This Weekly Market Update reviews the top three market headlines; Stunning Job Growth in May, Business Surveys Modestly Improved in May, IPO Market Reopens

Data Points

  • Nonfarm payrolls grew by 2.5 million in May, while the unemployment rate fell to 13.3%
  • The ISM manufacturing index registered 43.1 in May, improving from last month but still signaling contraction
  • Warner Music Group and ZoomInfo Technologies raised a combined $2.9 billion through IPOs

Top Three Market Headlines

Stunning Job Growth in May: The Labor Department reported last Friday that nonfarm payrolls grew by 2.5 million in May, the largest monthly increase since the statistic’s inception in 1939, and a surprising reversal from April, when nearly 21 million jobs were lost. Meanwhile, the jobless rate declined to 13.3% from 14.7% in April, far better than the 19% economists had expected. Most of the growth in May came from jobs classified as temporary layoffs, which had accounted for 78% of job losses the month prior. Nearly half of the gains in May were in the hospitality and leisure sectors, with jobs in bars and restaurants increasing by 1.4 million as states began to re-open. After months of losses, May’s jobs report could be an early indication that the U.S economy is on the road to recovery.

Business Surveys Modestly Improved in May: As business activity slowly begins to resume, surveys of business executives released last week showed the U.S. economy still contracted in May, but at a lesser pace. The Institute for Supply Management (ISM) Manufacturing Index rose to 43.1 in May from an 11-year low of 41.5 in April (a reading below 50 indicates economic contraction). While respondents cited worsening production and new orders, the trajectory of overall manufacturing activity improved. The ISM Non-Manufacturing Index rose as well, increasing to 45.4 last month from 41.8 in April. This was the second straight month of contraction for the nonmanufacturing sector, following 122 months of expansion.

IPO Market Reopens: The IPO market flashed signs of revitalization last week, seeing its busiest week of the year as eight companies came to market successfully. Headlined by Warner Music Group and ZoomInfo Technologies, all of the deals were priced at or above their target ranges, a sign of strong investor demand. The listings breathed life into what had been a dormant primary issuance market in the aftermath of the stock market’s severe first quarter decline: prior to last week, total IPO listings and proceeds were down 42% and 64%, respectively, from the same time last year.

As of June 5, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 5.83% 22.27% -3.86% 9.14%
S&P 500 4.96% 24.05% -0.26% 15.31%
Russell 2000 8.13% 30.99% -9.11% 1.55%
MSCI EAFE 7.07% 18.95% -8.20% 2.02%
MSCI Emerging Markets 7.87% 18.66% -9.34% 2.38%
FTSE NAREIT 11.41% 20.89% -12.12% -6.55%
Bloomberg Commodity 1.83% 4.61% -19.76% -14.22%
Barclays U.S. Aggregate -0.49% 1.75% 4.95% 8.77%

CNBC 06/05/20, WSJ 6/1/20, WSJ 6/3/20, MarketWatch 6/3/20, Nasdaq 6/2/20. 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.