Thursday's Scoop: Stumble🌤️

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Here’s what you need to know today to inform your work, spending, and investments…

1. Companies are still hanging onto their employees.

2. The economy showed new signs of life this month.

3. The housing shortage keeps pushing prices higher and stalling sales.

Unemployment Rate: 3.9%
^{Still near the lowest rate in 50+ years}

Layoff rates are still very low. The Labor Department reported initial unemployment claims dropped for the second straight week last week to 215,000, roughly average for a healthy economy. Unemployment is historically low, and there are still more than 1.3 available jobs for every unemployed person.

The economy showed new signs of life this month. S&P Global’s composite Purchasing Managers Index (PMI), which tracks manufacturing and service sectors, surged to the highest level in over two years in May. Manufacturing snapped out of a downturn, and the services industry accelerated to a twelve-month high. New orders picked up, but so did costs. Businesses reported rising materials and labor costs that they expect to pass on to customers, a warning sign for more potential price inflation.

30yr Mortgage Rate: 7.0%
^{That’s up from 6.7% a year ago. (MBA)}
Median Home Price: $407,600
^{That’s up from $386K a year ago. (Existing homes - NAR)}

High mortgage costs and rising home prices have stalled sales. The Commerce Department reported sales of newly-built homes dropped 4.7% in April as the median sale price rose to $433,500. This aligns with an earlier report that existing home sales, which comprise most of the market, also slumped in April. High mortgage costs have deterred buyers and kept sellers on the sideline, shrinking the number of homes available for resale. That’s pushed buyers to new construction over the past several months, but that appears to be slowing. The volume of new home sales, which account for 13% of all sales, was 8% lower in April than the year before.

The Market: ⬇️ -0.7%
S&P 500: 5,267.84
1Mo: +4% | 1Yr: +27% | 5Yr: +86%

The market slumped on Thursday as the AI enthusiasm fueled by Nvidia's blowout earnings report faded into renewed concerns about inflation. New economic data pointed to a May rebound that might drive higher prices.