This Weekly Financial Markets Update reviews the top market headlines: Stubborn Inflation Trends in February, Mixed February Retail Sales Report, Inflation Weighs on Small Business Owners

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Top Three Market Headlines

Stubborn Inflation Trends 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, up from January's 0.3% monthly pace. Key areas contributing to the higher reading included shelter (+0.4%) and gasoline (+3.8%), which together drove over 60% of the index's rise in February. Compared to the prior year the CPI increased 3.2%, also a modest increase from 3.1% in January. The "core" CPI, which excludes volatile food and energy items, rose 0.4% on the month, unchanged from January, while registering 3.8% on an annual basis, down marginally from 3.9% in January.

Mixed February Retail Sales Report: The U.S. Census Bureau reported last week that sales at U.S. retail and food service establishments rebounded at a 0.6% monthly pace in February after falling in January. However, the result fell short of economists' expectations for a 0.8% gain, and the previously-reported January decline was revised down to 1.1% from 0.8%. On a year-over-year basis, the rate of sales growth in February, including the effect of price increases, was just 1.5%. On a monthly basis, the strongest results were seen in building materials & garden equipment (+2.2%) and motor vehicles & parts (+1.6%), while sales faltered across furniture (-1.1%), clothing (-0.5%), and internet (-0.1%) retailers.

Inflation Weighs on Small Business Owners: Small business owners continued facing challenging conditions in February, according to the latest Small Business Optimism Index. Released last week by the National Federation of Independent Business, the index fell from 89.9 in the prior month to 89.4 in February, its lowest level in nine months and its 26th straight month below the 50-year average of 98. The report highlighted that inflation remained the most important concern facing business operators, followed by labor quality and labor costs.

As of March 18, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.43% 5.88% 5.88% 27.60%
S&P 500 -0.09% 7.63% 7.63% 33.59%
Russell 2000 -2.02% 0.89% 0.89% 18.65%
MSCI EAFE -1.32% 4.38% 4.38% 21.31%
MSCI Emerging Markets -0.12% 1.38% 1.38% 12.23%
FTSE NAREIT Equity 2.80% -2.69% -2.69% 9.74%
Bloomberg Commodity 1.31% 1.69% 1.69% 2.42%
Barclays U.S. Aggregate -1.23% -1.72% -1.72% 1.15%