This Weekly Market Update reviews the top market headlines: Strong U.S. Economic Rebound Continues in May, The OECD Raises Global Growth Outlooks, Hiring Accelerates in May

Top Three Market Headlines 

Strong U.S. Economic Rebound Continues in May: U.S. business activity continued to expand at a healthy clip in May, according to surveys of business executives released last week from the Institute of Supply Management (ISM). The ISM Manufacturing Index registered 61.2 in May, up from 60.7 in the prior month. (A reading above 50 indicates an expansion of activity, while a sub-50 mark reflects contraction.) The services sector also continued to grow in May as the ISM Services index increased 1.3 points higher from the prior month to 64.0. May marked the twelfth consecutive month both indices signaled expansion after having fallen below 50 in April 2020.

The OECD Raises Global Growth Outlooks: The Organization for Economic Cooperation and Development (OECD) last week raised its outlook for 2021 global economic growth to 5.8%, an increase from its March estimate of 5.6%. As recently as December 20201, the OECD had projected 2020 growth of 4.2%. Key to the OECD’s improved outlook is the successful rollout of Covid-19 vaccines in advanced economies. For the U.S., the OECD expects growth of 6.9% this year, up from its previous estimate of 6.5%. At the same time, the OECD noted that some emerging market economies may continue to experience slower growth, due to slower vaccination deployment and less fiscal policy support.

Hiring Accelerates in May: The Labor Department reported last week that U.S. nonfarm payrolls increased by 559,000 in May, marking an uptick from April but still below market expectations. Most of the gains in May occurred in the leisure and hospitality, public and private education, and health care industries, accounting for 482,000 jobs or 86% of the job growth in May. Meanwhile, the unemployment rate declined by 0.3 percentage points to 5.8%; while this is well below the 14.8% peak registered in April of last year, it remains above the pre-pandemic rate of 3.5%.

As of June 4, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.75% 6.75% 11.63% 37.79%
S&P 500 0.64% 6.76% 13.35% 38.08%
Russell 2000 0.78% 3.11% 16.20% 59.20%
MSCI EAFE 0.73% 7.48% 11.22% 32.51%
MSCI Emerging Markets 1.59% 5.32% 7.72% 42.56%
FTSE NAREIT 2.82% 12.24% 22.19% 33.46%
Bloomberg Commodity 2.00% 13.47% 21.33% 47.25%
Barclays U.S. Aggregate 0.12% 1.25% -2.17% 0.16%

WSJ 6/4/21, BLS 6/4/21,ISM 6/1/21, WSJ 6/1/21, OECD 5/31/21 ; 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.