Weekly Market Update: February 3, 2020

Top Three Market Headlines

Federal Reserve Leaves Rates Unchanged: The Federal Open Market Committee (FOMC), the interest rate-setting committee of the Federal Reserve, concluded its first policy meeting of 2020 by deciding to leave the federal-funds target rate range unchanged at  1.50% to 1.75%. Chairman Jerome Powell said the Fed is “comfortable with [its] current policy stance” given the broader macroeconomic outlook. The Fed’s post-meeting statement provided a mixed view on the economy, noting that the labor market remains strong but that business investment and exports remain weak. As such, the central bank believes the current stance “is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the [Bank’s] 2% objective.” 

Consumers’ Confidence High to Start 2020:  Encouraged by labor market strength and a robust stock market, consumers are optimistic about the economy in the early stages of 2020, according to The Consumer Confidence index released by the Conference Board last Tuesday. The index registered 131.6 in January,  its strongest reading since last August. The results bring the one-year average to 129.1, slightly above 2019’s average of 128.3. The survey suggested that consumers remain sensitive to global trade disputes, but the recent ‘phase-one’ trade deal with China and a continued strong jobs market has helped sustain American consumers’ optimism. 

U.S. GDP Grew 2.1% in Q4 2019: The U.S. Department of Commerce last week issued its first estimate of U.S. gross domestic product (GDP) growth for Q4 2019. According to the report, which will be updated twice more in upcoming months as more underlying economic data is released, GDP grew at a 2.1% annualized pace during Q4, resulting in an overall 2019 growth rate of 2.3%, the slowest full-year pace since 2016. During Q4, residential fixed investment increased 5.8%, the strongest pace in two years; however, nonresidential fixed investment, a key measure of business spending, fell 2.1%.

Data Points

• The Federal Reserve chose to keep the federal-funds target rate range steady at 1.50% to 1.75%
• January’s Consumer Confidence index rose 2.7% from the prior month
• U.S. GDP grew at an annualized rate of 2.1% in the fourth quarter of 2019

BEA 1/31/2020,FederalReserve,gov 1/29/20, WSJ 1/29/2020; 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.