This Weekly Financial Markets Update reviews the top market headlines: Inflation Moderates Slightly in February, Banking Sector Remains Under Scrutiny, Retail Sales Retreat in February
  • The CPI rose at an annual pace of 6.0% in February, the smallest increase since September 2021
  • The SPDR S&P Regional Banking ETF fell 14.3% last week
  • Retail sales declined 0.4% in February

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Top Three Market Headlines

Inflation Moderates Slightly in February: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 0.4% in February over the prior month, slightly lower than the 0.5% pace recorded in January. On an annual basis, prices rose 6.0%, the smallest 12-month increase since September 2021. Key contributors to the monthly increase in February were shelter (+0.8%) and food (+0.4%). On the other hand, the energy index fell 0.6% as the natural gas and fuel oil indexes declined. The core CPI, which excludes the volatile energy and food categories, rose 0.5% on the month and 5.5% annually, the latter being the lowest rate of growth since December 2021.

Banking Sector Remains Under Scrutiny: In the first week of trading after the failures of Silicon Valley Bank and Signature Bank, investors remained cautious about the banking sector. The SPDR S&P Regional Banking ETF fell another 14.3% last week, after declining 16.0% the prior week. During the week, it was announced that First Republic Bank, a San Francisco bank with more than $200 billion in assets whose stock had come under pressure, would receive a $30 billion infusion of deposits from a consortium of eleven of the largest U.S. banks. The agreement, coordinated by the U.S. Treasury Department, was seen as effort to shore up market confidence in the bank and the banking sector in general.

Retail Sales Retreat in February: The Department of Commerce reported last week that total sales at retail and food service establishments fell in February by 0.4% from the prior month. On an annual basis, sales rose 5.4%, the slowest pace since December 2020. (Both numbers include the effect of price increases). February's decline followed a strong report in January, when sales rose 3.2%. Sales of essential items like groceries and pharmaceuticals increased in February, but categories that had posted solid gains in the prior month, including vehicles, restaurants, and furniture, failed to maintain momentum, all registering declines in February.

As of March 20, 2023 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.03% 2.09% 2.09% -9.78%
S&P 500 1.47% 2.41% 2.41% -9.69%
Russell 2000 -2.57% -1.70% -1.70% -15.17%
MSCI EAFE -3.13% 2.64% 2.64% -5.00%
MSCI Emerging Markets -0.28% -0.25% -0.25% -12.64%
FTSE NAREIT Equity -1.09% -2.05% -2.05% -20.71%
Bloomberg Commodity -1.78% -8.14% -8.14% -15.00%
Barclays U.S. Aggregate 1.43% 2.90% 2.90% -5.33%

The Bureau of Labor Statistics 3/14/2023, US Dept. of Commerce 3/15/2023, FT 3/17/2023, Bloomberg 3/16/23, WSJ 3/15/2023. 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.