This Weekly Market Update reviews the top market headlines: Federal Reserve Signals an Upcoming Interest Rate Hike, U.S. GDP Rebounds in Q4, Home Price Growth Cools but Remains Strong
  • The target federal funds rate range has remained 0.00% - 0.25% since April 2020
  • U.S. GDP expanded at an annualized rate of 6.9% in Q4 of 2021
  • U.S. home prices rose at an annual rate of 18.8% in November

Top Three Market Headlines

Federal Reserve Signals an Upcoming Interest Rate Hike: Following its first meeting of 2022 last week, the Federal Reserve confirmed it could soon begin raising its target range for the federal funds rate. Most analysts predict the "liftoff" in the fed-funds rate—which has remained close to zero since April of 2020—will occur as soon as March, which is when the Fed also plans to cease its bond-buying stimulus program (a.k.a. "quantitative easing"). The Fed's pivot from its aggressive pandemic-induced monetary policy measures comes amid inflation readings reaching their highest level in nearly 40 years.

U.S. GDP Rebounds in Q4: The Commerce Department last week released its first estimate for Q4 2021 U.S. gross domestic product (GDP), a measure of all goods and services produced. According to the report, Q4 GDP expanded at an annualized pace of 6.9%, which exceeded analysts' expectations and represented a jump from the third quarter's 2.3% pace. The growth in Q4 was driven by an increase in private inventory investment, strong consumer activity, exports, and business spending as measured by nonresidential fixed investment; however, lower government spending at the federal level detracted from total output. For the full year, the U.S. saw a 5.7% increase in annualized GDP as the country continued to recover from the unprecedented drop in activity during the early days of the pandemic.

Home Price Growth Cools but Remains Strong: U.S. home prices continued increasing rapidly in November, though at a slightly lesser pace than seen earlier in the year. The S&P CoreLogic Case-Shiller 20-City Composite Home Price Index rose 18.8% compared to the prior year in November, the 12th straight month of double-digit increases. While this pace represented a slight deceleration from the prior month's annual rate of 18.5%, it was nonetheless the sixth-highest reading in the index's 34 years of data. Prices rose in November in all 20 cities measured, and stood at record highs in 19 of them. The strongest gains were seen in the South and Southeast, both up 25.0% year-over-year.

As of January 31, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.06% -6.54% -6.54% 9.34%
S&P 500 0.79% -6.93% -6.93% 18.68%
Russell 2000 -0.97% -12.30% -12.30% -5.63%
MSCI EAFE -3.61% -5.73% -5.73% 4.27%
MSCI Emerging Markets -4.26% -3.28% -3.28% -9.89%
FTSE NAREIT -0.32% -7.94% -7.94%; 30.17%
Bloomberg Commodity 1.70% 8.06% 8.06% 34.01%
Barclays U.S. Aggregate -0.36% -2.13% -2.13% -3.03%

WSJ 1/25/2022, WSJ 1/26/2022, Fox News 1/28/2021, Federal Reserve 1/26/2022, S&P Dow Jones 1/25/2022. 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.