Top Three Market Headlines
U.S. Service Industry Expands In October: According to a survey of business executives conducted by the Institute for Supply Management (ISM), business activity in the U.S. service sector picked up in October. The ISM Non-Manufacturing Index registered 54.7 last month, up from 52.6 in September (a reading above 50 indicates expansion). As the service sector makes up 90% of the U.S. economy, investors welcomed the report as a sign that the recent contraction in the U.S. manufacturing sector (the complementary ISM Manufacturing Index has been below 50 for the last three months) hasn’t spilled over to the broader economy.
Hopeful Signs of Stabilizing Global Economies: With global economic growth having slowed this year amid on-going trade battles, certain recent developments are helping to ease fears the global economy may on the verge of tipping into a recession. For one, a handful of economic indicators have shown improvement of late, including the U.S. ISM Non-Manufacturing Index (discussed above), the JPMorgan Global Manufacturing Index, and German exports. In addition, approximately 30 global central banks have cut interest rates this year, which could help rejuvenate growth. Further, the U.S. Treasury yield curve has maintained a normal upward-sloping shape since early September after having briefly inverted (meaning short-term rates exceeded long-term rates) in late August, a development viewed by some to be a precursor to a recession.
Corporate Earnings Season Winds Down: Almost 90% of companies in the S&P 500 Index have now reported their Q3 2019 earnings, providing a glimpse into business conditions among corporate America. Based on reports through last Friday as well as expected results for those companies yet to report, total revenue for S&P 500 companies is expected to grow 3.2% over the prior year’s Q3, according to FactSet, while earnings are estimated to decline 2.4%, which would represent the third straight quarter of year-over-year profit declines. This, however, is an improvement over a decline of 4.1% that was expected by Wall Street analysts at the start of earnings season, as 75% of reporting companies have topped expectations.
Data Points
- The ISM Non-Manufacturing Index rose to 54.7 in October from 52.6 in September
- Approximately 30 global central banks have cut interest rates this year
- 75% of S&P 500 companies have beaten earnings expectations in Q3
|
As of November 8, 2019 |
Week |
Quarter-To-Date |
Year-To-Date |
One-Year |
|
MSCI All Country World |
0.87% |
4.48% |
21.40% |
11.01% |
|
S&P 500 |
0.93% |
4.12% |
25.52% |
12.48% |
|
Russell 2000 |
0.63% |
5.06% |
19.96% |
2.81% |
|
MSCI EAFE |
0.53% |
4.74% |
18.15% |
9.70% |
|
MSCI Emerging Markets |
1.50% |
6.52% |
12.79% |
9.97% |
|
FTSE NAREIT |
-3.45% |
-2.11% |
24.29% |
16.04% |
|
Bloomberg Commodity |
-0.41% |
2.92% |
6.14% |
-1.87% |
|
Barclays Aggregate |
-0.87% |
-0.72% |
7.74% |
10.60% |
WSJ 11/8/2019, Bloomberg 11/5/2019, MarketWatch 11/5/2019. 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.