This Weekly Market Update reviews the top three market headlines: Federal Reserve Keeps Rates Near Zero, Consumer Confidence Drops at Record Pace, U.S. GDP Contracts at Fastest Level Since 2008

Data Points

Top Three Market Headlines

Federal Reserve Keeps Rates Near Zero: After slashing the federal funds rate in March in response to the rapidly mounting economic and financial market pressures stemming from the COVID-19 crisis, the Federal Reserve last week voted to maintain the target federal funds rate at its current range of 0 to 0.25%. The Fed stated that it expects to maintain this target range until it “is confident that the economy has weathered recent events.” At the same time, the Fed reinforced its commitment to various other accommodative policies it enacted in the wake of the crisis, such as quantitative easing (i.e., purchasing bonds) and various lending programs, noting that the Fed “is committed to using its full range of tools to support the U.S. economy in this challenging time.”     

Consumer Confidence Drops at Record Pace: Optimism among consumers deteriorated sharply in April as COVID-19 mitigation efforts slammed the U.S. economy and caused a surge in unemployment claims. The Conference Board, a private research group, stated last week that its index of consumer confidence contracted from 118.8 in March to 86.9 in April, the largest monthly contraction in the index’s history. Respondents noted that they were particularly pessimistic about current economic conditions; at the same time, however, consumers’ short-term outlook brightened modestly from March, perhaps reflective of certain states’ efforts to loosen stay-at-home restrictions. 

U.S. GDP Contracts at Fastest Level Since 2008: The Bureau of Economic Analysis reported last week that real U.S. GDP decreased at an annual rate of 4.8% in Q1 2020, marking the worst quarter since 2008. Given the pervasive stay-at-home measures adopted across the country in March, personal consumption unsurprisingly led the decline, falling at a 7.6% annual rate. Reduced nonresidential fixed investment, exports, and inventories also contributed to the pullback. Forecasters expect an even worse contraction in the second quarter, though many economists predict a rebound in the second half of the year as states slowly reopen and lift shutdown measures. 

As of May 1, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.30% 8.32% -14.82% -6.70%
S&P 500 -0.19% 9.67% -11.83% -1.22%
Russell 2000 2.24% 9.38% -24.10% -18.83%
MSCI EAFE 3.07% 5.06% -18.92% -12.70%
MSCI Emerging Markets 4.27% 8.19% -17.34% -12.88%
FTSE NAREIT 2.66% 4.38% -24.12% -17.89%
Bloomberg Commodity 0.78% -1.85% -24.71% -23.28%
Barclays U.S. Aggregate -0.12% 1.66% 4.86% 10.68%

Marketwatch 4/27/2020, Wall Street Journal 04/30/2020, Federal Reserve, 4/29/2020; 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.