Weekly Market Update: September 9, 2019

Top Three Market Headlines

Mixed Signals on the U.S. Economy: The Institute for Supply Management’s (ISM) latest monthly survey of purchasing managers in corporate America, released last week, painted a mixed picture of the U.S. economy. Conditions in the manufacturing sector weakened in August, as the ISM Manufacturing Index registered 49.1 for the month, the first time it has dipped below 50 since 2016. (A reading below 50 indicates contraction in the sector, while a reading above 50 indicates expansion.) Conversely, economic activity remained healthy across the U.S. services sector in August, as the ISM Non-Manufacturing Index came in at 56.4, rebounding from 53.7 in the previous month. 

U.S. Dollar Index Climbs to a Two-Year High: Last week the ICE Dollar Index, which tracks the currency against a basket of its peers, touched its highest level in more than two years, reflecting the dollar’s continued safe haven status amid slowing economic growth overseas and rising geopolitical tensions. Among certain foreign currencies, the British pound last week dipped to multi-year lows on Brexit concerns, while the Chinese yuan fell to its lowest level in 11 years amid economic weakness and trade pressures. A rising dollar pressures U.S. companies because it makes U.S. exports more expensive while lowering the value of profits generated overseas.

August Jobs Report: The Labor Department reported last Friday that the U.S. added 130,000 jobs in August, down from 159,000 jobs in the prior month. While August’s result marked the 107th straight month of job growth, the slower pace may indicate that employers are taking a more cautious stance at a time of growing global economic pressures. Meanwhile, the jobless rate remained constant for the third month in a row at 3.7%, close to a 50-year low, while average hourly earnings reported a 3.2% gain from a year earlier and 0.4% from the prior month. The subdued report may increase the likelihood of a second interest rate cut from the Federal Reserve when it meets on September 17th and 18th.

Data Points

• The ISM Manufacturing Index declined to 49.1 in August, while the Non-Manufacturing Index rose to 56.4. 
• The ICE US Dollar index hit a two-year high last week.
• The U.S. added 130,000 job in August and the unemployment rate held steady at 3.7%
  
  

WSJ 9.3.2019, ISM Non-Manufacturing Report 09.05.2019, ISM Manufacturing Report 09.03.2019. 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.