This Weekly Market Update reviews the top three market headlines: Retail Sales Suffer Historic Fall, Oil Markets Start to Rebound, U.S. Industrial Production Plunges

Data Points

Top Three Market Headlines

Retail Sales Suffer Historic Fall: Sales at U.S. retail establishments fell 16.4% in April from the prior month, the largest drop on record, as COVID-19 containment measures dramatically curtailed consumer spending at restaurants, malls, and many other stores. Clothing stores took the biggest hit as sales fell 79%, followed by electronics & appliance stores (-61%) and furniture stores (-59%). The only category that posted an increase, not surprisingly as consumers stayed home, was internet retailers (+8.4%). The recent collapse of in-store shopping proved to be the last straw for a group of retailers already struggling with consumers’ on-going shift to e-commerce, as Neiman Marcus, J. Crew, and JC Penney all filed for bankruptcy last week.

Oil Markets Start to Rebound: Supply and demand fundamentals in the oil market have begun to re-balance in recent weeks, providing support to oil prices that had plummeted nearly 80% from the start of the year through late April. Brent Crude, the international benchmark for oil, finished last week at $33.72 per barrel, up from a year-to-date low of $19.50 on April 21. Demand for the energy commodity has ticked up as global economies begin reopening, while massive, coordinated production cuts from OPEC+ has helped to curb the supply glut that has persisted since February.

U.S. Industrial Production Plunges: According to data released last week by the Federal Reserve, business conditions continue to deteriorate across U.S. industrial companies, as industrial production—a measure of factory, mining and utility output—fell 11.2% in April from the prior month. The decline marked the largest monthly drop in the 101-year history of the index, and was largely keyed by a 13.7% plunge in manufacturing output. All major industry and market groups felt pressure, with a notable 70% reduction in automobile output. In a related note, the capacity utilization rate for the industrial sector fell to 64.9% in April, 8.3 percentage points below March and a record low for the measure since its inception in 1967.

As of May 15, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -2.37% 8.39% -14.77% -3.78%
S&P 500 -2.20% 11.08% -10.69% 2.47%
Russell 2000 -5.42% 9.17% -24.25% -17.57%
MSCI EAFE -3.18% 2.61% -20.81% -12.02%
MSCI Emerging Markets -1.11% 6.43% -18.69% -8.93%
FTSE NAREIT -9.20% -3.28% -29.69% -24.74%
Bloomberg Commodity -1.06% -0.30% -23.53% -21.40%
Barclays U.S. Aggregate 0.33% 1.66% 4.86% 10.01%

Federal Reserve press releases 05/15/2020,WSJ 05/15/2020, CNBC 05/15/2020; WSJ 5/15/2020, CNBC 5/14/2020. 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.