This Weekly Market Update reviews the top three market headlines: Historic Job Losses in April, Corporate Bond Issuances Reaches Record Levels, U.S. Services Sector Shrinks in April

Data Points

  • Nonfarm payrolls fell by 20.5 million in April; the unemployment rate hit 14.7%
  • Investment-grade companies raised $350 billion of public debt in April
  • The ISM Nonmanufacturing Index fell to 41.8 in April, its lowest reading since March 2009

Top Three Market Headlines

Historic Job Losses in April: The Labor Department reported last Friday that nonfarm payrolls fell by 20.5 million in April, the largest decline since the statistic’s inception in 1939. Driven by on-going Covid-19 containment measures, leisure and hospitality led the decline, losing 7.7 million jobs. Other sectors that drastically cut payrolls included education and health services, professional and business services, manufacturing, government, and construction. In addition to payroll declines, the unemployment rate rose to 14.7%, the highest level since the Great Depression.

Corporate Bond Issuances Reaches Record Levels: Recent efforts by the Federal Reserve and the European Central Bank to support debt markets have helped restore investor confidence and lower corporate borrowing costs, and corporations have swiftly responded by raising record amounts of public debt. Companies with investment-grade-rated debt raised a record $350 billion globally in April, surpassing the previous record set in March. Companies with debt rated lower than investment grade—i.e., “junk bonds”—have also taken advantage of the market rebound, securing $30 billion of new funding in April.

U.S. Services Sector Shrinks in April: The Institute for Supply Management (ISM) Non-Manufacturing Index officially fell into contraction territory in April, dropping to 41.8, down from 52.5 in March and marking the lowest reading since March 2009. The index is based on surveys of executives across various service sectors, and a reading below 50 signals contraction of business activity. The response to the COVID-19 pandemic has particularly impacted service sectors, many of which are dependent on travel, social gatherings, and contact with customers. Effects have been widespread across service sectors: of 18 industries tracked by the survey, 16 reported declines in activity from March.

As of May 8, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 2.50% 11.02% -12.70% -2.61%
S&P 500 3.57% 13.58% -8.68% 3.85%
Russell 2000 5.52% 15.42% -19.92% -14.30%
MSCI EAFE 0.87% 5.98% -18.21% -9.99%
MSCI Emerging Markets -0.52% 7.63% -17.77% -10.95%
FTSE NAREIT 2.04% 6.51% -22.57% -15.15%
Bloomberg Commodity 2.66% 0.76% -22.71% -19.86%
Barclays U.S. Aggregate -0.33% 1.33% 4.52% 10.20%

Wall Street Journal 5/8/2020, Reuters 5/5/2020, Wall Street Journal 5/5/2020; 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.