Financial and Economic Brief - June 5, 2018by © Liberty Publishing, Inc.
Strong Employment Signals Rate Hikes
May’s strong employment report of 223,000 new jobs in May including a gain in wages of 0.3%, indicates the Fed is on track to raise interest rates in June and could even add a fourth rate hike to its forecast this year. In addition, the unemployment rate fell to 3.8%, after reaching a low 3.9% in April. Markets had focused on the “wage element” of the jobs report, waiting to see a tick-up in wages that would signal more inflation ahead. A higher inflation rate would confirm the Fed’s forecast for three rate hikes this year and even encourage it to hike a fourth time, as many in the markets suspect it might.
U.S. Stocks Rise
U.S. stocks rose on Monday led by gains in technology shares and Friday’s jobs data, which gave investors confidence that the U.S. economy remained strong. Concerns that bullish economic numbers will lead to faster rises in interest rates and lower future growth have sent U.S. stocks on a tailspin on several occasions this year. But investors said they did not find Friday’s data concerning. “We’re seeing continued enthusiasm and a strong follow-through after Friday’s blockbuster numbers which bolsters the argument that the future is looking very bright,” Andre Bakhos, managing director at New Vines Capital LLC said.
More Store Closings for Sears
Sears Holdings is closing 63 stores because the company hasn’t earned a profit since 2010. Sears continues to cut its footprint, saying Thursday that it will close another 63 Sears and Kmart stores as it tries to reduce costs and regain its traction amidst falling sales. The company will close 15 Kmart and 48 Sears locations in early September, with liquidation sales starting in June. Earlier Thursday, officials said they’d be closing 72 locations out of roughly 100 non-profitable stores but “a small group of stores was pulled from the closing list... as they are being evaluated further,” the company said in a statement.