Weekly Market Update: June 16, 2025

The nation added an estimated 139,000 jobs in May. That figure was better than the consensus forecast of 125,000 positions, and the unemployment rate was unchanged at 4.2%. The Labor Department report, though, did show some waning momentum, reflected in the downward revision of 95,000 jobs for the previous two-month period and a decrease in the labor force participation rate (from 62.6% to 62.4%). The latter issue bears watching, as it means fewer people are contributing to the workforce, which can have negative implications for economic growth and government finances. 

The pace of price growth at the consumer level continues to moderate. Both the Consumer Price Index (CPI) and the core CPI, which excludes the more-volatile food and energy components, increased just 0.1%, easing from the prior month’s paces. On a 12-month basis, the CPI and core CPI climbed 2.4% and 2.8%, with the core figure, which was expected to reflect the impact of the tariff policies, coming in below forecast. Inflation is easing, but given the uncertain fiscal policy outlook, as the next budget bill is being debated on Capitol Hill and global trade negotiations persist, the central bank may still be hesitant to resume cutting the benchmark short-term interest rate during the next few monetary policy meetings. Investors should note that the June Federal Open Market Committee (FOMC) decision was due shortly after we went to press, at which time the Fed was expected to hold the federal funds rate steady at 4.25%-4.50%. 

Wall Street is focusing on the state of the U.S. economy. After contracting during the first three months of this year, the gross domestic product (GDP) is expected to rebound in the second quarter, getting a boost from the recent sharp drop in imported goods. (Imports detract from the calculation of the GDP estimate.) While the economy is expected to avoid recession, which is two consecutive quarters of negative GDP growth, the Institute for Supply Management’s reports showed contractions in both manufacturing and non-manufacturing activity last month. 

Conclusion: With the near-term fiscal and monetary policy landscape still unsettled, investors would do well to focus on stocks of high-quality, cash-generating companies, as well as top-rated bonds and stable cash instruments. 

Source: ValueLine.com