This Weekly Market Update reviews the top market headlines: Inflation Hits a Fresh 40-Year High, Small Business Optimism Recedes, Consumer Sentiment Index Hits Decade Low
  • The CPI rose 7.5% on an annual basis in January, its fastest pace since 1982
  • The NFIB Small Business Optimism Index decreased to 97.1 in January
  • The University of Michigan Index of Consumer Sentiment has fallen more than 20% from a year ago

Top Three Market Headlines

Inflation Hits a Fresh 40-Year High: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.6% in January from the prior month, which put the annual increase at 7.5%, the highest reading in four decades. The "core" CPI, which excludes energy and food costs, measured a 0.6% increase on the month and rose 6.0% on an annual basis, slightly higher than the 5.5% pace seen in the previous month. The largest contributors to the January CPI increase included food, housing rental prices, vehicles, shelter, and electricity.

Small Business Optimism Recedes: Small business owners' outlook on the economic environment deteriorated in January, according to the National Federation of Independent Business (NFIB). The NFIB Small Business Optimism Index, based on surveys of small business owners, dropped to 97.1 in January, the lowest level since February 2021. Of the 10 components that make up the index, seven declined, including future sales expectations. Rising costs for labor and materials remained a pressing concern among respondents, with 61% of business owners reported raising average selling prices in response, the highest percentage since 1974.

Consumer Sentiment Index Hits Decade Low: U.S. consumers have become increasingly glum about current and future economic conditions, according to the Index of Consumer Sentiment published by the University of Michigan. The latest Index reading, released last week, was down more than 20% from a year ago and hit its lowest level in over a decade. A key cause of the recent declines in sentiment, according to the survey, is weakening financial prospects driven largely by rising inflation, with almost half of consumers indicating they expect their inflation-adjusted incomes to fall in the upcoming year.

As of February 7, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.07% -5.13% -5.13% 6.81%
S&P 500 -1.26% -7.16% -7.16% 14.41%
Russell 2000 2.00% -9.51% -9.51% -10.28%
MSCI EAFE 0.80% -2.38% -2.38% 4.95%
MSCI Emerging Markets 2.51% 0.75% 0.75% -11.30%
FTSE NAREIT -2.43% -9.47% -9.47% 22.65%
Bloomberg Commodity 0.52% 10.84% 10.84% 31.73%
Barclays U.S. Aggregate -1.07% -3.45% -3.45% -4.03%

NFIB 2/9/2022, WSJ 2/10/2022, CNBC 2/10/2022, Univ. of Michigan Surveys of Consumers, 2/11/2022. 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..