U.S stocks lost ground during the first trading session of June after stern comments from JPMorgan (JPM) boss Jamie Dimon warning of a "hurricane" bearing down on the U.S. economy.
The S&P 500 fell 0.7%, the Dow lost 0.5%, and the Nasdaq declined by 0.7% on Wednesday.
After rallying to start the trading session, the major averages slipped following solid readings on the U.S. manufacturing sector, which were shortly followed by Dimon's comments at an investment conference.
Data from the Institute for Supply Management showed the U.S. manufacturing sector grew faster-than-expected in May, another signal that fears of an imminent downturn in the U.S. economy may be overblown.
JP Morgan CEO Jamie Dimon listens as he is introduced at the Boston College Chief Executives Club luncheon in Boston, Massachusetts, U.S., November 23, 2021. REUTERS/Brian Snyder ·Brian Snyder / reuters
The April report on job openings from the BLS also showed a decline in the number of job openings, a data point the Federal Reserve is likely to view positively as it works to cool the labor market.
The biggest corporate headline of the day crossed at around 3:30 p.m. ET, when Meta Platforms (FB) announced COO Sheryl Sandberg would be stepping down from her position at the company. Sandberg, who joined Facebook in 2008, will stay on the company's board after leaving the company in the fall.
Meta Platforms shares finished Wednesday's trading session down 2.5%.
An upbeat earnings report from Salesforce (CRM) late Tuesday gave investor sentiment a boost early Wednesday after the software company raised its profit forecast and said it did not see any significant impact on operations from macroeconomic uncertainty.
The outlook was in contrast with some downbeat quarterly results from corporate peers that signaled struggles with rising costs and supply chain imbalances ahead.
“We’re just not seeing material impact on the broader economic world that all of you are in,” Salesforce Chief Executive Officer Marc Benioff said in an earnings call. Shares of Salesforce gained 9.8% during Wednesday's session.
Despite a month of sharp gyrations in equity markets, the S&P 500 churned out a small gain of less than 1% – even after seven consecutive weeks of losses briefly dragged the index into bear market territory. The Dow Jones Industrial Average also closed slightly up for May, while the Nasdaq Composite deepened losses for the month amid a continued rotation out of technology stocks.
In the past decade, the month of June has returned an average 1.4%, ranking it the fourth best month of the year, according to data from LPL Financial. Over the past 20 years, however, the month has been weak, with only September worse for stocks.
“June has something for everyone, as it is no doubt a very weak month historically, but the past decade it has been strong,” LPL Financial Chief Market Strategist Ryan Detrick said in a note. “Still, after the big bounce in late May, we wouldn’t be surprised at all if this recent strength continued into a potential summer rally.”
Bespoke Investment Group pointed out in a note Tuesday that summer months have historically seen weaker stock market returns relative to winter and early spring. According to data from the firm, the Dow Jones Industrial Average has averaged a gain of 0.47% in June over the last century, but has been a “coin flip” for positive returns during the month, logging gains only 52% of the time.
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4:10 p.m. ET: Wall Street finishes the first day of June lower
Here's where the major indexes were trading at the end of Wednesday's session:
10:46 a.m. ET: Jamie Dimon says 'hurricane' coming for the U.S. economy
JPMorgan (JPM) CEO Jamie Dimon is making waves on Wednesday with his comments at an investor conference.
Speaking at Bernstein's Strategic Decisions Conference, Dimon said the U.S. economy is facing a "hurricane" as the Federal Reserve continues its process of normalizing interest rates. Dimon said he'd previously referred to impending challenges facing the economy as "storm clouds."
"Right now, it's kind of sunny, things are doing fine," Dimon told the conference, according to a transcript from S&P Capital IQ. "Everyone thinks the Fed can handle this. That hurricane is right out there down the road, coming our way. We just don't know if it's a minor one or Superstorm Sandy...or Andrew or something like that. And you got to brace yourself."
Dimon added that he thinks the banking industry is in great shape, as are consumers sitting on over $2 trillion in savings.
"Jobs are plentiful, wages are going up, consumers are spending," Dimon said. "[The] lower income folks, not quite as much as before, but everybody else, it looks like they have $2 trillion more savings... I don't think that's going to stop...spending [in] 6 or 9 months. And so that to me is the bright clouds out there."
—Myles Udland, senior markets editor
10:20 a.m. ET: Manufacturing activity remains resilient in May
Two readings on the U.S. manufacturing sector in May showed continued growth amid investor concerns of an impending economic slowdown.
For both reports, any reading over 50 indicates expansion in the sector while readings below 50 indicate contraction.
The data wasn't all sunny, however, with the ISM's employment index showing an unexpected decline last month. Additionally, S&P's report showed business confidence falling to the lowest level since October 2020.
"A solid expansion of manufacturing output in May should help drive an increase in GDP during the second quarter, with production growth running well above the average seen over the past decade," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "However, the rate of growth has slowed as producers report ongoing issues with supply chain delays and labor shortages, as well as slower demand growth."
Commenting on the ISM's latest report, Tim Fiore, chair of the ISM's Manufacturing Business Survey Committee, said, "The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment. Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain."
—Myles Udland, senior markets editor
10:07 a.m. ET: Job openings slide in April
The latest JOLTS — or Job Openings and Labor Turnover Survey — report showed 11.4 million jobs were open on the last business day of April, down from 11.86 million the prior month. Economists expected this report to show 11.35 million jobs were open at the end of April.
According to the BLS, the biggest decreases by industry were in health care and social work, retail, and food services, which all saw openings drop by more than 100,000 from March to April.
Job openings are being closely watched by economists for signs of potential cooling in the labor market, with Fed chair Jay Powell telling reporters last month the number of job openings relative to unemployed workers shows an "imbalance" in the labor market.
Wednesday's data suggest a potential step towards re-balancing this market.
—Myles Udland, senior markets editor
9:33 a.m. ET: Wall Street kicks off June with gains after closing out volatile month
Here's where the major indexes were trading at the start of Wednesday's session:
Gold (GC=F): -$14.70 (-0.80%) to $1,833.70 per ounce
10-year Treasury (^TNX): +10.1 bps to yield 2.8440%
NEW YORK, NEW YORK - MAY 25: Traders participate in a moment of silence at the start of the trading day for the victims of the school shooting in Texas on the floor of the New York Stock Exchange (NYSE) on May 25, 2022 in New York City. At least 21 people were killed, including nineteen children. (Photo by Spencer Platt/Getty Images) ·Spencer Platt via Getty Images
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
