This Weekly Financial Markets Update reviews the top market headlines: Housing Market Downturn Deepens, Retail Sales Slump at Year-End, Beige Book Signals Muted Activity

Top Three Market Headlines

Housing Market Downturn Deepens: The National Association of Realtors reported last week that sales of existing homes dropped 1.5% in December from the prior month to a seasonally-adjusted annual rate (SAAR) of 4.02 million. This was the eleventh straight month of decreasing sales. Compared to the prior year, the level of sales in December was 34% lower, reflecting the dramatic impact that surging mortgage rates over the last 12 months have had on housing market activity. Related, the U.S. Census Bureau also reported last week that the number of seasonally-adjusted, annualized rate of housing starts in December was 1.382 million, 22% lower than the pace one year prior.

Retail Sales Slump at Year-End: The Department of Commerce reported last week that sales at retail and food service establishments fell by 1.1% in December compared to the prior month. This was the second straight monthly decline, following November's downwardly revised 1.0% drop. Sales in December fell in 10 of 13 categories that are monitored, including motor vehicles, personal care, and furniture. Reported sales at gasoline stations also fell by 4.6% over the month as oil prices declined. On a year-over-year basis, sales in December rose 6.0%, which largely reflects the effect of rising prices over this period.

Beige Book Signals Muted Activity: The Federal Reserve last week released its most recent Beige Book, a compilation of anecdotal information about current economic conditions collected eight times a year by the 12 Federal Reserve Districts. According to the report, overall economic activity through early January was little changed from November of last year, and survey respondents generally didn't expect much growth in upcoming months. Manufacturing sector activity reportedly declined, while housing markets continued to weaken. On the brighter side, tourism activity was relatively strong towards year-end, and manufacturers noted that supply chain disruptions had eased. In addition, contacts reported that the pace of price increases had slowed from that of recent reporting periods.

As of January 23, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.25% 5.17% 5.17% -10.70%
S&P 500 -0.65% 3.55% 3.55% -9.90%
Russell 2000 -1.04% 6.06% 6.06% -6.41%
MSCI EAFE 0.01% 7.05% 7.05% -7.76%
MSCI Emerging Markets 0.63% 8.39% 8.39% -15.05%
FTSE NAREIT Equity 0.08% 6.07% 6.07% -13.33%
Bloomberg Commodity 0.58% -0.34% -0.34% 8.51%
Barclays U.S. Aggregate 0.15% 2.89% 2.89% -8.60%

WSJ 01/18/2023, National Assoc. of Realtors 01/20/2023, US Dept. of Commerce 01/18/2023, Federal Reserve 1/18/2023. 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.