This Weekly Market Update reviews the top market headlines: Recapping 2021

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Recapping 2021

Shrugging off recurrent waves of Covid-19 infections and the emergence of intransigent inflation, investors in 2021 focused on the continued global economic recovery and attendant strength in corporate earnings, driving strong returns across many risk assets for the second straight year.

U.S. Equities: U.S. stocks extended their robust post-pandemic recovery, with the S&P 500 index tacking on a 28.7% total return, following an 18.4% gain in 2020. All S&P economic sectors showed double-digit percentage gains on the year, led by energy stocks (+54.6%). Large cap stocks led the market, while returns were more modest among small cap stocks (Russell 2000 index, +14.8%).

International Equities: Foreign stocks failed to keep pace with U.S. stocks in 2021, with returns tempered by uneven economic recoveries and a rising U.S. dollar. While developed market returns were respectable (MSCI EAFE index, +11.3%, U.S. $ terms), emerging market indices were dampened by weakness in Chinese stocks (MSCI Emerging Markets index, -2.5%, U.S. $ terms).

Fixed Income: Bonds largely struggled as interest rates rose across the yield curve during the course of the year (Bloomberg Barclays U.S. Aggregate, -1.5%). Among the few bright spots were high yield bonds (Bloomberg Barclays High Yield, +5.3%) and TIPS (Bloomberg Barclays U.S. Treasury TIPS, 6.0%—the latter benefiting from investors seeking protection from rising inflation.

REITs: REITs enjoyed a banner year (FTSE NAREIT Equity REITs, +43.2%), rebounding from 2020 losses as economic activity recovered. Strong returns were widespread across all sectors, led by industrial, residential, and retail.

Commodities: Increasing demand and constrained supplies drove rallies across multiple commodities in 2021, pushing the broad index to its best return in years (Bloomberg Commodity, +27.1%). The energy complex was the standout performer as the price of oil jumped more than 50% during the year.

As of January 4, 2022 Week-To-Date Quarter-To-Date One-Year
MSCI All Country World 4.00% 6.68% 18.54%
S&P 500 4.48% 11.03% 28.71%
Russell 2000 2.23% 2.14% 14.82%
MSCI EAFE 5.12% 2.69% 11.26%
MSCI Emerging Markets 1.88% -1.31% -2.54%
FTSE NAREIT 8.83% 16.31% 43.24%
Bloomberg Commodity 3.53% -1.56% 27.11%
Barclays U.S. Aggregate -0.26% 0.01% -1.54%

Data from Morningstar Direct. Other sources: FactSet, FTSE Russell. 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.