This Weekly Market Update reviews the top market headlines: Personal Spending Withstands Income Drop, Fed’s Preferred Inflation Index Jumps in April, Home Sales Slow as Prices Remain Red Hot

Top Three Market Headlines 

Personal Spending Withstands Income Drop: The Bureau of Economic Analysis (BEA) reported last week that personal consumption expenditures, a measure of consumer spending for all goods and services, rose by 0.5% in April from the prior month. With the economic reopening gaining steam in April, consumer spending on recreation services, food services, and accommodations saw large gains. While a deceleration from March pace of 4.7%, the growth in April came despite a decline in total personal income of 13.1% during the month, which reflected decreased fiscal support after the $1.9 trillion stimulus bull and $1,400 stimulus checks were delivered to most individuals in March.

Fed’s Preferred Inflation Index Jumps in April: The price index embedded within last week’s personal income and spending report from the BEA indicated that consumer prices rose 0.6% from March, or 3.6% over the prior year. The “core” PCE price index that strips out volatile food and energy prices, which is the Federal Reserve’s preferred inflation gauge, rose 0.7% from the previous month and 3.1% relative to April of 2020. This core annual rate was the highest registered since 1992 and brings the index well above the Federal Reserve’s inflation target of 2%, though the Fed has maintained that current elevated rates will prove transitory.

Home Sales Slow as Prices Remain Red Hot: U.S. home prices, as reflected in the S&P CoreLogic Case-Shiller Index that tracks residential real estate prices in the 20 largest U.S. cities, increased at an annual rate of 13.3% through March of this year. This was the tenth consecutive month of accelerating prices and the highest rate in more than seven years. All regions of the country saw double-digit gains, with the strongest growth seen in Phoenix (+20.0%) and San Diego (+19.1%). Surging prices and low inventories may be starting to impact the rate of housing activity, however, with recent reports indicating that existing and new home sales fell 2.7% and 5.9%, respectively, in April from the prior month.

As of May 28, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.41% 5.95% 10.79% 41.86%
S&P 500 1.20% 6.07% 12.62% 41.02%
Russell 2000 2.45% 2.31% 15.30% 63.81%
MSCI EAFE 1.22% 6.70% 10.42% 37.43%
MSCI Emerging Markets 2.39% 3.66% 6.03% 50.11%
FTSE NAREIT 2.00% 9.16% 18.85% 36.60%
Bloomberg Commodity 2.12% 11.25% 18.94% 48.01%
Barclays U.S. Aggregate 0.35% 1.12% -2.29% -0.09%

BEA 5/28/21, WSJ 5/26/2021, Yahoo Finance 5/25/21, CNBC 5/21/21, Marketwatch 5/25/21, S&P Dow Jones Indices 5/25/21; 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.