This Weekly Market Update reviews the top three market headlines: Manufacturing Sector Contracts in March, Jobs Fall in March, Housing Market Started the Year Strong

Data Points

  • The ISM Manufacturing Index fell to 49.1 in March, signaling contraction
  • Nonfarm payroll employment fell by 701,000 in March
  • U.S. sales of existing homes rose to a 13-year high in February

Top Three Market Headlines

Manufacturing Sector Contracts in March: Reflecting the impact that COVID-19 is beginning to have on corporate America, the Institute for Supply Management (ISM) Manufacturing Index dropped from 50.1 in February to 49.1 in March, thereby signaling contraction of business activity in the sector. A sub-50 reading for the index, which is based on a monthly survey of business executives, indicates contraction, while a level above 50 represents expansion. Three key components of the index—new orders, production, and employment—on average fell 4.4 points from the prior month. 

Jobs Fall in March: The Labor Department reported last Friday that nonfarm payrolls fell by 701,000 in March, the first monthly decline since 2010. Not surprisingly, given the widespread adoption of COVID-19 containment measures in recent weeks, leisure and hospitality employment fell by 459,000. Other sectors seeing notable declines included health care and social assistance, professional and business services, retail trade, and construction. Meanwhile, the unemployment rate increased to 4.4% from 3.5%, the largest month-over-month increase since January 1975. The poor jobs report followed news the prior day that filings for unemployment benefits skyrocketed to 6.6 million for the week ending March 28, the highest weekly total in the history of the series. 

Housing Market Started the Year Strong: Data released last week indicated that the U.S. housing market was off to solid start in 2019 before COVID-19 began roiling the U.S. economy. Home prices across 20 key metropolitan areas increased in January at a 3.1% annual rate, according to the S&P CoreLogic Case-Shiller National Home Price Index. Additionally, U.S. sales of existing homes rose to a 13-year high in February. Yet to be seen is the impact COVID-19 will have on the housing market in upcoming months. Home sales are expected to decline as consumers come under pressure, but the Federal Reserve’s recent moves to lower interest rates will keep a lid on mortgage rates, thereby helping support the market.

As of April 6, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -2.46% -3.83% -24.38% -16.10%
S&P 500 -2.02% -3.68% -22.56% -11.62%
Russell 2000 -6.99% -8.75% -36.69% -31.59%
MSCI EAFE -3.76% -4.66% -26.43% -20.14%
MSCI Emerging Markets -1.20% -1.95% -25.09% -20.93%
FTSE NAREIT -10.38% -9.74% -34.38% -29.43%
Bloomberg Commodity -0.83% 0.55% -22.88% -22.95%
Barclays U.S. Aggregate 0.73% 0.26% 3.42% 9.72%

Bureau of Labor Statistics 4/3/2020, Institute for Supply Management 4/1/2020, WSJ 3/31/2020, WSJ 3/20/2020. 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.