This Weekly Market Update reviews the top three market headlines; U.S. Economy Begins to Stir, U.S. - China Tensions Reignite, Personal Income Surges While Spending Plunges

Data Points

Top Three Market Headlines

U.S. Economy Begins to Stir: A number of “real time” indicators tracked by Bloomberg Economics have modestly improved in recent weeks, suggesting the U.S. economy is beginning to recover as COVID-19 containment restrictions begin to ease. For instance, air travel passengers reached a daily total of 267,000 in the U.S. on May 24 from a low of 88,000 on April 14, according to the Transportation Security Administration, while hotel occupancy rates increased from 21% last month to 32% in the week ended May 16, according to a survey conducted by hospitality data services company STR. Meanwhile, though still well below pre-crisis levels, restaurant bookings have begun to pick up, according to OpenTable.

U.S. - China Tensions Reignite: Tensions between the U.S. and China flared up last week after China passed a law aimed at advancing national security in Hong Kong, a move that critics fear will weaken the territory’s autonomy under the “one country, two systems” principle that has applied since 1997. In response, U.S. Secretary of State Mike Pompeo stated the U.S. no longer sees Hong Kong as autonomous, and President Trump on Friday announced the U.S. would begin eliminating certain special trading privileges for Hong Kong that have exempted it  from the same U.S. tariffs and restrictions applied to mainland China. In addition, prior to the law’s passage in China, the U.S. Senate passed legislation that could tighten restrictions on Chinese companies listing shares on U.S. stock exchanges.  

Personal Income Surges While Spending Plunges: Despite declining wages and salaries resulting from job losses, overall personal income in the U.S. rose by 10.5% in April from the prior month, thanks to federal rescue programs, the Bureau of Economic Analysis (BEA) reported last week. The one-time $1,200 stimulus payments that were part of the CARES Act reflected the bulk of the increase, while unemployment insurance payments also boosted the total. Meanwhile, the BEA also reported that consumer spending fell a record 13.6% in April as most Americans sheltered in place. Among hard goods, the largest decrease was seen in food and beverages, while among services the biggest declines were registered in healthcare spending, food services, and accommodations.

As of May 29, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 3.59% 15.53% -9.16% 4.78%
S&P 500 3.04% 18.19% -4.97% 11.62%
Russell 2000 2.87% 21.14% -15.95% -5.00%
MSCI EAFE 5.10% 11.10% -14.26% -3.36%
MSCI Emerging Markets 2.85% 10.00% -15.96% -3.14%
FTSE NAREIT 4.51% 8.51% -21.12% -14.00%
Bloomberg Commodity 1.27% 2.74% -21.20% -18.80%
Barclays U.S. Aggregate 0.23% 2.25% 5.47% 9.99%

Bloomberg 5/28/20, CNBC 5/21/20, 5/28/20, WSJ 5/27/20; 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.