This Weekly Financial Markets Update reviews the top market headlines: Q1 Corporate Earnings Trend Upwards, Consumer Sentiment Weakens, Europe Moves Ahead of the Fed on Rate Cuts
  • S&P 500 company earnings are on track to grow 5.4% in Q1 2024 over the prior year
  • The University of Michigan Consumer Sentiment Index fell to 67.4 in May, the lowest reading in six months
  • Sweden’s Riksbank cut its key policy interest rate to 3.75% from 4.0%

Top Three Market Headlines

Q1 Corporate Earnings Trend Upwards: Earnings results across corporate America for the first quarter of 2024 have proven stronger than anticipated, according to FactSet. With more than 90% of S&P 500 companies having issued their Q1 financial results as of last week, the aggregate earnings growth rate — based on a blend of actual reports and analysts' forecasts for the remaining companies — stood at 5.4% over Q1 of the prior year, better than analysts' estimate of 3.4% at the start of the quarter. Should the current rate stand, it would represent the third straight quarter of positive year-over-year growth and the highest rate since Q2 2022.

Consumer Sentiment Weakens: Two key surveys released in the past few weeks depict a deteriorating outlook of late among consumers. The latest Index of Consumer Sentiment published by the University of Michigan last week registered 67.4, down from 77.2 in January and the lowest reading in six months. Survey respondents voiced concerns that inflation, unemployment, and interest rates may all be trending in an unfavorable direction. Related, the Conference Board's Consumer Confidence Index fell for the third consecutive month in April, hitting its lowest level since July 2022. According to the survey, high price levels, particularly for food and gas, were consumers' foremost concern.

Europe Moves Ahead of the Fed on Rate Cuts: Recent moves by two European central banks to enact interest rate cuts have bolstered speculation that policymakers across the continent may lead the U.S. in easing monetary policy. Sweden's central bank last week lowered its key policy rate to 3.75% from 4.0% in response to easing inflation trends and weak economic activity. Weeks before, the Swiss National Bank had cut its policy rate, also in reaction to softer inflation readings. At a broader level, an increasing number of analysts and economists expect the European Central Bank to cut interest rates in June.

As of May 13, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.72% 0.04% 8.24% 21.91%
S&P 500 1.89% -0.47% 10.03% 28.22%
Russell 2000 1.21% -2.95% 2.07% 18.89%
MSCI EAFE 1.77% 0.47% 6.29% 12.68%
MSCI Emerging Markets 0.98% 3.02% 5.46% 12.32%
FTSE NAREIT Equity 1.92% -3.30% -3.49% 5.84%
Bloomberg Commodity 1.53% 3.97% 6.25% 5.58%
Barclays U.S. Aggregate 0.09% -1.20% -1.97% -0.05%

University of Michigan 5/10/2024, The Conference Board 4/30/2024, WSJ 5/8/2024, MarketWatch 5/8/2024, FactSet 5/10/2024, Reuters 3/28/2024. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.