This Weekly Financial Markets Update reviews the top market headlines: S&P 500 Index Enters a Bull Market, Manufacturing Activity Contracts Again in May, Saudi Arabia to Cut Oil Production

Top Three Market Headlines

S&P 500 Index Enters a Bull Market: The S&P 500 index officially entered bull market territory last week, closing on Thursday at a level 20% above its lowest point last October. In doing so, the market has notably climbed a proverbial "wall of worry," casting aside a range of concerns, such as stubborn inflation, continued Fed rate hikes, declining corporate earnings, recession concerns, and the banking turmoil that arose earlier this year. To be sure, the index's gains over this period have been relatively concentrated, with a significant portion of the advance being driven by a limited cadre of large cap technology stocks.

Manufacturing Activity Contracts Again in May: Business activity in the manufacturing sector slipped again in May, according to surveys of executives conducted by the Institute for Supply Management (ISM). The ISM Manufacturing Index registered 46.9% for the month, down from 47.1% in April and the seventh straight sub-50% reading in the sector. (Above 50% indicates expansion of activity, while below 50% reflects contraction.) Meanwhile, the ISM Services Index reflected continued expansion in May, though just barely, at 50.3%. While this was the fifth consecutive 50%+ reading, it was down 1.6 percentage points from April.

Saudi Arabia to Cut Oil Production: Saudi Arabia last week announced a voluntary reduction in oil production output of one million barrels per day, about 10% of production, starting in July. The decision was in conjunction with a broader deal agreed to by OPEC+ to limit the supply of oil going into 2024, aiming to stabilize weakening oil prices. The decision comes as oil prices have dropped over the last 12 months due to ongoing concerns of a potential global economic recession. The move could boost U.S. crude oil exports throughout the peak summer season and continue to reduce U.S. crude oil inventory, which has already been reduced to near historic lows.

As of June 12, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.60% 3.61% 11.18% 6.53%
S&P 500 0.41% 4.95% 12.82% 8.86%
Russell 2000 1.92% 3.79% 6.63% 2.37%
MSCI EAFE 0.64% 1.84% 10.46% 8.96%
MSCI Emerging Markets 1.89% 1.74% 5.77% -3.34%
FTSE NAREIT Equity 1.14% 1.06% 3.77% -4.32%
Bloomberg Commodity 1.24% -3.35% -8.54% -23.11%
Bloomberg U.S. Aggregate -0.15% -0.92% 2.01% -1.50%

ISM 6/5/2023, Barron’s 6/12/2023, Reuters 6/4/2023, 6/5/2023. 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.