On Tuesday, June 2, the S&P 500 closed above 7,600 for the first time in its history, capping a nine-week winning streak that is the longest since late 2023. The Dow has broken 50,000. AI infrastructure spending is still accelerating. Corporate earnings are coming in ahead of estimates. From a pure price-action standpoint, the bull case is intact and then some.
And yet. The week that begins today may be the most consequential for this rally since it started. On Friday, the May nonfarm payrolls report drops at 8:30 AM ET — the last major labor market read before Kevin Warsh chairs his first Federal Open Market Committee meeting on June 16–17. That meeting will be the first genuine test of what the new Fed regime actually believes about inflation, rates, and the relationship between the two. The answer matters enormously for a market that is, by the Shiller P/E measure, trading at valuations not seen since January 1871 — a market that has been pricing in rate cuts that the inflation data is now actively arguing against.
The setup, bluntly, is this: a stock market at record highs, a new Fed chair taking the wheel for the first time in two weeks, resurging inflation at a three-year high, and a jobs report on Friday that could either validate continued rate-hold patience or rattle the consensus that a September cut is still on the table. Investors who understand exactly what is at stake in each of those variables will be better positioned than those who are extrapolating last quarter’s tape into the second half of the year.
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