This Weekly Market Update reviews the top market headlines: The Fed Steps up Rate Hikes, Jobs Growth Remains Steady, Business Activity Cools in April

Top Three Market Headlines

The Fed Steps up Rate Hikes: In a widely anticipated decision, the Federal Reserve last week raised its target for short-term interest rates (the federal-funds rate) by 0.50%, putting the current target range at 0.75% to 1.00%. The half-percentage point move is the largest one-time increase since 2000, reflecting the Fed's recent pivot to a more aggressive approach to fighting inflation. Fed Chairman Jerome Powell also signaled that the central bank could execute additional 0.50% hikes at the next few Fed meetings in upcoming months. Concurrently, the Fed announced a plan to begin shrinking its balance sheet by reducing the amounts reinvested of principal payments received from maturing Treasury and mortgage securities.

Jobs Growth Remains Steady: The Labor Department reported last week that U.S. nonfarm payrolls grew by 428,000 in April, matching the number of jobs added the previous month. The unemployment rate also remained unchanged from March, holding steady at 3.6%, which is just shy of the 3.5% pre-pandemic level. Industries that saw the most job gains in April included leisure and hospitality, manufacturing, and transportation and warehousing. For the month, average hourly earnings increased by 5.5% compared to the prior year, reflecting the tightness of the labor market.

Business Activity Cools in April: U.S. business activity continued to grow in April, though at a lesser pace, according to surveys of business managers released last week from the Institute of Supply Management (ISM). The ISM Manufacturing Index slipped to 55.4% in April, its lowest reading since September 2020 and down from 57.1% in March. (A reading above 50% signals expansion of activity while a reading below 50 indicates contraction). The ISM Services Index also fell, registering 57.1% versus 58.3% in March. This was the 23rd straight month that both indices exceeded 50%, though the pace of expansion has decelerated from levels seen throughout most of 2021.

As of May 09, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.47% -9.36% -14.22% -7.17%
S&P 500 -0.18% -8.88% -13.07% -0.47%
Russell 2000 -1.29% -11.08% -17.77% -17.04%
MSCI EAFE -2.83% -9.12% -14.49% -11.89%
MSCI Emerging Markets -4.12% -9.46% -15.77% -21.32%
FTSE NAREIT -4.47% -8.66% -12.18% 8.69%
Bloomberg Commodity 0.68% 4.85% 31.64% 40.61%
Barclays U.S. Aggregate -1.11% -4.87% -10.51% -9.78%

Bloomberg 5/2/2022, Bloomberg 5/4/2022, WSJ 05/04/2022 WSJ 5/06/2022; Bureau of Labor Statistics, 5/6/2022. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC (“GFA”) is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC (“Triad”), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice