Weekly Market Insights: Stocks Take Summer Break, Month Remains Strong

Stocks took a breather last week as investors digested the previous week’s surge and the month-to-date solid gains.

The Dow Jones Industrial Average lost 1.67%, while the Standard & Poor’s 500 fell 1.39%. The Nasdaq Composite index dropped 1.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tumbled 2.00%.1,2,3

Rally Stalls

The stock market drifted lower last week as the tug-of-war between bulls and bears played out in a week that was light on market-moving news.

After falling in the first days of a holiday-shortened trading week, stocks rebounded on Thursday to recover some of the week’s losses. Stocks looked past Congressional testimony by Fed Chair Powell, who said two more rate hikes are likely in the wake of interest rate hikes by central bankers in the U.K., Switzerland, Norway, and Turkey.

The retreat continued into Friday, fueled by global growth fears from new economic data indicating more robust economic slowdowns in the eurozone, Japan, and Australia.

Housing Sentiment Improves

Home builders’ confidence edged into positive territory for the first time in 11 months, aided by strong demand, low inventory, and a recovering supply chain. May’s new home sales, which rose 21.7%–the most significant percentage gain since October 2016, validated this confidence. The number of new home starts in May (1.63 million) hit a 13-month high, with both single- and multi-family homes up substantially.4,5

Sales of existing homes in May rose 0.2% month-over-month while declining 20.4% from a year ago. The existing home market continues to suffer from low inventory and still-high prices. The median price of a home sold in May declined 3.1% year-over-year to $396,100.6

This Week: Key Economic Data

Tuesday: Durable Goods Orders. New Home Sales.

Thursday: Gross Domestic Product (GDP). Jobless Claims. 

Friday: Personal Income and Outlays. Consumer Sentiment.

Source: Econoday, June 23, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: Walgreens Boots Alliance, Inc. (WBA).

Wednesday: Micron Technology, Inc. (MU), General Mills, Inc. (GIS).

Thursday: Nike, Inc. (NKE), McCormick & Company, Inc. (MKC)

Source: Zacks, June 23, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“There is no better compass than compassion.”

– Amanda Gorman

Couples Who Work Together, Tax Together

When a household starts a business, couples find themselves learning about the tax responsibilities related to that business. There are some things to consider when working together.

Here are a few items to consider:

  • You should first establish if you have a partnership business (where both spouses have an equal say in the affairs, services, and capital of the business) or an employee/employer relationship (one spouse substantially controls management decisions). These relationships face different tax situations.
  • If there is an employee/employer relationship, the second spouse (employee) may be subject to income, Social Security, and Medicare
  • You may need to file the U.S. Return of Partnership Income form if there is a partnership relationship.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov7

Eat This, Not That: Easy Food Swaps Anyone Can Do

Eating healthier doesn’t have to be hard! You might not have to make any significant changes to your current diet! You can cut the bad stuff by swapping out unhealthy options for healthier picks and still enjoy your meal. Here are some of our favorite food swaps:

  • Mustard instead of mayonnaise (0 calories vs. 90 calories)
  • Scrambled eggs with green onions instead of cheese (170 calories vs. 275 calories)
  • Sparkling water instead of soda (0 calories vs. 140 calories)
  • Fresh fruit instead of dried fruit (69 calories vs. 325 calories)
  • Greek yogurt instead of sour cream (28 calories vs. 60 calories)
  • Olive oil spray instead of a tablespoon of olive oil (5 calories vs. 120 calories)
  • Corn tortillas instead of flour tortillas (100 calories vs. 280 calories)
  • All-bran cereal instead of granola (80 calories vs. 200 calories)
  • Goat cheese instead of Brie cheese (70 calories vs. 100 calories)

Many healthy swaps like these can help you reduce your caloric intake, consume less sugar, and make it easy to create a more balanced meal.

Tip adapted from EatThis.com8

You hold 3 U.S. coins in your hand. None of them are dimes, pennies, or quarters. They total 60¢. What 3 coins do you have in hand?

 

Last week’s riddle: A major league pitcher faces just 27 hitters in a baseball game. He retires all of them, allowing no runs and no hits. Still, his team loses the game 4-0. How is this possible?  Answer: He was a relief pitcher.

Lake Tekapo & Lupin Field, New Zealand

 

Footnotes and Sources


1. The Wall Street Journal, June 23, 2023. 

2. The Wall Street Journal, June 23, 2023.

3. The Wall Street Journal, June 23, 2023.

4. National Association of Home Builders, June 19, 2023

5. Reuters, June 20, 2023.

6. CNBC, June 22, 2023.

7.  IRS.gov, February 22, 2023

8. EatThis.com, February 15, 2023

Weekly Market Insights: Stocks Climb After Fed Pause

Stocks climbed last week as reassuring inflation data boosted investor hopes that the rate-hike cycle was nearing an end amid fresh economic data pointing to continued economic resilience.

The Dow Jones Industrial Average rose 1.25%, while the Standard & Poor’s 500 picked up 2.58%. The Nasdaq Composite index gained 3.25% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.42%.1,2,3

Stocks Rally

Stock market momentum gathered steam last week, blowing past the 4,300 and 4,400 thresholds in the S&P 500–a remarkable feat considering the time it took to break the 4,200 resistance level. 

Optimism was high to begin the week, with expectations that fresh evidence of cooling inflation would provide the Fed room to pause on further rate hikes. The data cooperated as consumer prices rose 4.0% year-over-year (the lowest 12-month number in two years), and producer prices increased 1.1% from a year ago.4

The Fed’s “hawkish pause” briefly unsettled investors, but after some reassessment and aided by healthy economic data, stocks rallied before slipping on Friday as the market digested the week’s gains.

More Rate Hikes To Come?

Federal Reserve officials kept rates steady at last week’s Federal Open Market Committee (FOMC) meeting. However, a majority of committee members indicated at least two more quarter-point rate hikes were likely before year-end.4

Fed Chair Jerome Powell commented that he saw progress in fighting inflation and that no decision was made regarding any future rate increase, saying that members will assess the economic impact of the cumulative rate hikes before the July 25-26 FOMC meeting.5

The Fed raised its 2023 economic growth forecast to 1%, up from its March forecast of 0.4%. The Fed also lowered its unemployment projection to 4.1% from its earlier estimate of 4.5%.6

This Week: Key Economic Data

Tuesday: Housing Starts.

Thursday: Existing Home Sales. Index of Leading Economic Indicators. Jobless Claims.

Friday: Purchasing Managers’ Index (PMI) Composite.

Source: Econoday, June 16, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: FedEx Corporation (FDX).

Thursday: Darden Restaurants, Inc. (DRI).

Source: Zacks, June 16, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“Kindness eases change. Love quiets fear.”

– Octavia E. Butler

3 Facts About Capital Gains

When you sell a capital asset, like an investment or a piece of property, the sale can result in a capital gain or loss. The Internal Revenue Service (IRS) defines a capital asset as “almost anything you own for personal use or own as an investment.” Here are three facts you should keep in mind:

  1. A capital gain or loss is the difference between what you originally paid for the asset (your basis) and the amount you get when you sell an asset.
  2. The IRS may allow you to deduct capital losses on the sale of an investment or piece of property.
  3. If your total net capital loss is more than the limit you can deduct, you may be able to carry it over to next year’s tax return.


*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov7

Finding Inner Peace Inside (And Indoors)

Practiced for thousands of years, yoga has had a revival in the last couple of decades. Yoga can be an optimal exercise choice for many individuals of all ages. But before getting started with any fitness regimen, discuss any medical concerns with your healthcare provider; this information is not a substitute for medical advice.

While there are many different styles of yoga, it is generally a low-impact form of exercise. But in addition to the fitness benefits, it can help you learn relaxation and breathing techniques and how to regulate emotions and quiet your mind. It’s also a great form of indoor exercise, and there are thousands of free classes on YouTube. So, if you’re looking for a way to promote both physical and mental health, you can practice quieting your inner monologue and start doing yoga from the comfort of your home.

Tip adapted from Yogabasics.com8

A major league pitcher faces just 27 hitters in a baseball game. He retires all of them, allowing no runs and no hits. Still, his team loses the game 4-0. How is this possible?

 

Last week’s riddle: A common English word refers to a person or thing not being in a place. But just by inserting a space within it, you can get two words meaning that a person or thing is present. What is this word? Answer:  Nowhere – which breaks into now here.

Mt. Tamalpais State Park, Marin County, California

 

Footnotes And Sources

1. The Wall Street Journal, June 16, 2023. 

2. The Wall Street Journal, June 16, 2023.

3. The Wall Street Journal, June 16, 2023.

4. AP News, June 14, 2023.

5. CNBC, June 14, 2023.

6. CNBC, June 14, 2023.

7. IRS.gov, January 26, 2023

8. Yogabasics.com, February 15, 2023

Wishing You a Happy Father’s Day

Let’s hear it for the dads, the ones who help us grow, give us guidance, and look out for us in a million different ways. In celebration of Father’s Day, here are some of the ways you can honor the father-figures in your life:

  • Tell the dads in your life how much you appreciate them
  • Look through old pictures or home videos with your father, or a father-figure
  • If your own father has passed, keep their memory close by sharing a cherished story about them with a friend or loved one

If you’re a father yourself, thank you. In small ways and big ways, you’ve helped make this world a better place for all of us. Wishing you and your family a very special Father’s Day.

Weekly Market Insights: Markets March Into Positive Territory Continues

A late-week rally sent stocks into positive territory, with the S&P 500 index closing just shy of the 4,300 mark.

The Dow Jones Industrial Average gained 0.34%, while the Standard & Poor’s 500 added 0.39%. The Nasdaq Composite index improved 0.14% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.44%.1,2,3

Stocks Edge Higher

Stocks bumped along the flatline for much of the week ahead of this week’s two inflation reports and the June meeting of the Federal Open Market Committee.

Amid little news, stocks drifted lower to start the week until Wednesday, when a solid early-day rally evaporated on news of the Bank of Canada’s surprise interest rate hike. Stocks rose again the following day, holding onto their gains, with the S&P 500 hitting a new closing high for 2023.4

Stocks added small gains on Friday after weathering some midday weakness, leaving major indices marginally higher for the week.

Better Breadth

One investor concern has been that a handful of mega-cap stocks have driven recent market returns. Last week’s market bucked that trend, with outperformance in small-cap stocks and equally-weighted stock market indices.

For instance, the Russell 2000 index (which measures the performance of 2,000 smaller-cap companies) rose 1.90% this week, outpacing the S&P 500 and the technology-heavy Nasdaq.5

Another example of broadening performance was the outperformance of the equally-weighted S&P 500 index, where each stock has equal weighting regardless of size, versus the market-cap S&P 500 index, where mega-cap companies disproportionately impact index performance. Last week’s return of the equally-weighted S&P 500 index exceeded the cap-weighted S&P 500’s return by 0.65%.6

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI).

Wednesday: Producer Price Index (PPI). FOMC Announcement.

Thursday: Retail Sales. Industrial Production. Jobless Claims.

Friday: Consumer Sentiment.

Source: Econoday, June 9, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Oracle Corporation (ORCL).

Thursday: Adobe, Inc. (ADBE).

Source: Zacks, June 9, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“I don’t believe in being serious about anything. I think life is too serious to be taken seriously.”

– Ray Bradbury

Do You Know The Difference Between Taxable And Nontaxable Income?

All income you receive is taxable unless the rules explicitly state it isn’t. According to the Internal Revenue Service (IRS), taxable income includes earned income like wages and any income earned by providing a service or the exchange of property or services. Rental income, interest, dividends, and social security benefits are all examples of taxable unearned income.

Some income is only taxable if certain conditions are met. For example, life insurance proceeds are usually not taxable to the beneficiary unless you redeem a life insurance policy for cash. Any amount you receive above the cost of the policy is taxable. State and local income tax refunds may be taxable and should be reported on your federal taxes.

Some forms of income are usually not taxable, like:

  • Gifts and inheritances. (State taxes may apply to inheritances.)
  • Welfare benefits.
  • Damage awards for physical injury or sickness.
  • Cash rebates from a dealer or manufacturer for an item you buy.
  • Reimbursements for qualified adoption expenses.

Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.


*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.


Tip adapted from IRS.gov7

Choose To Make Your Plate “MyPlate”

The so-called Food Pyramid had many flaws. Its significant weaknesses were that it generalized recommended daily servings and poorly defined portion sizes. So, in 2008, the U.S. Department of Agriculture implemented a user-friendly redesign: the pyramid was transformed into a plate.

The concept behind the MyPlate design was both revolutionary and seemingly obvious. After all, we eat off a plate, not a pyramid. Portions are easier to see. Make half the plate fruits and vegetables; the other half, grains and protein—a serving of dairy (or non-dairy alternative) on the side.

Take advantage of this method the next time you sit down for a meal and see what adjustments you can make to make your plate even healthier.


Tip adapted from MyPlate.gov8

A common English word refers to a person or thing not being in a place. But just by inserting a space within it, you can get two words meaning that a person or thing is present. What is this word?

 

Last week’s riddle: A friend wants change for a dollar. All you have in your pocket are over a dollar in coins, but you still can’t make the change correctly. What is the largest amount of money you could have in this situation? What coins do you have that prevent you from making the change correctly? Answer: $1.19. Four pennies, four dimes, and three quarters.

Hallstatter Lake, Hallstatt, Austria

 

Footnotes And Sources


1. The Wall Street Journal, June 9, 2023. 

2. The Wall Street Journal, June 9, 2023.

3. The Wall Street Journal, June 9, 2023.

4. CNBC, June 8, 2023.

5. The Wall Street Journal, June 8, 2023.

6. Google Finance, June 9, 2023.

7. IRS.gov, November 10, 2022.

8. MyPlate.gov, February 15, 2023.

The Cost of Procrastination

Some of us share a common experience. You’re driving along when a police cruiser pulls up behind you with its lights flashing. You pull over, the officer gets out, and your heart drops.

“Are you aware the registration on your car has expired?”

You’ve experienced one of the costs of procrastination.

“Procrastination can cause missed deadlines, missed opportunities, and just plain missing out.”

 

Procrastination is avoiding a task that needs to be done—postponing until tomorrow what could be done today. Procrastinators can sabotage themselves. They often put obstacles in their own path. They may choose paths that hurt their performance.

Though Mark Twain famously quipped, “Never put off until tomorrow what you can do the day after tomorrow,” we know that procrastination can be detrimental, both in our personal and professional lives. Problems with procrastination in the business world have led to a sizable industry in books, articles, workshops, videos, and other products created to deal with the issue. There are a number of theories about why people procrastinate, but whatever the psychology behind it, procrastination may cost money—particularly when investments and financial decisions are put off.

As the illustration below shows, putting off investing may put off potential returns.

If you have been meaning to get around to addressing some part of your financial future, maybe it’s time to develop a strategy. Don’t let procrastination keep you from pursuing your financial goals. This also applies to college funds for kids and grandchildren too. The sooner you start, the more time for compound growth of investment accounts.

Early Bird

Let’s look at the case of Cindy and Charlie, who each invest $100,000.

Charlie immediately begins depositing $10,000 a year in an account that earns a 6% rate of return. Then, after 10 years, he stops making deposits.

Cindy waits 10 years before getting started. She then starts to invest $10,000 a year for 10 years into an account that also earns a 6% rate of return.

Cindy and Charlie have both invested the same $100,000. However, Charlie’s balance is higher at the end of 20 years because his account has more time for the investment returns to compound.

This is a hypothetical example of mathematical compounding. It’s used for comparison purposes only and is not intended to represent the past or future performance of any investment. Taxes and investment costs were not considered in this example. The results are not a guarantee of performance or specific investment advice. The rate of return on investments will vary over time, particularly for long-term investments. Investments that offer the potential for high returns also carry a high degree of risk. Actual returns will fluctuate. The type of strategies illustrated may not be suitable for everyone.

6Lc_psgUAAAAAA9c7MediJBuq3wAxIyxDSt73c9j