This Weekly Market Update reviews the top market headlines: Earnings Season Starts with a Bang, Rising Raw Materials Costs Spur Price Hikes, Home Sales Surge
  • The expected Q1 EPS growth rate for S&P 500 companies is currently 34%
  • Corn futures prices have risen 96% over the last 12 months while lumber futures prices are up 265%
  • New home sales grew 21% in the month of March from the prior month

Top Three Market Headlines 

Earnings Season Starts with a Bang: With earnings reporting season getting underway, early indications point to a strong rebound in profits across corporate America for Q1. Through last week, approximately 25% of the S&P 500 companies had reported earnings, 84% of which reported a positive surprise in earnings per share (EPS) compared to Wall Street analyst estimates, according to FactSet. If this rate holds, it would be the highest since 2008. Overall, the expected year-over-year EPS growth rate for S&P 500 companies now stands at 34% (combining actual reports with analyst estimates for companies yet to report), which is up from 24% at the start of the quarter.

Rising Raw Materials Costs Spur Price Hikes: Proctor & Gamble and Coca-Cola last week became the latest corporations to announce price increases in response to rising raw materials costs. Other companies that have recently warned of price hikes include General Mills, Kimberly-Clark, J.M. Smucker, Sherwin-Williams, and Conagra. Companies are seeking to pass on to consumers some of the effect of surging commodity prices: for example, futures contract prices for corn, cotton, and lumber are up 96%, 54%, and 265%, respectively, over the past year. While food items represent only 14% of the broad consumer price index (CPI), the impending price increases may stoke mounting concerns in some corners about potential inflationary pressures as the economy reopens.

Home Sales Surge: The Commerce Department reported last Friday that sales of new single-family homes surged in March to a seasonally-adjusted annual rate of 1.021 million, the highest level since August 2006. This represented an increase of 21% from the prior month and 67% versus the prior year. A separate report from the National Association of Realtors (NAR) revealed that sales of existing homes grew by 12% in March over the prior year, though activity fell from February on account of limited supply and higher prices nationwide. According to the NAR, the median existing-home sales price hit $329,100 in March, an all-time high and a 17% increase over the prior year.

As of April 23, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.14% 4.62% 9.40% 51.91%
S&P 500 -0.11% 5.30% 11.80% 51.92%
Russell 2000 0.41% 2.34% 15.33% 89.29%
MSCI EAFE -0.41% 3.80% 7.41% 45.96%
MSCI Emerging Markets 0.35% 2.87% 5.23% 54.84%
FTSE NAREIT 1.80% 6.54% 16.00% 45.28%
Bloomberg Commodity 2.17% 5.94% 13.27% 45.59%
Barclays U.S. Aggregate 0.13% 0.97% -2.43% -0.05%

WSJ 4/12/2021, 4/23/2021, Business Insider 04/22/2021, Bloomberg 4/22/2021, 4/23/2021, US Bureau of Labor Statistics, Nat’l Assoc of Realtors, 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.