This Weekly Market Update reviews the top three market headlines; U.S. GDP Rebounds at Record Rate in Q3, Consumer Confidence Holds Steady, European Central Bank Prepares Support for Eurozone

Data Points

  • U.S. GDP grew at an annualized pace of 33.1% in Q3 2020, its fastest pace ever
  • The U.S. Consumer Confidence Index registered 100.9 in October, little changed from 101.3 in September
  • The ECB’s key interest rate is currently set at -0.5%

Top Three Market Headlines

U.S. GDP Rebounds at Record Rate in Q3: The Commerce Department announced last week that U.S. gross domestic product (GDP), a measure of goods and services produced, expanded at an annualized pace of 33.1% in the third quarter. Following on the heels of a 31.4% second quarter decline, the Q3 growth rate was fastest pace ever recorded and exceeded economists’ expectations of 32% growth. Rebounds in consumption, business equipment investment, and residential investment drove the strong Q3 number; however, lower levels of government spending and non-residential investment held back the overall result. While the initial recovery of GDP in Q3 was stronger than anticipated, the economy remains 3.5% smaller than it was in the final quarter of 2019.

Consumer Confidence Holds Steady: The Conference Board, a private research group, reported last Tuesday that its Consumer Confidence Index, which reflects consumers’ current and six-month future outlook of the economy, registered 100.9 in October, little changed from the 101.3 reading in September. Recent months’ readings remain much stronger than the springtime low of 85.7 in April. Consumers reported feeling better in October about the current environment, as the Present Situation component of the Index increased to 104.6 from 98.9 last month; on the other hand, consumers’ future outlook dimmed, as the Expectations Index decreased to 98.3 from 102.9 in September.

European Central Bank Prepares Support for Eurozone: The European Central Bank (ECB) announced last week that it intends to adopt additional measures to support Eurozone economies as key countries reenact coronavirus restrictions in response to rising Covid-19 case counts. ECB President Christine Lagarde warned that the Eurozone economy could slow significantly over the coming months as lockdowns begin. The additional support measures could take the form of more bond purchases and interest rate cuts. The ECB is currently buying €1.35 trillion of government and corporate debt through at least June 2021 while also maintaining its key interest rate at -0.5%.

 
As of October 30, 2020
 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -5.30% -2.43% -1.09% 4.75%
S&P 500 -5.62% -2.66% 2.77% 9.39%
Russell 2000 -6.21% 2.09% -6.77% -0.79%
MSCI EAFE -5.51% -3.99% -10.80% -6.79%
MSCI Emerging Markets -2.89% 2.06% 0.87% 8.30%
FTSE NAREIT -5.35% -2.61% -19.69% -21.57%
Bloomberg Commodity -2.34% 1.41% -10.85% -9.16%
Barclays U.S. Aggregate -0.04% -0.45% 6.32% 6.75%

WSJ 10/29/2020, The Conference Board 10/27/2020, CNBC 10/29/2020, Capital Economics 10/29/2020; 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.