This Weekly Market Update reviews the top market headlines; U.S. GDP Expands in Q4, Consumer Spending Ticks Lower in December, Federal Reserve Keeps Policy Unchanged

Top Three Market Headlines 

U.S. GDP Expands in Q4: The Commerce Department reported last week that U.S. gross domestic product (GDP), a measure of all goods and services produced, expanded at an annualized pace of 4.0% in the fourth quarter of 2020. Following a 33.1% annualized third-quarter increase, the Q4 growth rate came in slightly below expectations. Rebounds in exports, nonresidential fixed investment, and consumer spending drove Q4 growth; however, lower government spending at the federal, state, and local levels detracted from output. For the full year, GDP declined 3.5%, weighed down by the dramatic 31.4% Q2 decline in the wake of Covid-19-induced business shutdowns. 2020’s downturn marked the first yearly decrease since 2009 and the sharpest decline since 1946.

Consumer Spending Ticks Lower in December: The Bureau of Economic Analysis reported last week that U.S. consumer spending fell 0.2% in December from the prior month. This was the second straight monthly decline, and was led by decreases in purchases of food services, reflecting the impact of renewed COVID-19-induced economic restrictions imposed by certain cities and states towards the end of 2020. A weakening consumer environment was also depicted in the January reading for the Consumer Confidence index, released earlier in the week; while the index rose to 89.3 from 87.1 in December, it remained meaningfully below its September level of 101.8.

Federal Reserve Keeps Policy Unchanged: The Federal Reserve said last week that it will keep the federal funds rate near zero while maintaining its monthly bond purchases of $120 billion per month, moves that were consistent with market expectations. Fed Chairman Jerome Powell addressed the issue of when the Fed might taper its quantitative easing (i.e., bond buying) program, stating that its bond purchases will continue until the central bank makes substantial progress toward reaching its monetary and inflation goals. In commenting on the economy, the Fed noted that the pace of the recovery in economic activity and employment moderated in recent months.


As of January 29, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -3.54% -0.45% -0.45% 15.23%
S&P 500 -3.29% -1.01% -1.01% 15.56%
Russell 2000 -4.38% 5.03% 5.03% 27.41%
MSCI EAFE -3.45% -1.07% -1.07% 7.78%
MSCI Emerging Markets -4.46% 3.07% 3.07% 23.80%
FTSE NAREIT -0.78% 0.10% 0.10% -10.11%
Bloomberg Commodity 1.25% 2.63% 2.63% 5.88%
Barclays U.S. Aggregate 0.03% -0.72% -0.72% 4.98%

CNBC 1/28/2021; WSJ 01/26/2021, WSJ 01/29/2021; WSJ 1/27/2021, Federal Reserve 01/27/2021. 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.