Research Reports

In this edition, we catalog catalysts that can catapult GE; life science shares offer opportunities; Cognizant shares are a top pick; and Cooper, Veeva Systems, and NetEase.

Stocks rallied on Friday morning following the passage of the debt ceiling bill in the Senate late Thursday and a stronger-than-expected May employment report. The Labor Department said that the U.S. economy added 339,000 nonfarm payroll jobs last month, up from a revised 294,000 in April and well above the Reuters consensus forecast of 190,000. However, the unemployment rate rose to 3.7% from 3.4%, and growth in average hourly earnings slowed slightly from April. The Dow rose 1.5%, the S&P 1.2%, and the Nasdaq 0.9%. Crude oil rose 2% to $71.50 per barrel, while gold fell $13 to $1983 per ounce.

The U.S. economy generated 339,000 new jobs in May, topping consensus expectations of 190,000 and our forecast of 175,000. The unemployment rate rose to 3.7% from 3.4% in April, which had been a 54-year low. In recent weeks, Fed Chair Jerome Powell and other central bank officials have suggested that they may hold rates steady at the June 13-14 meeting to assess the lagging effects of 10 rate hikes since March 2022. Average hourly earnings increased $0.11 from the prior month and are now 4.3% higher year-over-year, a slight cooling from 4.4% in April. The labor-participation rate was unchanged at 62.6%. In May, job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance. Employment was little changed in mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; information; financial activities; and other services. Job gains in March and April were revised higher by 93,000 jobs. The number of job openings in April increased by 358,000 according a separate report. Demand for workers is still strong with 10.1 million openings, but the number of unemployed rose by 440,000 to 6.1 million. After the jobs report, stocks futures were slightly lower, and the yield on the 10-year Treasury rose slightly. Before this morning's release, futures contracts suggested an 80% probability that the Fed would hold the target range at 5.0%-5.25% at its June meeting and a 46% chance that the pause would continue on July 26. After this morning's release, the probability of the Fed standing pat in June dropped to 66%. Continuing strength in the job market reduced the probability of a continuing pause to 30% in July from 43% and raised the likelihood of an increase to 70%.

On Thursday, the Nasdaq and the Nasdaq 100 again led the market -- this time with advances of 1.3%. But other indices also participated on the day, with the S&P 500 (SPX) and NYSE rising 1%, the S&P 100 up 1.1%, the S&P 400 up 0.8%, and the Russell 2000 up 1.1%.

Stocks moved higher on Thursday after the House passed a bill to raise the debt ceiling. The major indices were all higher in a range of 0.4% to as much as 1.3%. Friday features the jobs report, and at least for a day will swing investor attention back to Fed rate hikes and the status of the U.S. economy.

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Stocks rose on Thursday morning after the House voted late Wednesday to approve the debt ceiling agreement negotiated by President Biden and House Speaker McCarthy. The deal will now go to the Senate, where quick passage is expected. On the employment front, the Labor Department said that first-time jobless claims rose by 2,000 to a seasonally adjusted 232,000 for the week ended May 27, slightly below the Reuters consensus forecast of 235,000. Meanwhile, payroll provider ADP said that U.S. companies added 278,000 jobs in May, down from 291,000 in April but well above the consensus forecast of 170,000. The Dow rose 0.2%, the S&P 0.6%, and the Nasdaq 0.7%. Crude oil rose 2% to $69.50 per barrel while gold rose $15 to $1997 per ounce.