This Weekly Market Update reviews the top three market headlines; U.S. Service Sector Picks Up in June, Mortgage Rates Fall to Record Lows, Initial Unemployment Claims Continue to Decline

Data Points

  • The ISM Non-Manufacturing Index registered 57.1 in June, up from 45.4 in May
  • The average rate for a 30-year fixed-rate mortgage was 3.03% last week, the lowest level in almost 50 years 
  • U.S. initial unemployment claims dropped 99,000 to 1.31 million for the week ended July 4th
 
Top Three Market Headlines


U.S. Service Sector Picks Up in June: Service sector activity recovered in June as state governments increasingly eased COVID-19-related restrictions. The Institute for Supply Management (ISM) reported last week that its Non-Manufacturing Index rose to 57.1 in June, up from 45.4 in May, indicating expansion in the sector for the first time in two months (a reading above 50 indicates expansion, while a reading below 50 reflects a contraction in activity). This was the largest single-month point increase since the index’s debut in 1997. Of 14 industries surveyed, 11 reported growth for June, highlighted by Agriculture, Forestry, Fishing & Hunting, and Accommodations & Food Services. 

Mortgage Rates Fall to Record Lows: According to Freddie Mac, the average rate for a 30-year fixed mortgage last week stood at 3.03%, the lowest level since the organization began tracking mortgage rates in 1971 and the sixth record-low since COVID-19 began to roil financial markets. In comparison, the 30-year fixed loan rate was 3.75% one year ago. Mortgage rates have fallen as the Federal Reserve has maintained its benchmark interest rate near zero while also purchasing bonds of different sorts, including mortgage-backed securities, in an effort to stimulate the economy. The record-low mortgage rates could help stimulate the housing market, where activity slowed in the immediate aftermath of COVID-19’s spread.

Initial Unemployment Claims Continue to Decline: The latest jobless claims report indicated that initial unemployment claims continue to fall from record highs, but still reflect the existence of meaningful pressure on the labor market. The number of initial claims in the U.S. fell by 99,000 to 1.31 million for the week ending July 4. This marked the 14th consecutive week of declines since claims hit a peak of 6.87 million in March when coronavirus-related restrictions shut down significant portions of the economy. Despite the continued decline, however, claims remain well above levels reached in previous recessions. 

As of July 10, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.79%
 3.30% -3.16% 4.52%
S&P 500 1.79% 2.79% -0.38% 8.53%
Russell 2000 -0.63%
 -1.27% -14.09% -7.75%
MSCI EAFE .50% 1.88% -9.68% -3.09%
MSCI Emerging Markets 3.65% 7.77% -2.77% 4.46%
FTSE NAREIT -3.26% -1.26% -19.73% -17.34%
Bloomberg Commodity 1.53% 2.56% -17.34% -16.26%
Barclays U.S. Aggregate 0.42% 0.54% 6.71% 9.51%

WSJ 07/09/20, CNBC 07/09/2020, Morningstar 07/09/2020, WSJ 07/09/20, FOXBusiness 07/09/20. 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.