🔨 Labor market is mixed

but stocks continue to swing

Good morning investors! The market shone bright yesterday with some hitting new highs and earnings coming positive.

Today we cover:

  • The labor market

  • Stocks jump

  • BNPL firms – gift or trap?

The wealthiest companies tend to target the biggest markets. For example, NVIDIA skyrocketed nearly 200% higher in the last year with the $214B AI market’s tailwind. That’s why investors like SoftBank are so excited about Pacaso. 

Created by the team that grew Zillow to a $16B valuation, Pacaso’s digital marketplace offers easy purchase, ownership, and enjoyment of luxury vacation homes. And their target market is worth a whopping $1.3T. No wonder Pacaso has earned over $100M in gross profits. Now, they’re taking their biggest step yet – with a focus on international markets.

Their first two Paris properties sold out in record time, so they just added another. They already have seven homes in Cabo, and they just bought their most expensive European property yet in London. And this expansion is truly just beginning.

Disclaimer: This is a paid advertisement for Pacaso’s Regulation A offering. Please read the offering circular at invest.pacaso.com.

What do you think of BNPL plans?

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📊 Economy and News 

U.S. Labor Market Shows Mixed Signals Amid Tariff Uncertainty

U.S. job openings rose by 191,000 to 7.391 million in April, driven by professional services and healthcare, though vacancies dropped in hospitality, manufacturing, and finance.

Layoffs surged by 196,000, the largest increase since July, reaching 1.786 million, while quits fell by 150,000 to 3.194 million, signaling declining worker confidence.

Hiring increased modestly by 169,000 to 5.573 million. Economists attribute the softening labor market to uncertainty from on-again, off-again tariffs, which a U.S. trade court briefly blocked but were reinstated, leaving businesses hesitant to expand.

Despite these shifts, layoffs remain low, and the labor market continues to support the economy, though May’s employment report may reflect further cooling with an expected 130,000 job gain and a steady 4.2% unemployment rate.

In another news, U.S. growth forecast cut sharply by OECD as Trump tariffs sour global outlook

Global hits:

US home prices to rise? U.S. home prices are expected to increase steadily at 3.5% annually through 2027, the slowest pace since 2011, driven by high prices and limited mortgage rate declines.

Experts predict 30-year mortgage rates will drop slightly from 6.98% to 6.73% this year, reaching 6.29% by 2027, still double the pandemic-era lows. Also, tariffs may reduce affordable home construction, leading to fewer or smaller homes.

Construction spending fell in April, and existing home sales are projected to stay near 4 million units annually, far below the 2021 peak of 6.6 million. Only half of analysts expect improved affordability for first-time buyers in the next year, down from 62% earlier.

Good to know: The administration has paused its plan to garnish Social Security benefits for those who’ve defaulted on their student loans. But people’s wages are still at risk for collection efforts later this summer.

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Economic shifts can influence financial decisions. A fiduciary financial advisor can provide personalized insights into your portfolio, long-term investment approach, and risk management.

📈 Stocks

S&P 500 5,970.37 (+0.58%)
DJIA 42,519.64 (+0.51%)
NASDAQ 19,398.96 (+0.81%)
BRENT CRUDE 65.63 (+1.54%)
* Prices as of Jun 4th, 12:20 AM UTC

S&P 500 Climbs on Nvidia-Led AI Surge Amid Trade Deal Speculation

The S&P 500 advanced as investors awaited details on potential U.S. trade agreements.

Nvidia, alongside other semiconductor stocks, spearheaded the rally. The leading AI chip manufacturer surged nearly 3%, building on Monday’s momentum and surpassing Microsoft in market capitalization for the first time since January. Other chipmakers, including Broadcom and Micron Technology, gained over 3% and 4%, respectively.

However, CFRA Research’s Sam Stovall advises caution, suggesting the market may remain in a trading range between 5,700 and its late February peak for the near term.

Key economic updates, including second-quarter GDP and earnings data, as well as further details on tariffs, are not expected until July, so we shouldn’t expect major swings until then.

One of the biggest winners yesterday was Broadcom that began shipping its Tomahawk 6 Ethernet switch, offering 102.4 terabits per second of switching capacity, twice the bandwidth of any current Ethernet switch. The firm is set to report today.

Earnings:

  • Dollar General (+15%) raised its full-year forecast after beating first-quarter expectations. CEO Todd Vasos said the company is working to reduce its exposure to China and minimize price increases for customers. He added that the retailer is attracting more middle- and upper-income customers seeking value.

  • CrowdStrike (-6.65%) reported lower-than-expected annual revenue guidance after Tuesday’s close, projecting $4.74 billion to $4.81 billion, causing a 5% drop in after-hours trading despite a 2% daily gain. For Q1, it achieved $0.73 adjusted earnings per share and $1.1 billion in revenue, up 20% year-over-year.

  • Nio’s Q1 revenue reached $1.66 billion, up 21.5% year-over-year but below the $1.73 billion analyst forecast. Vehicle deliveries grew 40.1% to 42,094. The adjusted loss was $0.41 per share, exceeding the expected $0.37 loss. Gross margin rose to 7.6% from 4.9% last year but dropped from 11.7% last quarter. Nio projects Q2 deliveries of 72,000 to 75,000 vehicles, up 25.5% to 30.7% year-over-year.

  • HP beat expectations reporting Q2 revenue of $7.63B and adjusted EPS of $0.38. This sent he stock up +3% after the bell.

Check this: Ford's U.S. sales rose 16.3% year-over-year in May, driven by a 17.2% increase in traditional engine vehicles and a 29% jump in hybrids, supported by an employee pricing program. Cox Automotive noted a slower sales pace compared to the tariff-driven surges in prior months.

MetaxConstellation Energy

Meta signed a 20-year deal to buy nuclear power from Constellation Energy’s Clinton Clean Energy Center in Illinois, boosting $CEG stock by 15% overnight, though it later fell 0.13%.

The multi-billion-dollar agreement, starting in 2027, will increase output by 30 megawatts and preserve over 1,000 jobs. It’s the first deal to power AI with an operational nuclear plant, following Microsoft’s Three Mile Island project. Meta’s Urvi Parekh stressed reliable energy’s role in AI goals, as tech giants, including Microsoft and Google, increasingly tap diverse energy sources, like natural gas, for data centers.

💵 Personal Finance

Buy Now, Pay Later: Convenient Tool or Debt Trap?

Buy Now, Pay Later (BNPL) services, like Affirm and Klarna, are gaining traction with partnerships at Costco and DoorDash, but 40% of users reported late payments in the past year.

Critics like financial planner Douglas Boneparth call BNPL a potential scam that encourages overspending and targets vulnerable consumers, though he acknowledges disciplined users can benefit from its credit-like structure, splitting purchases into manageable, often interest-free installments. However, BNPL is still debt, warns Bankrate’s Ted Rossman, with some plans charging high interest rates up to 36%.

Consumers risk late fees and financial strain if payments are missed, especially with longer-term plans. To stay safe, experts advise using BNPL only for affordable purchases, avoiding impulse buys, and carefully reviewing terms to prevent overextension.

But, this isn’t easy now that Klarna is piloting a debit card called Klarna Card in the US and Europe.

BNPL’s “payments” mindset undermines the principle of living below your means, diverting cash from savings and investments, as it tempts users to finance even small purchases instead of paying upfront. We think a credit card that is paid in full is a better option than BNPL.

Here’s an interesting video on the topic:

💰 Be a Better Investor

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Yiddish Proverb

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.