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(Wednesday Market Open) A better-than-expected earnings report from Salesforce.com (NYSE:CRM) is leading stocks higher, gaining more than 9% in premarket trading. Equity index futures are pointing to a higher open as investors try to bounce back from yesterday’s retreat.  

All but two of the S&P 500’s sectors finished down on Tuesday with consumer discretionary stocks the top gainer, up 0.76% %, followed by communications services, up 0.41.%. The S&P 500 lost 0.6% Tuesday after ending its seven-week downturn before the long weekend, while the Dow Jones Industrial Average ($DJI) lost 0.7%—leaving both major indexes nearly unchanged for the month by the close. The Nasdaq Composite ($COMP) dropped 0.41% on the day.

The Conference Board’s monthly report showed consumer confidence dropped slightly in May from previous months, and Brent crude went on a roller-coaster ride before finishing up 1% after European Union leaders announced an oil embargo against Russia, their toughest energy sanctions yet.  And in a key report for the direction of the housing market, the S&P Case-Shiller Home Price Index showed home prices gained more than 20% during May even as interest rates rose.

Though cloud software leader Salesforce beat on top and bottom estimates, its CEO said it expects to be more “measured” in future hiring. Investors will likely be watching today’s Job Openings and Labor Turnover (JOLTS) report, tomorrow’s unemployment claims numbers, and Friday’s May jobs report for signals indicating whether the nation’s continuing hot job market might finally be cooling. Estimates show nonfarm payrolls likely declined to 320,000 in May from April’s 428,000.  

Time to Unwind: June 1 marks the first day of the Federal Reserve’s plan to reduce its pandemic-era balance sheet that rose to nearly $9 trillion during the height of the crisis. Much of the Fed’s bonds are expected to simply mature and not be replaced, which won’t directly affect Treasury prices. However, without the Fed buying bonds, the bond markets could see some liquidity issues. Lower liquidity could result in higher volatility in the bond markets.

On Tuesday, the 10-year Treasury yield (TNX) jumped from 2.74% to 2.84%, or 10 basis points. Rates are likely to continue rising as the Treasury market seeks to entice investors into the bond markets to make up for the loss of demand from the Fed. Last time the Fed tried to clear its balance sheet in September of 2019, overnight rates shot up as bank reserves got too low. However, the Fed has tried to account for this risk by setting up a standard repo facility that will work as a permanent backstop. Bank reserves are also more than double than what they were in 2019.

Greasing the Wheels: Treasuries could also see increased pressures from rising oil prices. WTI crude oil futures continue to inch higher and are currently trading above its March and May highs. Last week, BofA Global Research warned that Brent Crude oil could goas high as $150 per barrel without Russian oil exports. The International Energy Agency (IEA) estimated last week that Russia has already reduced its production by nearly one million barrels of oil per day.

Maybe’s Don’t Fly in June: Data from Schroders shows that June has the worst track record for the number of stock market gains for the S&P 500, FTSE100, MSCI World, and the EURO STOXX 50 from 1987 to 2018. December, April, and October were the best months for market gains while June, August, and September were the worst. Of course, past performance is not a predictor of future results, the old saying of “sell in May and go away” has historically demonstrated some merit.