This Weekly Market Update reviews the top market headlines: Retail Sales Slump in July, Fed Signals Tapering is Likely to Start This Year, Chip Shortage Continues to Hinder Automakers

Top Three Market Headlines

Retail Sales Slump in July: The U.S. Department of Commerce reported last week that sales of goods and services recorded by online retailers, restaurants, and brick-and mortar stores declined in July for the second time in three months, falling 1.1% from June's level. Motor vehicle sales, constrained by dwindling inventory and rising prices, declined 4.3%, while online retailers saw a 3.1% drop. On the bright side, restaurants and bars continued to rebound in July, showing a 1.7% rise over the month. Although sales decreased over the month, they were still well above 2020 pandemic-impacted levels, with July's total of $91.9 billion exceeding the prior year by almost 16%.

Fed Signals Tapering is Likely to Start This Year: A majority of Federal Reserve governors indicated support for starting to unwind easy-money policies later this year, according to minutes of the Fed's late-July meeting that were released last week. The Fed could begin to taper its $120 billion in monthly asset purchases at any of the remaining policy meetings this year provided the economy evolves as anticipated. However, Fed officials broadly agreed that "substantial further progress" still has not been made in regards to employment, suggesting they are not considering raising interest rates in the near-term.

Chip Shortage Continues to Hinder Automakers: A shortage of semiconductor chips continues to disrupt auto industry production, with two of the world's largest carmakers last week announcing fresh assembly lines suspensions. Ford stated it has been forced to halt production of its signature F-150 pickup, while Toyota said it would pause output at 14 plants and slash production by 40% due to semiconductor-related part shortages. Many of the semiconductors found in vehicles are produced in Southeast Asia, which continues to struggle with virus[1]induced business shutdowns. IHS Markit, a global information and analytics provider, has predicted that as many as 7.1 million vehicles will be cut from production this year alone due to the chip shortage.

As of August 23, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.61% 0.58% 12.95% 28.77%
S&P 500 -0.39% 3.56% 19.36% 33.20%
Russell 2000 -3.37% -6.08% 10.39% 40.01%
MSCI EAFE -2.27% 0.35% 9.21% 25.09%
MSCI Emerging Markets -5.35% -10.75% -4.10% 15.17%
FTSE NAREIT 0.24% 4.51% 27.46% 39.10%
Bloomberg Commodity -4.02% -3.57% 16.82% 27.07%
Barclays U.S. Aggregate 0.53% 0.97% -0.65% -0.27%

WSJ 08/17/2021, Bloomberg 8/19/2021, IHS Markit 8/19/2021, WSJ 08/18/2021, 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