This Weekly Financial Markets Update reviews the top market headlines: Federal Reserve Slashes Policy Interest Rate, Leading Indicators Fall Again in August, Home Sales Retreat in August
  • The Federal Reserve cut its federal funds rate target range to 4.75%-5.00%
  • The U.S Leading Economic Index declined 0.2% in August
  • Existing home sales declined 2.5% in August versus the prior month

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Top Three Market Headlines

Federal Reserve Slashes Policy Interest Rate: The Federal Reserve voted last week to lower its benchmark policy interest rate, the federal funds rate, to a range of 4.75%-5.00% from 5.25%-5.50%, where it had stood since July of 2023. In discussing the decision, Federal Reserve Chair Jerome Powell said Fed officials "have gained greater confidence that inflation is moving sustainably toward 2%," but also noted that the "downside risks to employment have increased" as the labor market has cooled. Concurrently, Fed governors updated their outlook for future fed funds rate levels, with the median year-end 2024 forecasted rate falling to 4.25%-4.50% versus the prior estimate of 5.0%-5.25%.

Leading Indicators Fall Again in August: The Conference Board's U.S. Leading Economic Index (LEI) fell by 0.2% in August, the sixth straight monthly drop. The decline was keyed by weakness in manufacturers' new orders for goods and materials and subdued consumer expectations of future business conditions. Based on recent readings of the index, the Conference Board expects U.S. real gross domestic product (GDP) growth to cool in the back half of 2024, but it also noted that the Federal Reserve's forecasted interest rate cuts should lower borrowing costs and support stronger economic activity in 2025.

Home Sales Retreat in August: Existing home sales fell modestly in August after increasing in July, according to the National Association of Realtors (NAR). Sales decreased by 2.5% from the prior month to a seasonally adjusted annual rate of 3.86 million. Despite the reversal, the NAR pointed out that lower mortgage rates combined with increasing inventory could support a more favorable environment for sales in the future. The median existing-home sales price rose 3.1% in August from one year ago to $416,700, marking the 14th consecutive month of year-over-year price gains.

As of September 20, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.28% 4.74% 16.58% 26.00%
S&P 500 1.39% 4.76% 20.78% 31.45%
Russell 2000 2.10% 9.10% 11.00% 24.91%
MSCI EAFE 0.43% 4.98% 10.58% 18.01%
MSCI Emerging Markets 2.26% 2.68% 10.37% 16.90%
FTSE NAREIT Equity -0.96% 15.48% 15.33% 26.81%
Bloomberg Commodity 2.14% -1.64% 3.42% -3.45%
Bloomberg U.S. Aggregate -0.22% 5.45% 4.70% 10.43%

Federal Reserve 9/18/2024, WSJ 9/18/2024 The Conference Board 9/19/2024, Nat'l Assoc. of Realtors 9/19/2024. Data from Morningstar Direct. 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.