Top Three Market Headlines
U.S. Inflation Still Subdued: Key data released last week provided further evidence of the lack of pricing pressure in the U.S. economy. The U.S. Department of Labor announced that the Consumer Price Index (CPI) was flat in September compared to the prior month, the weakest reading since January. Compared to the prior year, the CPI increased 1.7%. The so-called core CPI, which excludes food and energy items, rose a mere 0.1% in September from August, or 2.4% over the prior year. Trends were even weaker at the wholesale, or business-to-business level, as both the total and core readings of the Producer Price Index (PPI) decreased 0.3% in September from August, the weakest reading for each in at least four years.
Main Street Remains Optimistic: The Small Business Optimism Index produced by the NFIB Research Foundation took a slight dip in September, but remained at a historically strong level. The index fell 1.3 points from the prior month to 101.8, which “still falls within the top 20% of all readings in the index’s 46 year history,” according to the NFIB. The survey noted that job creation, capital spending, and inventory investment continue to grow across small businesses, albeit at a slower pace. At the same time, a growing number of small businesses reported greater uncertainty about future business conditions.
Q3 Earnings Season Kicks Off: Q3 earnings season is upon us, with 174 U.S. companies set to release earnings this week. The current median estimate for year-over-year earnings per share (EPS) growth for S&P 500 companies is -4.6%, which, if it occurs, would mark the first time since Q2 2016 that earnings have declined for three straight quarters. Four sectors are predicted to report year-over-year EPS growth in Q3, led by the real estate and utilities sectors, while six sectors are projected to report an earnings decline, with the sharpest drops expected to occur in the energy, information technology, and materials sectors.
Data Points
- The core Consumer Price Index rose 1.7% in September compared to the prior year
- The NFIB index fell 1.3 points from the month prior, but remains at a relatively strong historical
- The current estimate for Q3 earnings per share growth for S&P 500 companies is -4.6%
|
As of October 11, 2019 |
Week |
Quarter-To-Date |
Year-To-Date |
One-Year |
|
MSCI All Country World |
1.25% |
0.15% |
16.36% |
8.71% |
|
S&P 500 |
0.66% |
-0.14% |
20.38% |
11.12% |
|
Russell 2000 |
0.77% |
-0.72% |
13.35% |
-0.72% |
|
MSCI EAFE |
2.31% |
0.44% |
13.30% |
5.59% |
|
MSCI Emerging Markets |
1.53% |
1.11% |
7.07% |
8.70% |
|
FTSE NAREIT |
-0.58% |
-0.25% |
26.65% |
24.91% |
|
Bloomberg Commodity |
1.19% |
1.41% |
4.58% |
-6.13% |
|
Barclays Aggregate |
-1.03% |
-0.27% |
8.23% |
10.50% |
Bureau of Labor Statistics 10/11/19, FactSet 10/11/19, National Federation of Independent Business, 10/8/19; 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.