U.S. equity markets took a breather from their recent rally last week amid hawkish commentary from Federal Reserve members and a mixed bag of economic data, but equities held on to strong gains for the month of May. For the week, the S&P 500 was down 0.49%. The Dow Jones Industrial Average (DJIA) moved a little farther from the record 40,000 level of a couple weeks ago and ended last week down 0.88%, to 38,686. Small and mid-sized companies held their value better than their large-cap counterparts with the S&P 400 mid-cap and the S&P 600 small-cap up slightly at 0.22% and 0.72%, respectively.

Minneapolis Fed President Neel Kashkari said he would need to see “many more months of positive inflation data” before contemplating rate cuts. While Fed Governor Michelle Bowman noted she would have been in favor of waiting to slow the pace of balance-sheet runoff, referring to changes made at the May 1st Federal Reserve meeting. Both reflect a common theme of signaling no rush to ease monetary policy to more accommodative levels.

The May Consumer Confidence Index came in at 102.0, well above the expected 95.7 and even beating the upwardly revised April reading of 97.5. The Conference Board report showed improvement in May after three consecutive months of decline in the average 12-month inflation expectations. Unemployment numbers show little change reflecting a persistent strong economy. Initial jobless claims came in at 219k, just above the expected 218k. Continuing claims came in at 1,791k, which was lower than the expected 1,800k.

Despite the uptick in consumer sentiment and stable employment numbers, the April PCE (Personal Consumption Expenditures) report, the Fed’s preferred measure of tracking inflation, showed slowing consumer momentum with negative real personal income and consumer spending. The savings rate fell to a 16-month low as consumers are dealing with continued high prices for goods and services. Corporations are seeing a mixed bag. Costco said consumers are purchasing discretionary items as inflation levels off, while Target and Best Buy noted consumers trading down or watching for price cuts or value offerings.

Last Tuesday marked the change in securities trade settlement from two days to one. T+1 (transaction date plus one day) settlement of securities such as individual stocks and ETFs improves liquidity and lowers counterparty risk. This brings trading of those securities in line with other types of securities such as mutual funds and allows investors to reinvest their capital more quickly.

This week is another busy agenda in economic reporting, highlighted by several important updates on the labor market. The April Job Openings and Labor Turnover Survey (JOLTS) is expected to show a continued decline in new position openings as labor demand cools off. Meanwhile, nonfarm payrolls are expected to have increased by 180k based on consensus economist forecasts. The unemployment rate is forecasted to remain the same at 3.9%, which wouldn’t increase the likelihood for the Fed to reduce interest rates any time soon.