Stocks Near Record Highs Despite Mixed Economic Signals
Market Recap for the Week of June 8, 2025
The U.S. stock market continues to recover its losses for the year and is now sitting just about 2% below the all-time high, which was reached back in February. Much of the economic data released last week was, in my opinion, negative. This again highlights the point that the stock market and the economy are not the same thing—you can have a rising stock market during a period of economic weakness.
A couple of economic data points stood out this week. One was the ADP employment report, which showed that only 37,000 jobs were added in May. The forecast had anticipated 110,000 jobs, so this was a significant miss. However, this could be an outlier and not necessarily the start of a downward trend in the labor market. In contrast, the official jobs report from the Bureau of Labor Statistics (BLS), released on Friday, painted a much more positive picture of the labor market. ADP uses actual payroll data—as it is one of the largest payroll providers—while the BLS relies on surveys.
Bottom line: tracking the true state of the economy can be difficult, and the different methodologies are not providing a clear or consistent picture. Meanwhile, the bond market experienced a slight decline for the week, as the yield on 10-year government bonds crept back up to 4.50%. I would view these higher yield levels as an opportunity, especially for those holding a large amount of idle cash not needed in the near term.
“The stock market and the economy don’t always move together—last week was a reminder of that.”
Chart of The Week
Our chart of the week comes from the JPMorgan Guide to the Markets. While the chart looks busy with numerous annotations, just focus on the black line. This line measures consumer sentiment—in other words, when the black line is high, individuals feel good about the economy; when it's low, they feel negative.
Notice that sentiment for the month of May is near an all-time low. There are legitimate reasons to be concerned about the economy right now, as uncertainty remains high. However, it’s worth noting that stocks have historically performed well following periods of low sentiment. On the other hand, some of the worst times for stocks have occurred when people were overly optimistic. While there are no guarantees that this trend will continue, history does suggest that buying stocks during periods of low sentiment has often worked out well.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Chart Source: FactSet, Standard & Poor’s, University of Michigan, J.P. Morgan Asset Management.
Peak is defined as the highest index value before a series of lower lows, while a trough is defined as the lowest index value before a series of higher highs. Subsequent 12-month S&P 500 returns are price returns only starting from the end of the month and excluding dividends. Past performance is not a reliable indicator of current and future results.
Guide to the Markets – U.S. Data are as of June 5, 2025.
