June 8, 2026
Equities cooled off, but the fundamental backdrop did not fall apart. The S&P 500 snapped a nine-week winning streak and fell 2.55% for the week, while remaining up 8.43% year to date. The Dow slipped only 0.21%, while the Nasdaq dropped 4.65%, showing that the weakness was more concentrated in growth and technology.
Valuation pressure eased but did not disappear. The S&P 500 forward 12-month P/E moved down to 21.1, still above its 5-year average of 19.9 and 10-year average of 19.0. For recruiting, that is a simple framing: the market got cheaper after the pullback, but it was not cheap.
Earnings were not the weak spot. First-quarter S&P 500 earnings grew 28.6% year over year, the strongest growth rate since the fourth quarter of 2021 and the sixth straight quarter of double-digit earnings growth. The selloff came after fresh all-time highs and alongside announcements of new IPOs from mega-cap startups and equity offerings from established mega-cap technology companies.
Rates moved against risk assets. The 10-year Treasury yield rose 9 basis points to 4.54%, helped by rising crude oil prices during the Iran War and solid labor data. The Bloomberg Aggregate Bond Index fell 0.54%, investment-grade corporates declined 0.59%, and high-yield bonds fell 0.42%. Municipal bonds were the exception, rising 0.39%.
The labor market still looked firm. Nonfarm payrolls increased by 172,000 in May, April payrolls were revised higher, and unemployment held at 4.3%. ADP private payrolls rose 122,000, while job openings increased to 7.618 million in April, the highest reading in two years. Those numbers made it harder for the Fed to focus only on labor weakness.
Economic activity also held up. ISM Manufacturing rose 1.3 points to 54.0, the highest in four years, and ISM Services rose to 54.5 from 53.6. The Fed's Beige Book showed increased activity in 10 of 12 districts. The next checkpoints were CPI, PPI, the ECB decision, existing home sales, and Michigan sentiment. The market story was less dramatic than the pullback suggested: strong earnings and labor data remained in place, but higher yields and equity supply made valuation more sensitive.