This Weekly Financial Markets Update reviews the top market headlines: Fed Hikes Again, Hints at Pausing, April Jobs Report Mixed, Surveys Reflect Further Manufacturing Contraction

Top Three Market Headlines

Fed Hikes Again, Hints at Pausing: The Federal Reserve last week raised the target for its interest rate benchmark, the federal-funds rate, by another quarter percentage-point. This marked the 10th increase in just over a year and pushed the target rate range to 5.00% ‒ 5.25%. In an accompanying statement, the Fed reiterated that it is "strongly committed to returning inflation to its 2% objective." Notably, however, officials removed language from previous statements that stated additional increases in rates may be necessary, signaling that the central bank may pause rate hikes for the time being while evaluating on-going economic and financial developments and the cumulative impact of prior rate increases.

April Jobs Report Mixed: The Labor Department reported last week that employers added 253,000 jobs in April, ahead of economists' expectations. However, previously-reported gains for the prior two months were revised downward by a total of nearly 150,000. This put the average number of additions from February to April at 222,000, the lowest three-month tally since January 2021. Sectors seeing the most new jobs in April included professional and business services, healthcare, and leisure and hospitality. With the job growth in April, the unemployment rate decreased to 3.4%, its lowest level since 1969.

Surveys Reflect Further Manufacturing Contraction: Business activity in the manufacturing sector contracted again in April, according to surveys of executives by the Institute for Supply management (ISM). The ISM Manufacturing Index registered 47.1% on the month, its sixth straight monthly reading below the 50% threshold that differentiates expansion of activity from contraction. Conversely, the environment for services companies remained sturdier, as the ISM Services Index registered 51.9%, its fourth consecutive month reflecting expansion of activity.

As of May 08, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.35% 1.09% 8.47% 2.23%
S&P 500 -0.78% 0.77% 8.33% 1.49%
Russell 2000 -0.49% -2.28% 0.40% -4.49%
MSCI EAFE 0.16% 2.99% 11.70% 10.66%
MSCI Emerging Markets 0.51% -0.63% 3.30% -4.50%
FTSE NAREIT Equity 0.33% 1.16% 3.88% -11.79%
Bloomberg Commodity -1.20% -1.94% -7.20% -19.43%
Bloomberg U.S. Aggregate -0.05% 0.55% 3.53% 0.23%

Bloomberg 5/4/2023, ISM 5/1/2023 & 5/3/2023, WSJ 5/3/2023, 5/5/2023, US Bureau of Labor Statistics, 5/5/2023. 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.