This Weekly Financial Markets Update reviews the top market headlines: Corporate Earnings Pressured in Q4, U.S. Trade Deficit Soared to a Record High in 2022, Natural Gas Prices Plummet from 2022 Highs

Top Three Market Headlines

Corporate Earnings Pressured in Q4: Corporate America's post-pandemic earnings rebound hit a wall in the latter months of 2022, based on fourth quarter earnings reports issued by companies in recent weeks. Across the nearly 70% of companies in the S&P 500 index that had reported Q4 2022 earnings through last week, the blended earnings growth rate stood at -4.9% (as measured versus the prior year). If this rate were to hold as the remaining companies report, it would be the first time since Q3 2020 that earnings have declined on a year-over-year basis. Of 11 economic sectors in the index, only four are reporting earnings growth in Q4, including energy and industrial companies.

U.S. Trade Deficit Soared to a Record High in 2022: The U.S. Department of Commerce reported last week that the U.S. trade deficit widened to a record $948.1 billion in 2022, an increase of $103 billion, or 12.2%, from the prior year. Imports of goods and services jumped $556.1 billion, up 16.3% on the year, led by increased demand for industrial supplies and materials, including crude oil and other petroleum products. Meanwhile, exports increased by $453.1 billion, or 17.7%, also led by industrial supplies and materials, as the European Union turned to purchasing more energy products from the United States.

Natural Gas Prices Plummet from 2022 Highs: Natural gas prices have faced continued pressure in 2023, extending a plunge that began in the second half of 2022. The front-month futures contract for natural gas ended last week at $2.58/mmBtu (British thermal units), off 37% since the start of the year, and down nearly 75% from a 14-year high of $9.68 last August. The collapse in prices has been driven by weaker demand resulting from warmer winter temperatures combined with strong production levels. As of February 3, the amount of working gas in underground storage in the U.S. stood at 2,366 billion cubic feet, up 11% from the same time last year and 5% above the five-year average.

As of February 13, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -2.31% 6.95% 6.95% -9.33%
S&P 500 -2.09% 6.71% 6.71% -7.66%
Russell 2000 -4.09% 9.05% 9.05% -5.10%
MSCI EAFE -2.25% 7.34% 7.34% -6.70%
MSCI Emerging Markets -3.04% 6.04% 6.04% -16.60%
FTSE NAREIT Equity -3.54% 9.77% 9.77% -8.84%
Bloomberg Commodity -0.57% -3.15% -3.15% 1.82%
Barclays U.S. Aggregate -2.22% 1.55% 1.55% -7.94%

Census.Gov 2/7/2023, WSJ 2/8/2023, EIA 2/9/2023, Factset 2/10/2023, Forber 1/30/2023. 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.