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Quote of the Week
“Risk comes from not knowing what you are doing.”
— Warren Buffett
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After nine straight weeks of gains, the rally hit a wall on Friday. A jobs report that came in twice as strong as expected sent Treasury yields surging, and the semiconductor sector took a brutal hit. The Nasdaq fell more than 4% on the day, its worst single session since April 2025, with chipmakers like Broadcom, Marvell, Micron, and Nvidia leading the way down. The S&P 500 finished the week lower for the first time in more than two months, and the VIX, Wall Street’s so-called “Fear Gauge,” jumped nearly 40% on Friday alone. The good news, ironically, was the cause: a labor market that refuses to slow down. That same strength is what has the Federal Reserve and the bond market thinking rate cuts are off the table for now. Fed funds futures markets now place the probability of a rate hike by year-end at roughly 70%, up sharply from where things stood just a week ago. This week, we work through what it means.
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Number of the Week
172,000
Jobs added in May, more than double the 80,000 economists had forecast. Combined with upward revisions to March and April, the past three months have produced the strongest pace of hiring in more than two years. A labor market this resilient is good for the economy, but it is also why bond yields surged and rate cuts now look further off than they did a week ago.
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📊 Market Snapshot — Week Ending June 5, 2026
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INDEX / ASSET
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CLOSE
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WK CHANGE
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YTD
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S&P 500
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7,383.74
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▼ 2.59%
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▲ 7.9%
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Dow Jones
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50,866.78
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▼ 0.32%
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▲ 5.8%
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Nasdaq Comp.
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25,709.43
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▼ 4.68%
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▲ 11.0%
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Russell 2000
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2,833.50
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▼ 2.93%
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▲ 14.2%
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Brent Crude
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$95.89
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▲ 4.2%
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▲ ~32%
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Gold (Spot)
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$4,365.30
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▼ 5.0%
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▲ ~13%
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10-Yr Treasury
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4.50%
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▲ 5 bps
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▲ ~60 bps
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VIX (Fear Index)
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21.51
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▲ 6.19 — Sharply elevated
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Data sources: Yahoo Finance, CNBC, Reuters, Investing.com, as of June 5, 2026 close. Past performance is not indicative of future results.
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📉 What Drove Markets Last Week
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For four days, the market did exactly what it had been doing for two months: drift higher. The Dow set a fresh all-time high on Thursday at 51,562. Then Friday landed, and the picture changed in a single session. The May jobs report came in well above expectations, Treasury yields surged in response, and a fragile semiconductor sector cracked. Three developments mattered most:
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📍 Strong Jobs, Loud Reaction
May payrolls jumped 172,000, more than double the 80,000 forecast. Unemployment stayed at 4.3% for a third straight month. Wages rose 3.4% year over year. Strong for the economy. Difficult for anyone hoping the Federal Reserve might soon cut rates.
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📉 Semiconductors Cracked
Friday delivered the worst day for chipmakers in over a year. Broadcom fell 7%, Marvell 16%, Micron 13%, Intel and AMD each 11%, Nvidia nearly 6%. A skeptical AI research report and a $5 billion secondary offering from Meta added pressure.
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💰 Yields Spiked, VIX Surged
The 30-year Treasury yield climbed back above 5%, the 10-year crossed 4.5%, and the VIX jumped nearly 40% on Friday alone. The bond market is now pricing in a Federal Reserve that may hold rates higher for longer than expected.
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The Iran situation also remained an active variable, and over the weekend it intensified meaningfully. Iran and Israel traded direct missile fire for the first time since the April 8 ceasefire, with Yemen’s Houthi forces joining in by firing on Israel as well. It was the most serious crossfire since the truce began and threatens to drag the wider Middle East back into a full-scale war. Brent crude finished last week above $95, up roughly 4%, and could move significantly higher this week if the escalation continues. None of this changes the underlying economic story, but it does suggest the easy part of this rally may be behind us.
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🔭 What to Watch This Week (June 8 – 12)
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A genuinely heavy week ahead. Wednesday brings May CPI, the first reading on whether inflation is following through on the recent uptick. Thursday brings PPI. The next FOMC meeting is just one week out, and how markets digest this data will set the tone for the meeting.
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KEY EVENTS THIS WEEK
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Mon 6/8
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Wholesale Inventories • Iran situation developing
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Tue 6/9
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NFIB Small Business Optimism (May) • Three-Year Treasury Auction
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Wed 6/10
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CPI Inflation Report (May) • Ten-Year Treasury Auction
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Thu 6/11
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PPI Inflation (May) • Jobless Claims • Thirty-Year Treasury Auction • Adobe earnings
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Fri 6/12
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Michigan Consumer Sentiment (preliminary) • Federal budget statement
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Wednesday is the main event. May CPI, the Consumer Price Index, will tell us whether the recent uptick in inflation is intensifying or stabilizing. After April’s 3.8% headline reading, markets will be looking carefully for any sign that energy and shelter costs are pushing core inflation higher. A hot print on top of Friday’s strong jobs data could put real pressure on stocks. A contained reading would offer meaningful relief.
Thursday brings PPI, the Producer Price Index, which tracks the prices businesses pay for the goods and services they use to operate. Because those costs eventually get passed on to consumers, PPI is often viewed as an early warning signal for where the inflation we all experience at the store is headed next. The Treasury auctions Wednesday and Thursday will also be closely watched given how sharply yields moved last week. Strong demand at these auctions would help stabilize yields. Weak demand could send them higher still. Our new Federal Reserve Chair has yet to give a major public address, and any commentary from him this week would draw significant attention.
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🌎 The Big Picture — Our Take on the Markets
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Last week was a reminder that markets are rarely as predictable as they seem. After nine consecutive weekly gains, Friday delivered a sharp pullback driven by news that, on any other day, would have been celebrated: a strong jobs report. Investors who understand the dynamics behind market moves tend to navigate weeks like this with much less anxiety than those who do not.
When we step back from the headlines, the underlying picture remains constructive. The economy added more than 170,000 jobs in May. Corporate earnings have been exceptional this season. Consumer spending continues to support growth. The bond market is recalibrating its expectations for Federal Reserve policy, and that recalibration is what hit stocks Friday, but it is being driven by economic strength rather than economic weakness. That is an important distinction.
There are real questions ahead. Inflation could come in hotter than expected this week. The semiconductor selloff could continue. The Iran situation could escalate. We will continue to monitor these things closely, but the economy has been more resilient than nearly anyone expected when this year began, and that resilience has carried the market through every test so far. For long-term investors, the picture continues to argue for staying engaged. We will keep you informed.
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A reminder after a difficult Friday: the S&P 500 is still up nearly 8% on the year, and the Russell 2000, which tracks smaller U.S. companies, is up more than 14%. Nine straight winning weeks created a lot of room for a pullback, and the market took advantage. Strong corporate earnings and a resilient labor market remain the foundation underneath the rally. With more than 80% of S&P 500 companies beating expectations this earnings season, the fundamentals continue to provide a reason for markets to advance even in the face of higher rates and geopolitical concerns.
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If you have any questions about your portfolio or what any of this means for your specific situation, please don’t hesitate to reach out to your CIAS Investment Adviser Representative. We are here to help you navigate these markets with confidence.
Edward J. Sabo
Chief Investment Officer
Capital Investment Advisory Services, LLC
Important Disclosures:
Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The statements contained herein are solely based upon the opinions of Edward J. Sabo and the data available at the time of publication of this report, and there is no assurance that any predicted or implied results will actually occur. Information was obtained from third-party sources, which are believed to be reliable, but are not guaranteed as to their accuracy or completeness.
The actual characteristics with respect to any particular client account will vary based on a number of factors including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. Capital Investment Advisory Services, LLC (CIAS) reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed may not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.
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