CWS Market Review – June 9, 2026

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Last Tuesday, the stock market closed at an all-time high. We’ve gotten used to new highs, but what changed was what came after that on Thursday and Friday. That’s when many large-cap tech stocks, semiconductors in particular, got hit very hard. Many semis fell more than 10% in one day.

What caused the semi rout? As usual, it was a combination of factors. For one, valuations are quite high. Also, these stocks have been very popular so some pushback shouldn’t be surprising.

The market was also spooked by Broadcom’s earnings. Actually, the earnings were quite good, but it was disappointing guidance that scared investors.

Semiconductor Stocks Plunge

It sounds almost comical, but the market was upset that Broadcom didn’t increase its revenue guidance for this year and next year. In other words, keeping the guidance the same is seen, in practical terms, as a downgrade. That should tell you something about the current mood on Wall Street.

The stock market rebounded some on Monday but today was more of a raucous day. Stocks opened higher but fell as the morning went on. At one point, the S&P 500 was off by more than 2.2% and the Nasdaq was down much more than that. Later on, the bulls showed up to pare some of the losses. Still, you can see how easily stocks got pushed around. That’s very different from the market’s behavior earlier this spring.

The broader market was briefly helped by optimistic news from the Middle East. The price of oil fell close to 4% after Energy Secretary Chris Wight said that ship traffic is increasing in the Strait of Hormuz. Gold fell more than $130 per ounce on Friday. President Trump said that a deal to open the strait is “two or three” days away. This is encouraging, but I’m a realist about such matters. I’ll believe it when I see it.

On Tuesday, the Dow Jones Transports were up over 1.3% while the Dow Jones Industrials were little changed (+0.2%). These sector rotations are becoming more pronounced.

Over the past week, High Beta stocks have fallen on hard times. By High Beta, I mean stocks that tend to fluctuate a lot. At the other end of the spectrum, low volatility stocks have been remarkably calm.

Over the last five trading days, the S&P 500 High Beta ETF (SPHB) has fallen by 5.4% while the S&P 500 Low Vol ETF (SPLV) has gained 2.8%. That’s a very large spread, especially for such a short period of time. Of course, this is merely the opposite of what the market had been doing for several months.

Here’s a chart of High Beta (red) versus Low Vol (blue):

This week, Bank of America (BAC) warned investors that its stock market signals started flashing red. Charlie Bilello, one of my favorite stats guys, recently said that the yield on the S&P 500 has dropped below 1%, and it’s heading toward its all-time low of 0.94% from 2000.

The Economy Created 172,000 New Jobs in May

On Friday, the government released a surprisingly strong jobs report. The Bureau of Labor Statistics said that 172,000 net new jobs were created in May. That more than doubled expectations. The number for April was revised higher to 179,000.

The unemployment rate held steady at 4.3%. The unemployment rate has been either 4.3% or 4.4% for each of the last six months.

They key number that I’ve been looking for is average hourly earnings. More pay for workers means more business for companies. For May, average hourly earnings increased by 0.3% which matched expectations. That’s a good number but not a great one. Over the last year, average hourly earnings are up by 3.4%.

Here are some details:

Leisure and hospitality led all sectors with 70,000 jobs, well above the 14,000 per month average over the past year and a possible reaction to hiring needed for the World Cup.

Local government added 55,000.

Health care, which has been the leading sector, contributed 35,000 new hires, about in line with its average. Social assistance added 12,000.

It’s frustrating to see job growth concentrated in a few sectors. In addition to the strong job numbers for May, revisions for prior months also presented an even better picture.

The nonfarm payroll report for April was revised higher by 64,000. The number for March was raised to 214,000, which is a gain of 29,000. The labor force participation rate was stable at 61.8%. The broader U-6 unemployment rate dropped a little to 8.1%.

The Federal Reserve meets again next week. Don’t expect any movement on interest rates, but the Fed’s outlook could be slowly changing. The yield on the two-year Treasury has climbed higher in recent weeks. The yield recently hit its highest point in over a year. The 10-year yield recently broke above 4.6%.

Traders don’t see the Fed hiking rates next week, or at the meeting after that or the meeting after that. But in the one after that, in December, the market sees the Fed hiking interest rates by 0.2%. I’m skeptical of forecasts going out that far, but it does signal to investors that the market sees the Fed getting more aggressive sometime soon. Last week’s jobs report is more evidence.

On Wednesday, we’re going to get the CPI report for May, and it could be an ugly one. FactSet said the median estimate is that inflation is running at 4.2%. The Atlanta Fed’s GDPNow model sees Q2 GDP growth running at 3.3%. We did get some negative news this morning. Small business optimism fell to its lowest level since October 2024.

FICO Announces $2.0 Billion Share Buyback

We had good news from one of our Buy List stocks. Yesterday, FICO’s (FICO) Board of Directors approved a stock repurchase program. Under the program, FICO will buy up to $2.0 billion of the company’s outstanding stock.

The new program replaces what’s left in the previous $1.5 billion stock repurchase program. FICO also said it will borrow $1.5 billion to fund its accelerated share repurchase plan.

Shares of FICO have done well in recent weeks, Since April 22, FICO is up 32.8% for us.

The last earnings report was quite good. On April 28, FICO said its net income jumped 60% to $12.50 per share. Free-cash flow was $214.3 million, compared with $65.5 million last year. Quarterly revenue rose 30% to $691.7 million.

FICO also raised its guidance. Before, FICO expected full-year revenues of $2.35 billion. Now it expects revenues of $2.45 billion. FICO raised its full-year earnings guidance from $38.17 to $40.45 per share. The next earnings report should be out sometime late next month.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on June 9th, 2026 at 7:28 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.