Weekly Market Update: September 23, 2019

Top Three Market Headlines

Federal Reserve Enacts Another Rate Cut: The Federal Reserve last week cut its benchmark interest rate for the second time in the last two months, agreeing to reduce the target federal-funds rate by 0.25%, leaving it at a range of 1.75% to 2.00%. As the Fed attempts to insulate the U.S. economy from a global slowdown, central-bank officials were split over the decision and the outlook for further rate reductions. In explaining the Fed’s decision, Chairman Jerome Powell cited the effects of rising trade policy uncertainty on business investment and manufacturing activity. While leaving open the possibility of more rate cuts, Mr. Powell was reluctant to make any promises regarding further action by the Fed. 

Oil Spikes: The price of oil jumped last week in the aftermath of an attack on Saudi Arabian oil production facilities that resulted in the suspension of approximately 5% of global production. The near-term futures contract for Brent crude, the international oil benchmark, soared 15% last Monday to $69.02 a barrel, while its U.S. equivalent, West Texas Intermediate (WTI), also rose 15% on the day to close at $62.90, its highest level since May. Some of the gains were relinquished as the week proceeded—WTI fell almost 8% over the next two days—as Saudi Arabia moved to repair the damaged facilities and reassured the market that output would return to normal in a matter of weeks. The oil price spike had an immediate effect on gasoline prices in the U.S., driving a 10 cent increase in the national average price for a gallon of unleaded gas to $2.66 by the end of the week.

U.S. Housing Market Indicators Perk Up: Various data released last week indicated that falling mortgage rates may be benefiting the U.S. housing market. Housing starts, bolstered by strength in multifamily units, rose more than 12% in August from the prior month, while existing home sales registered a modest gain of 1.3% compared to July. In addition, The National Association of Home Builders’ latest Housing Market Index, derived from surveys of homebuilders about sales activity, rose to its highest level since October, 2018. 

Data Points

• The Federal Reserve cut its benchmark interest rate by 0.25% for the second time in 2019
• Oil prices soared 15% last Monday after an attack on Saudi Arabian oil facilities 
• Housing starts climbed 12.3% in August from July   

WSJ 9/16/2019, 9/18/2019, 9/19/2019; AAA 9/20/2019. 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.