Stocks Continue Climb Above 4,200

“Software is eating the world, but AI is going to eat software.” ~ Nvidia CEO Jensen Huang, 2017

Good evening:

At the start of the year, pundits and experts were skeptical when our own Tom Lee predicted the S&P 500 would break 4,200 before revisiting the all-time high by year-end. Yet stocks, powered by technology, have risen thus far in 2023. By Memorial Day, the S&P had already hit 4,200. Check.

That strength continued in this shortened trading week as markets followed Washington’s progress on resolving the debt-ceiling issue. On Friday, jobs data supplied enough positive news to help stocks close the week strongly. The economy added 339,000 non-farm jobs, far more than the 195,000 economists expected, but unemployment rose to 3.7% (vs. expectations of 3.5%). Perhaps more importantly, average hourly wages decelerated. As Lee notes, “In fact, 83% of industries had a deceleration of wage growth.” Combined, that appears to have been enough evidence of a cooling labor market to temper the market’s fears of another Fed hike in June, while also further supporting the view that we are headed for a soft landing.