The S&P Index jumped 6.7% last week, the best since the week ending November 6, 2020. What’s more, the rally ended the losing streak at seven, avoiding a tie for the most consecutive weekly declines in the history of the benchmark. Breadth indicators like “Percentage of SPX issues above their 20-day moving average” jumped to their highest levels of the year.  This is encouraging given that trends remain negative.

One other development worth highlighting is the degree to which stocks hitting new 52-week lows plummeted to the lowest levels since early April.  Both of these readings suggest that the bounce late last week accomplished some technical progress and could be worth following.

The Conference Board’s Consumer Confidence Index fell 2.2 points in May to 106.4, a three-month low, but above the consensus of 103.9. The index is down 13.6 points from a year ago and has failed to recapture its pre-recession level so far in this expansion. In our analysis, the decline in confidence had generated a slowdown signal for the economy earlier this year. Nevertheless, the index remains well above its pandemic lows and far from recession territory.

Consumers felt more wary about both the present situation and the future outlook. On net, the assessment of current business conditions improved, while views on job availability weakened somewhat, but were still higher than pre-recession. The latter suggests a near-term uptick in the unemployment rate, but still tight labor market conditions. Consumer expectations backtracked 1.5 points to 77.5, its second lowest level since February 2014. Notably, expected business conditions hit their lowest level since October 2011, which historically has correlated with slower real GDP growth over the next two quarters. Job and income expectations were more favorable, but well below higher levels earlier in the expansion.