This Weekly Market Update reviews the top three market headlines; Retail Spending Recovery Remains on Track, Consumer Prices Rise Modestly, Corporate Earnings Surprise to the Upside

Data Points

Top Three Market Headlines

Retail Spending Recovery Remains on Track: Reflecting U.S. consumers’ resilience, retail spending rose in July for the third straight month. The Commerce Department reported last week that sales at retailers increased at a seasonally adjusted pace of 1.2% compared to June and 2.7% from a year ago, with gains recorded in nearly every product category. Excluding the volatile auto and fuel categories, sales increased by 1.5% from June and 3.9% from the prior year. While the pace of gains slowed from the prior two months, it was nevertheless enough to push the absolute level of spending above pre-pandemic levels.

Consumer Prices Rise Modestly: After being depressed in recent months by COVID-19-induced business shutdowns, inflation indices picked up modestly in July, according to data published last week by the U.S. Bureau of Labor Statistics. The Consumer Price Index (CPI), a measure of the change of prices paid by consumers for a basket of goods and services, rose 1.0% in July from a year earlier, the fastest rate of growth since March, but still down meaningfully from the 2.5% annual rate posted as recently as January. Core CPI, which excludes food and energy, increased 1.6% annually, also the highest rate since March, but down from 2.4% in January. Meanwhile, the Federal Reserve is expected to finalize a policy-making review next month that some observers believe will lead the central bank to adopt a more liberal inflation-targeting approach.

Corporate Earnings Surprise to the Upside: With the second-quarter earnings season nearing a close, investors have been relieved that many corporate earnings reports have exceeded depressed expectations. According to FactSet, of the nearly 90% of S&P 500 companies that had reported Q2 earnings through August 7th, 83% surpassed the estimates of Wall Street brokerage analysts, the highest percentage since FactSet began tracking the metric in 2008. Despite the positive surprises, reported earnings were nonetheless down 34% year over year, the largest decline since the Global Financial Crisis. Eight sectors have reported declines in earnings, led by Energy, Industrials, Consumer Discretionary, and Financials, while just three have reported growth, including Utilities and Health Care.

 
As of August 14, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.14%
8.71% 1.91% 16.27%
S&P 500 0.69% 9.02% 5.66% 21.07%
Russell 2000 0.59%
9.61% -4.62% 9.12%
MSCI EAFE 2.46% 6.90% -5.23% 7.33%
MSCI Emerging Markets 0.39% 10.45% -0.36% 16.04%
FTSE NAREIT -1.60% 4.05% -15.41% -10.93%
Bloomberg Commodity 0.51% 8.99% -12.15% -6.93%
Barclays U.S. Aggregate -0.91% 0.68% 6.85% 7.08%

U.S. Census Bureau 8/14/20, U.S. BLS 8/12/20, WSJ 8/12/20, FactSet 8/7/20. 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.