This Weekly Financial Markets Update reviews the top market headlines: Federal Reserve Trims Policy Rate Again, Financial Markets React to Elections, Business Activity Indices Reflect Divergent Conditions
  • The Federal Reserve cut its federal funds rate target range to 4.50%-4.75%
  • The S&P 500 index and the Russell 2000 index surged 4.7% and 7.8%, respectively, last week
  • The ISM Services index registered 56.0% in October

Top Three Market Headlines

Federal Reserve Trims Policy Rate Again: The Federal Reserve last week voted to cut its benchmark policy interest rate, the federal funds rate, by a quarter percentage point to a range of 4.50%-4.75%. The highly anticipated move came on the heels of the Fed's half percentage point rate cut in September. In discussing the latest decision, Fed Chairman Jerome Powell said the labor market remains solid but has cooled, while inflation continues to recede towards the Fed's 2% goal. The Chairman also reiterated that policymakers see the risks to achieving the central bank's employment and inflation goals as being roughly in balance.

Financial Markets React to Elections: U.S. stocks jumped last week in the wake of U.S. elections, with the S&P 500 index rising 4.7% on the week. Small cap stocks enjoyed an even better result, as the Russell 2000 index surged 7.8%. Analysts attributed the strength to relief about the lack of a contested outcome and optimism that less regulation and lower corporate taxes could spur continued economic growth. In the bond market, yields initially spiked on Wednesday after election results rolled in, with the 10-year Treasury bond yield hitting a four-month high of 4.48%. This action reversed in the ensuing days, however, and the 10-year yield closed the week at 4.30%, down from 4.37% the previous Friday.

Business Activity Indices Reflect Divergent Conditions: The Institute for Supply Management (ISM) reported last week that economic activity in the U.S. services sector expanded in October for the fourth consecutive month. The ISM Services index registered 56.0%, the highest level since July 2022. (A reading above 50% indicates expansion of business activity while a sub-50% result reflects contraction.) At the same time, activity in the manufacturing sector contracted in October for the seventh straight month and the 23rd time in the last 24 months, as the corresponding ISM Manufacturing index registered 46.5%.

As of November 08, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 3.36% 1.39% 20.31% 31.95%
S&P 500 4.69% 4.17% 27.17% 38.80%
Russell 2000 8.61% 7.70% 19.72% 42.03%
MSCI EAFE 0.07% -5.24% 7.07% 18.91%
MSCI Emerging Markets 1.21% -3.05% 13.30% 21.45%
FTSE NAREIT Equity 3.42% -0.69% 15.14% 34.37%
Bloomberg Commodity 0.15% -1.72% 4.04% 1.03%
Bloomberg U.S. Aggregate 0.78% -2.16% 2.20% 8.02%

Federal Reserve 11/07/2024, Institute for Supply Management, WSJ 11/6/2024, Bloomberg 11/6/2024, Barron's 11/11/2024, FactSet. 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.