US stocks slid on the first day of June, after JP Morgan boss Jamie Dimon warned investors of a “hurricane” closing in on the US economy as it faces a slew of challenges, including tightening monetary policy and Russia’s invasion of Ukraine.
The S&P 500 dropped 0.7%, the Dow was down 0.5%, and the Nasdaq ended down by 0.7% on Wednesday.
The trading session began with a rally, as manufacturing data came in, showing the sector grew faster than expected, leading many to think the idea of an imminent downturn in the US economy was overblown.
Two reports on the manufacturing sector showed continued growth despite investor concerns of an economic slowdown.
The Institute for Supply Management’s Manufacturing PMI for May rose to 56.1, up from 55.4 in April. It was the 24th straight month of growth. S&P Global’s U.S. Manufacturing PMI landed at 57 in May, down from 59.2 in April.
In each report, any number over 50 indicates an expanding sector, while anything below 50 indicates a contraction.
Adding to sentiment was the upbeat earnings report from Salesforce on Tuesday, when the company raised its profit forecast, and said it saw no problems from any macroeconomic uncertainty. Salesforce Chief Executive Officer Marc Benioff said, “We’re just not seeing material impact on the broader economic world that all of you are in.” Shares of Salesforce rose 9.8% during Wednesday’s session.
Then Jamie Dimon said at a conference sponsored by Alliance Bernstein Holdings Wednesday, “”Right now, it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road, coming our way. We just don’t know if it’s a minor one or Superstorm Sandy…or Andrew or something like that. And you got to brace yourself.””
June has returned an average 1.4% over the last decade, making it the fourth best month of the year, however over the past 20 years, the month has not performed as well, with only September worse for stocks.
LPL Financial Chief Market Strategist Ryan Detrick said in a note said, “June has something for everyone, as it is no doubt a very weak month historically, but the past decade it has been strong. Still, after the big bounce in late May, we wouldn’t be surprised at all if this recent strength continued into a potential summer rally.”
