the monthly core price increase will reach 0.3%, the same as last month.

This data will be released a few hours before the Fed announces its latest policy decision. The market generally expects that the Fed will keep interest rates unchanged at this meeting. This will shift the market's main focus to the Fed's latest economic forecast summary (SEP), including the "dot plot," which depicts policymakers' expectations for future interest rate trends, and comments from Fed Chairman Powell.

Michael Feroli, chief US economist at JPMorgan, expects the dot plot to show a median of two rate cuts this year, down from three in March. As for Powell's comments, Feroli believes Powell's comments will be seen as "dovish."

Feroli wrote in a report to clients on Friday: "At the press conference, we expect Powell to express confidence that the economy is still on the right track, and the FOMC can patiently gain confidence that inflation is heading toward 2%."

Expected rate cut times reduced

Before the employment report was released last Friday, the market expected two rate cuts this year. Statistically speaking, after the report was released, this number fluctuated between one and two times.

However, it is worth noting that this change and the 10-year US Treasury bond yield surge by 15 basis points to 4.43%, did not affect investors' optimistic mood, and the S&P 500 index closed near its historical high point last Friday.

Lauren Goodwin, economist and chief market strategist at NY Life Investments, said this may be because the stronger-than-expected employment report is good news for the economy, "and the market has been very concerned about economic growth."

She added that considering the profit background for the rest of this year and the stable growth trajectory of the economy, the market can "calmly" accept the Fed's repricing.

Apple's WWDC conference

Apple's WWDC conference is scheduled to open on Monday, and investors are looking forward to this technology giant disclosing more details about its generative AI.

After a difficult start this year, the stock has risen more than 7% in the past month and has turned into an annual gain recently.

Nvidia stock split.

Nvidia stock will be split at a ratio of 10 to 1 starting on Monday, adjusting the stock price from last Friday's closing price of $1,208.88 to $120.88. A stock split means that as of last Thursday's close, owners of Nvidia common stock will receive ten shares for each share held.

Stock splits are usually seen by investors as a sign of strength, so companies that split their stock usually outperform the S&P 500 index in the year after the announcement. According to Bank of America's analysis, stocks generally rise an average of 25% in the 12 months after a split is announced, while the S&P 500 index has an average ROI of 12% during the same period. Bank of America's investment and ETF strategist Jared Woodard wrote in a report to clients that, “This is true across all market mechanisms.”

It's worth noting that this trend covers the period from the bursting of the technology bubble in 2000 to 2009. Since Nvidia announced its stock split on May 22, its stock price has risen by about 27%.

Musk's compensation plan.

Tesla's annual shareholder meeting is scheduled to take place after-market trading on Thursday, with the most pressing issue being a vote by shareholders on a $56 billion compensation plan for the CEO.

Morgan Stanley analyst Adam Jonas said he advised investors to closely watch this vote, as it would be "meaningful for the company's long-term strategic direction." He added, "While we cannot predict the outcome, we expect the event could result in significant volatility in Tesla's stock price."

In a survey of 109 investors, Morgan Stanley found that most investors believed that approving Musk's compensation plan would boost Tesla's stock price, while not approving it would bring pressure to the stock price. Before this meeting, Tesla's stock price had fallen by nearly 30% this year.

Hold

Analysts

Edited by Jeffrey