This Weekly Financial Markets Update reviews the top market headlines: Leading Indicators Register 16th Straight Decline, Fed Minutes Reflect Continued Inflation Concerns, Retail Sales Growth Increases in June

Top Three Market Headlines

Leading Indicators Register 16th Straight Decline: The Conference Board reported last week that its Leading Economic Index (LEI), a composite of ten U.S. economic indicators intended to signal turning points in the economy, fell by 0.4% in July from the prior month. The index has now fallen for the 16 straight months, signaling an uncertain economic outlook. The latest decline was primarily attributed to weakness in new orders, higher interest rates, decreased consumer sentiment, and reduced manufacturing hours. According to the Conference Board, "the index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead."

Fed Minutes Reflect Continued Inflation Concerns: Minutes released last week of the latest meeting of the Federal Reserve's policy-setting committee, held in July, indicated that officials remain concerned that the rate of inflation has remained well above the central bank's longer-run target of 2%. This sentiment drove the near-unanimous decision at the meeting to increase the target federal-funds rate by another 25 basis points to a range of 5.25% to 5.50%. Moreover, officials noted that further monetary policy tightening in the form of additional rate hikes could be required given "significant upside risks to inflation."

Retail Sales Growth Increases in June: Spending at U.S. retail and food service establishments grew 0.7% in July from the prior month, the U.S. Department of Commerce reported last week. This was more than double the pace of growth in June and was the largest monthly increase since January. Compared to the prior year sales were up 3.2%. Keying the stronger result in July was internet sales, which jumped 1.9% on the month and 10.3% versus the prior year, partly resulting from Amazon's latest Prime Day promotion. Restaurants also showed strength, with sales rising 1.4% and 11.9% versus the prior month and year, respectively.

As of August 21, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -2.57% -2.14% 11.50% 3.58%
S&P 500 -2.05% -1.60% 15.02% 3.76%
Russell 2000 -3.36% -1.39% 6.58% -5.60%
MSCI EAFE -3.30% -3.23% 8.06% 8.74%
MSCI Emerging Markets -3.29% -3.29% 2.80% -1.92%
FTSE NAREIT Equity -3.21% -2.83% 2.38% -12.52%
Bloomberg Commodity -1.17% 3.47% -4.59% -10.17%
Bloomberg U.S. Aggregate -0.50% -1.92% 0.13% -4.13%

WSJ 8/15/2023, 8/16/2023, The Conference Board 8/17/2023. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC ("GFA") is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC ("Triad"), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice.