The Weekly Economic Update

Alexis DuffyNewsroom

Folded Newspaper
In this week’s recap: Jobs data, regional bank issues, and market reaction

Presented by The PensionmarkMeridien Team, May 12, 2023


Major U.S. equity indices have continued to trade in narrow trading ranges, although last week featured the daily highs and lows expanding to an extent.

Nearly all of last week’s equity strength came on Friday after the release of the most recent employment data. It’s also worth noting that last week featured more regional banking woes, which I discuss in further detail below.

Tallying results from last week, the S&P 500 decreased by 0.80%1, the Nasdaq 100 added 0.10%2, and the Dow Jones Industrial Average declined by 1.24%3.


Nonfarm payrolls rose by 253,0004 in April, beating Wall Street’s estimates for job additions of 180,0005. The labor market data surprised market participants to the upside, given recent clues of a slowing labor market.

Job creation was broad-based6 in April, with the biggest gains in professional and business services (43,000), health care (40,000), and leisure and hospitality (31,000).

The unemployment rate ticked down slightly to 3.4% in April7 from 3.5% in March.


Major U.S. stock indexes rose sharply8 off the jobs data, though positive Apple earnings9 from the evening prior did help the rally.

Here is what’s interesting and had market participants mesmerized all day last Friday: For a long time, starting around when the Federal Reserve began raising interest rates, good news has been bad, and bad news has been good10.

In the past, a surprise jobs number showing more job creation would have indicated that the Fed had not sufficiently slowed the economy and interest rates would need to go higher. Traders have been selling such events for a while now.

However, we got the opposite reaction last week, with major U.S. stock indexes pushing higher after the surprise increase in jobs–and the Dow having its best day since Jan 6th11. What’s changed?

Perhaps traders and investors do not collectively believe the jobs data is reason enough for the Fed to hike again. Bear in mind, the market had already favored a pausing Fed at the next meeting. The jobs data was viewed as Goldilocks-like12 last week–just right.

Here is what we know so far: traders did not sell stocks aggressively on the surprising jobs data. The jobs report came out two days after the Fed hinted at a possible pause in rate hikes. The market seems to believe the Fed is done hiking. Could good news be good news again?


As expected, the Fed did raise the benchmark interest rate last week by 25 basis points. The tenth consecutive rate hike13 of the Fed’s campaign brings the U.S. benchmark interest rate to a range of 5.00% – 5.25%.

Amid the turmoil in regional banks, the Fed hinted that their rate hike crusade might be nearing an end, with a rate hike pause14 in sight.

Judging by the way the markets traded on Friday’s big jobs data and the CME Fedwatch Tool15 (as of Monday morning) showing an 88.0% probability of a pause at the June meeting and a 60.3% chance of a pause in July, the market seems to believe the Fed. 

There is also a 33.6% chance (as of Monday morning) of a 25-basis-point rate cut in July, according to the CME Fedwatch Tool. 


Banking concerns continued last week after the collapse of First Republic Bank. 

Other banks have been feeling stress, too, including PacWest Bancorp (NASDAQ: PACW16) and Western Alliance Bancorporation (NYSE: WAL17).

However, as the broader markets rallied last Friday, we saw extreme price volatility in these two names, with PACW increasing by 81.7%18 last Friday but decreasing by 43.25%19 for the week. Similarly, WAL tacked on 49.23%20 last Friday but finished lower by 26.83%21 for the week.

While the broader stock indexes have been trading in narrow ranges, there has been plenty of volatility in the regional banking space.

Nobody knows if another event is on the horizon in the regional banking space, but we are all tuned in with full attention.


On Sunday, Treasury Secretary Janet Yellen said22 the failure to raise the debt ceiling will cause a ”steep economic downturn.”

She has warned that in early June, there will be a day when the U.S. won’t be able to pay its bills. Special accounting measures23 have been used to keep the U.S. solvent as the debt ceiling deadline approaches.

The president is scheduled24 to meet with congressional leaders on Tuesday to discuss a deal to raise the debt ceiling.


It is that time of the month. Once again, we are due for the monthly check-in on inflation via the Consumer Price Index (CPI) and perhaps the more widely watched Core CPI.

For the May release ( of April data), preliminary estimates25 are for a 5.0% year-over-year rise in headline CPI, which would be identical to March’s data. Month-over-month, prices are expected to rise by 0.4%.

For Core CPI (which strips out volatile food and energy), a 5.5% year-over-year26 rise is the forecast. This would be a tick lower than the 5.6% result in March. 0.4% month-over-month is the estimated rise for Core CPI.

It is safe to say that market participants will be paying attention to the market reaction on CPI day since we saw a rather “opposite reaction” to the recent trading narrative to the jobs data last Friday.


Last week was somewhat of a tug-of-war, with stock index bears having control early in the week and bulls feeling energized post-Fed and amid strong labor market data. Fed comments hinting towards a pause, positive results from Apple, and the healthy jobs report were all market catalysts. Regional banking turmoil remains on the radar.

This week’s economic data calendar features CPI on Wednesday, producer pricing on Thursday, and the University of Michigan Consumer Sentiment on Friday. Market reaction to the data will be in focus after last week’s deviation from the recent norm.

The PensionmarkMeridien Team may be reached at 866-871-9963 or

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.


  1.  Trading View, May 7, 2023
  2. Trading View, May 7, 2023
  3. Trading View, May 7, 2023
  4., May 5, 2023
  5. CNBC, May 8, 2023
  6. CNBC, May 5, 2023
  7. BNN Bloomberg, May 5, 2023
  8. CNBC, May 5, 2023
  9. 9 to 5 Mac, May 4, 2023
  10. NASDAQ, May 5, 2023
  11. Trading View, May 5, 2023
  12. Investor Place, May 7, 2023
  13. Fox Business, May 3, 2023
  14. PBS, May 3,2023
  15. CME Group, May 9, 2023
  16. Google Finance, May 9, 2023
  17. Google Finance, May 9, 2023
  18. Trading View, May 7, 2023
  19. Trading View, May 7, 2023
  20. Trading View, May 7, 2023
  21. Trading View, May 7, 2023
  22. CNBC, May 7, 2023
  23. Fortune, May 7, 2023
  24. CNN, May 1, 2023
  25. Yahoo Finance, May 7, 2023
  26. Yahoo Finance, May 7, 2023

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).