This Weekly Market Update reviews the top market headlines: U.S. Home Prices Accelerate, Value Stocks Start Strong in 2021, Federal Reserve to Maintain Easy Monetary Policies

Top Three Market Headlines 

U.S. Home Prices Accelerate: Home prices across 20 major U.S. metropolitan areas surged 10.4% in December 2020 from the previous year, according to the S&P Core Logic Case-Shiller Home Prices Indices released last week. The increase followed a 9.5% rise in the month of November and was the highest annual growth rate seen in six years. The strong recent gains have been keyed by a surge in demand, as consumers take advantage of record-low mortgage rates, combined with limited supply, as the number of homes for sale dropped 23% in December from the previous year. Phoenix, Seattle, and San Diego saw the strongest price gains among the 19 cities surveyed.

Value Stocks Start Strong in 2021: After a decade of trailing their growth-oriented peers, value stocks have taken center stage in 2021. Year-to-date through February, the Russell 1000 Value index returned 5.1%, beating the -0.8% return of the Russell 1000 Growth index. The resurgence has been especially pronounced among small cap stocks, where the Russell 2000 Value index’s year-to-date gain of 15.2% has easily surpassed the 8.3% return of its growth counterpart. Economically-sensitive sectors such as financials, consumer discretionary, and industrials, which are more heavily weighted in value indices, have particularly benefited in 2021 as reopening optimism has boosted inflation expectations and interest rates.

Federal Reserve to Maintain Easy Monetary Policies: Federal Reserve Chairman Jerome Powell reiterated in Congressional testimony last week that the central bank intends to maintain its expansionary monetary policy—highlighted by near-zero short-term interest rates and an aggressive asset purchase program—until the labor market is close to full employment and inflation has hit the Fed’s 2% target. While acknowledging that the economic outlook has continued to improve since the end of 2020, Mr. Powell said the Fed is looking for “actual progress, not forecast progress” towards its employment and inflation goals.

As of February 26, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -3.29% 1.85% 1.85% 23.77%
S&P 500 -2.41% 1.72% 1.72% 24.50%
Russell 2000 -2.87% 11.58% 11.58% 43.63%
MSCI EAFE -2.80% 1.15% 1.15% 16.20%
MSCI Emerging Markets -6.34% 3.85% 3.85% 31.14%
FTSE NAREIT -0.35% 4.12% 4.12% -5.11%
Bloomberg Commodity -0.03% 9.27% 9.27% 16.00%
Barclays U.S. Aggregate -0.36% -2.15% -2.15% 2.06%

WSJ 2/23/21, 2/24/21, CNBC 2/23/21, Morningstar 2/26/21, FactSet. 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.