This Weekly Financial Markets Update reviews the top market headlines: Fed Pushes Ahead with Rate Hikes, Business Surveys Weaken Further, Pace of Jobs Growth Moderates

Top Three Market Headlines

Fed Pushes Ahead with Rate Hikes: The Federal Reserve last week raised the target for its interest rate benchmark, the federal-funds rate, by another three-quarters of a percentage point to a range of 3.75%-4.00%. The highly anticipated move was the Fed's sixth rate hike this year and fourth consecutive three-quarter percentage point increase. The surge in the fed-funds rate from near zero as recently as March to its current level represents the most aggressive string of rate hikes the Fed has enacted in decades. The central bank also signaled that additional increases are forthcoming amid its ongoing bid to tame persistently high inflation.

Business Surveys Weaken Further: Surveys of business executives conducted in October showed a continued softening of business activity in the United States. The Institute for Supply Management (ISM) Manufacturing index registered 50.2% during October, hovering just above the 50% level that distinguishes expansion of activity (above 50%) from contraction (sub-50%). The ISM Services index, meanwhile, reflected slightly stronger conditions, with a reading 54.4%, though this was down from 56.7% in September. While the indices continue to show modest expansion of activity, both have fallen sharply from 60%+ levels in late 2021.

Pace of Jobs Growth Moderates: The Labor Department reported last Friday that U.S. nonfarm payrolls increased by 261,000 in October, which was down from 315,000 in September and 292,000 in August. Healthcare led the market with 53,000 job additions, while other notable gains occurred in professional and technical services. Monthly job growth in 2022 has averaged 407,000, versus 562,000 in 2021. Despite the October gains, the unemployment rate increased to 3.7% from 3.5% in the prior month. The report also indicated continued pressures on wages, as average hourly earnings increased by 4.7% in October compared to the previous year.

As of November 07, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.39% 5.01% -21.90% -21.85%
S&P 500 -3.31% 5.30% -19.83% -18.16%
Russell 2000 -2.53% 8.21% -18.95% -24.08%
MSCI EAFE 1.24% 6.61% -22.27% -23.32%
MSCI Emerging Markets 4.68% 1.12% -26.34% -28.24%
FTSE NAREIT -1.81% 3.30% -25.76% -20.49%
Bloomberg Commodity 5.22% 5.77% 20.12% 16.14%
Barclays U.S. Aggregate -0.78% -1.66% -16.02% -16.18%

ISM 11/03/2022, BLS 11/04/2022, CNBC 11/2/2022. 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.