This Weekly Market Update reviews the top three market headlines: Retail Sales Rise in June, Earnings Season Kicks Off, China’s Growth Continues to Slow

Top Three market Headlines

Retail Sales Rise in June: U.S. retail sales grew for the fourth straight month in June, increasing 0.4% from May, showing that consumers continue to be a strength of the U.S. economy. This result exceeded economists’ projections of a 0.2% rise, and represented a growth rate of 3.4% versus the prior year.  Excluding the auto and fuel sectors, which tend to exhibit a fair amount of volatility on month-to-month basis, sales growth was even more robust, at 0.7% versus May and 3.8% over the prior year. Internet retailers showed the strongest rate of growth, at almost 13% versus the prior year, reflecting the continued migration of shopping to the internet.  
Earnings Season Kicks Off: Earnings season got under way last week as U.S. companies began reporting their Q2 earnings results. Heading into the week, the projected Q2 earnings growth rate for S&P 500 companies was -3.0% versus the prior year, according to Wall Street brokerage firm earnings estimates compiled by FactSet. Earnings growth for S&P 500 companies for Q1 was -0.3%, so if the Q2 projection turns out to be accurate it would mark the first time since 2016 year-over-year earnings have declined for two straight quarters. For Q2, six sectors in the S&P 500 are expected to post lower earnings, with the largest declines expected in the Materials and Technology sectors.

China’s Growth Continues to Slow: China’s gross domestic product (GDP) rose at the slowest pace in 27 years in Q2, at 6.2%, which was down from a 6.4% pace in the prior quarter. Growth has been hindered in recent months by pressured on exports, which declined in two out of the three months in Q2. To offset the effects of trade tensions and the economic slowdown, Chinese authorities have increased infrastructure spending and urged banks to lend more money to businesses; however, if the slowdown continues China may be forced to loosen monetary policy further.

Data Points

  • U.S. retail sales rose 0.4% in June versus the prior month, the fourth straight month of gains.
  • S&P 500 company earnings growth was -0.3% in Q1 2019.
  • China’s GDP grew at its slowest pace slowest since 1992 during Q2 2019.

As of July 19, 2019





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Bloomberg 7/14/20149, 7/16/19, WSJ 7/16/2019 7/15/2019, Yahoo Finance 7/19/2019, FactSet 7/12/2019; Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.