A viral forecast predicting 10% U.S. unemployment by June 2028 is extremely unrealistic, according to Julius Probst, a senior economist and director of research at Recruitonomics, part of Appcast Inc. The scenario, originally conceived as a thought experiment by Citrini Research, suggested artificial intelligence would drive joblessness higher and drag the S&P 500 down 38%. Probst argued that an unemployment shock of that magnitude would be an unstable equilibrium, leading to a collapse in consumption and stock markets that would inevitably be met with fiscal stimulus and rate cuts.

The Citrini Research memo had previously triggered a market sell-off, contributing to a roughly 13% single-session drop in International Business Machines Corp. (NYSE: IBM). Citadel Securities later published a rebuttal arguing the scenario misread macro fundamentals. Probst aligned with this view, emphasizing that the current labor market is showing resilience rather than falling apart.

Probst categorized the workforce into three groups regarding AI's impact. Workers possessing AI skills are seeing job postings rise roughly threefold over the past couple of years. Conversely, routine white-collar roles in customer service, sales, and entry-level finance face genuine displacement. Blue-collar and manual jobs requiring physical presence remain insulated and may benefit from broader economic growth.

Technology companies are projected to spend roughly $700 billion on U.S. data centers this year, driving construction demand in remote parts of Texas and Arizona where skilled labor is scarce. This investment is narrowing the wage gap that has favored desk jobs for decades. While wages for routine white-collar work have stagnated in inflation-adjusted terms, compensation for construction and skilled manual roles is rising strongly.

The labor market's strength was evident in the May employment report, which showed payrolls rising 172,000, more than double the consensus estimate, with unemployment holding steady at 4.3%. This resilience comes despite Brent crude averaging about $107 a barrel in May with the Strait of Hormuz still closed. Probst attributed the economic stamina to loose fiscal policy, record stock prices, a wealth effect from high asset values, and the ongoing AI investment wave offsetting the energy shock.

Attention now turns to the Federal Open Market Committee meeting on June 16-17, the first chaired by Kevin Warsh. The Consumer Price Index rose 4.2% in May, the hottest reading since 2023, yet markets anticipate no policy move. Probst suggested that if the Federal Reserve is serious about its 2% inflation target, it should probably hike rates, noting that inflation has run above target for five straight years.

US stocks rallied sharply on Monday after the United States and Iran signed a peace agreement that ends their war and reopens the Strait of Hormuz, sending crude oil tumbling roughly 5% to two-month lows. The collapse in energy prices eased inflation fears and powered a sharp rally in technology stocks, with the Nasdaq 100 surging 2.9% to 30,485. The S&P 500 climbed 1.8% to 7,567, while the Dow Jones Industrial Average advanced 1.3% to 51,886. Adding to the market euphoria, a post from Elon Musk about Space Exploration Technologies Corp projected revenue could reach approximately $1T in 2030, significantly surpassing prior bullish estimates from Goldman Sachs Group Inc and Morgan Stanley.

President Donald Trump stated that ships were moving along the Southern 'Highway' and confirmed the authorization for the toll-free opening of the strait. Senior US officials indicated that traffic would rise immediately, though full reopening would take time due to mine removal, with the deal signed in Switzerland on June 19. West Texas Intermediate crude slid 5.3% to around $80.37 a barrel, while Brent dropped 5.0% to roughly $82.93.

Sector Performance

The Technology Select Sector SPDR Fund led all S&P 500 sectors with a 3.7% jump, while the Energy Select Sector SPDR Fund was the standout laggard, sliding 3.2% as crude collapsed. The VanEck Gold Miners ETF surged 7.5% alongside a bullion rally, and the U.S. Global Jets ETF climbed 4.5% as plunging fuel costs lifted carriers. International markets also reacted strongly, with Japan's stock market rising 5% and South Korea's climbing 5.2%.

Market Movers

Memory and chip names dominated the gainers. Western Digital Corp soared 14.3% after a wave of bullish analyst targets, while peers Micron Technology Inc and Sandisk Corp rose more than 6%. Entegris Inc jumped 10.7% on semiconductor-materials tailwinds. Intel Corp and Advanced Micro Devices Inc also saw significant gains. On the downside, Fox Corp cratered 16.6% after agreeing to acquire Roku Inc for $160 per share. Fiserv Inc slid 8.2% after its CEO abruptly stepped down, and Alcoa Corp dropped 9.7% as aluminum futures slid nearly 5%.

Commodities and Rates

The retreat in oil rippled through rates markets. The 10-year Treasury yield eased 3 basis points to about 4.46%, while the 2-year fell 4 basis points to 4.05%. Gold rallied, with spot bullion up 3.2% to about $4,357 an ounce as falling yields and a softer dollar burnished the metal's appeal. Bitcoin also saw buying interest in early trade.