This Weekly Market Update reviews the top three market headlines; U.S. GDP Posts Record Downturn, Consumer Sentiment Dips in July after Spending Rose in June, Housing Market Shows Strength

Data Points

Top Three Market Headlines

U.S. GDP Posts Record Downturn: According to The Bureau of Economic Analysis advance estimate released on Thursday, real U.S. GDP decreased at an annual rate of 32.9% in Q2 2020. The steep decline, the largest contraction in U.S. history, came as states imposed lockdowns in March and April across the country, hurting consumer (-34.6%) and business (-27%) spending. Only Federal government spending recorded an increase while personal consumption, exports, private inventory investment, nonresidential and residential fixed investment, and state and local government spending all decreased. Many forecasters predict a recovery during the second half of 2020 that depends on the country’s capacity to control the pandemic.

Consumer Sentiment Dips in July after Spending Rose in June: The Bureau of Economic Analysis (BEA) reported last Friday that personal consumption expenditures (PCE), a measure of consumer spending for all goods and services, rose 5.6% in June from May, as the economy continued to reopen in June. However, since then, consumer optimism has deteriorated as U.S. COVID-19 cases have risen along with unemployment claims, following several months of declines. The Conference Board, a private research group, stated last week that its index of consumer confidence contracted from 98.3 in June to 92.6 in July. The short-term outlook of business conditions over the next six months also declined, illustrating the sensitivity of U.S. consumer demand to news surrounding the coronavirus outbreak.

Housing Market Shows Strength: Data released last week indicated that the U.S. housing market continues to show strength in spite of high unemployment and the uncertainty of COVID-19. Home prices across 20 key metropolitan areas increased in May at a 3.7% annual rate, according to the S&P CoreLogic Case-Shiller National Home Price Index. Additionally, U.S. sales of existing homes in June stunningly rose 20.7% from the prior month, with pending home sales up 16.6% over the same timeframe. The housing market, already a bright spot for the U.S. economy, could receive a further boost with the 30-year average fixed-rate mortgage dipping down to 2.99% last week.

As of July 31, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.75%
5.29% -1.29% 7.20%
S&P 500 1.75% 5.64% 2.38% 11.96%
Russell 2000 0.89%
2.77% -10.57% -4.59%
MSCI EAFE -2.12% 2.33% -9.28% -1.67%
MSCI Emerging Markets 1.76% 8.94% -1.72% 6.55%
FTSE NAREIT 4.90% 4.05% -15.42% -10.66%
Bloomberg Commodity 0.77% 5.71% -14.80% -12.07%
Barclays U.S. Aggregate 0.30% 1.49% 7.72% 10.12%

BEA 7/31/2020, Conference Board, 7/28/2020. CNBC 7/29/2020, Washington Post 7/30/2020; 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.