Market Holds Strong Into June — But Caution Is Warranted

The stock market closed out May with impressive strength, with SPY (S&P 500 ETF) finishing the month at $589.39, up 6.2% for May — its strongest monthly performance since 2023. After a fast recovery from April’s volatility, investors have regained confidence, fueled by easing trade fears and resilient economic data. However, while the market remains bullish, many traders and investors are shifting to a more cautious stance as we move into June, mindful that several important economic reports could still shift the narrative quickly.

This week kicks off with a focus on inflation and labor market data that may heavily influence the Federal Reserve’s next moves. The PCE inflation data (released May 31) has already been digested, but attention is now shifting to the highly anticipated Nonfarm Payrolls report on June 7. A strong labor market may fuel concerns that the Fed could stay more restrictive on rates for longer, while any weakness may spark recession chatter. We’ll also hear from several Fed speakers on June 3-4, potentially giving more clues on policy direction. Later, on June 12, the release of the CPI inflation report will likely be one of the biggest market drivers for the month.

For now, the technical setup for SPY remains healthy but stretched. Traders should stay nimble, avoid chasing extended moves, and focus on defined-risk strategies like debit spreads or iron condors near key levels. Watch support near $580–$582 and resistance around $590–$593 for potential breakout or pullback signals. Long-term investors may continue dollar-cost averaging but might also consider trimming highly extended positions and keeping some cash on hand for possible dips. While sentiment is still constructive, the next two weeks will be critical in determining whether this rally has more fuel or needs to cool off.