Stocks fell last week as investors reacted to disappointing inflation updates and other economic reports that fell short of estimates.

Stocks Snap Winning Streak

Markets were quiet Monday but opened lower Tuesday in response to the January inflation report that showed higher-than-expected consumer prices. But stocks regained some momentum on Wednesday and rallied Thursday despite disappointing reports on both retail sales and industrial production for January.^1,2

News of higher-than-expected wholesale prices on Friday put investors back on edge and kept stocks from ending the week on a positive note. The weekly loss broke a five-week winning streak.³

Inflated Perspective

Consumer Price Index data was one of the big pieces of news driving markets last week, with January’s numbers coming in at 3.1 percent compared to a year prior—cooler than December’s 3.4 percent year-over-year gain but warmer than the 2.9 percent consensus. Jittery Investors focused on the hotter-than-expected part.⁴

With the consumer report closely followed by disappointing inflation news on the producer level, attention quickly shifted to the Fed and what’s next for interest rates. While the Fed has indicated short-term rates may trend lower in 2024, the January inflation reports support Fed Chair Powell’s recent comments that the Fed is in no hurry to cut rates.⁴

This Week: Key Economic Data

Tuesday: Leading Indicators.

Wednesday: FOMC Meeting Minutes.

Thursday: Jobless Claims. Existing Home Sales. U.S. Fed Balance Sheet.

^{Source: Investors Business Daily – Econoday economic calendar; February 15, 2024
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: Walmart Inc. (WMT), The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW)

Wednesday: NVIDIA Corporation (NVDA)

Thursday: Intuit Inc. (INTU), Booking Holdings Inc. (BKNG)

Friday: Berkshire Hathaway Inc. (BRK.A, BRK.B)

^{Source: Zacks, February 15, 2024
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.}

“You miss 100% of the shots you never take.”

– Wayne Gretzky

Taking a Side Gig? Here’s How It May Affect Your Taxes

Taxpayers who work in the gig economy may benefit from a better understanding of how their work affects their taxes. 

Here are some things taxpayers should know about the gig economy and taxes:

• Money earned through this work may be taxable.
• There are tax implications for the company providing the platform and the individual performing the services. 

This income may be taxable even if the taxpayer providing the service doesn’t receive a Form 1099-MISC, Form 1099-K, or Form W-2. This income may also be taxable if the activity is only part-time or side work or paid in cash. 

*This information is not intended to be a substitute for specific, individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁵

Show Your Heart Some Love 

February is American Heart Month. While genetics and family history are primary factors in disease development and survival, some lifestyle factors are associated with better heart health. However, make sure to discuss any medical concerns with your health care provider before beginning any dietary and fitness regimen. The following information is not a substitute for medical advice.

• Manage your blood pressure: Make sure to get your blood pressure checked regularly. Hypertension is often asymptomatic.
• Maintain a healthy weight: Being overweight or obese may increase disease risk.
• Eat well and exercise: These two activities are associated with a lower incidence of heart disease.
• Drink less alcohol and don’t smoke: These habits are seen more frequently in heart disease patients.
• Sleep well and reduce stress: Lower cortisol levels may reduce your risk for heart disease. 

While not all risk factors are controllable, some are. The list above is not comprehensive. Give your heart some love this month and talk to your doctor about the best ways to care for it. 

Tip adapted from MedlinePlus.gov⁶

What can explode slowly, with no smoke or flame?

Last week’s riddle: If a single-engine airplane taxied not onto a runway but onto an enormous conveyor belt whose speed precisely equaled that of the plane in the opposite direction, could the plane still manage to take off? Answer: Yes, eventually. A plane’s wheels roll freely, and the thrust generated by the prop or jet engine will still be greater than drag, and the lift created by air flowing over the wing will still be greater than the aircraft’s weight.

A freediver swimming in a Mexican cenote

Footnotes and Sources

1. The Wall Street Journal, February 13, 2024.

2. CNBC, February 16, 2024.

3. The Wall Street Journal, February 15, 2024.

4. The Wall Street Journal, February 13, 2024.

^{5. IRS.gov, April 7, 2023.}

^{6. MedlinePlus.gov, December 12, 2023.}

The stock market experienced solid gains last week, concluding the trading week on a positive note, thanks to robust corporate reports and favorable inflation news; this propelled the S&P 500 Index to achieve a new record high at the end of the week.

S&P Tops 5,000

At the start of last week’s trading, stocks faced downward pressure due to comments by Fed Chair Powell over the weekend, signaling that the Federal Reserve had no immediate plans to initiate interest rate cuts. Consequently, the yield on the two-year U.S. Treasury note, highly influenced by monetary policy, increased to its highest level in two months.¹

By the end of trading on Monday, stocks had regained a significant portion of their previous losses. Influencing this market rally were positive corporate earnings reports. This trend continued throughout the week, contributing to the overall market momentum. By Friday, 67% of the companies listed in the S&P 500 had released their Q4 results, and an impressive 77% of those companies exceeded earnings expectations.²

Investors expressed enthusiasm on Friday after a report indicating that December’s inflation was lower than initially anticipated. This positive news revitalized buying activity, resulting in the S&P 500 surpassing 5,000 for the first time.³

Economic Strength

The strength of the U.S. economy has come into the spotlight. An analysis conducted by The Wall Street Journal recently proposed that the economy’s resilience could be attributed, at least in part, to the productivity driven by the technology sector.⁴

What might rein in that productivity? One possible influence could be the increase in oil prices witnessed last week. Additionally, shipping companies have been imposing surcharges for several months to mitigate recent conflict, and these charges may contribute to global inflation this year, potentially dampening investor enthusiasm.⁵

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI).

Wednesday: EIA Petroleum Report.

Thursday: Industrial Production. Retail Sales. Jobless Claims. 

Friday: Housing Starts. Producer Price Index (PPI). Consumer Sentiment. 

^{Source: Investors Business Daily – Econoday economic calendar; February 8, 2024
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: Arista Networks, Inc. (ANET), Waste Management, Inc. (WM)

Tuesday: The CocaCola Company (KO), Shopify Inc. (SHOP), AirBnB, Inc. (ABNB), Moody’s Corporation (MCO)

Wednesday: Cisco Systems, Inc. (CSCO), Sony Corporation (SONY), Kraft Heinz Company (KHC)

Thursday: Applied Materials, Inc. (AMAT), Deere & Company (DE)

^{Source: Zacks, February 8, 2024
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.}

“A real friend is one who walks in when the rest of the world walks out.”

– Walter Winchell

Are You Prepared for a Natural Disaster? 

Natural disasters, such as hurricanes, earthquakes, or fires, can happen anytime, so preparing before disaster strikes is essential. Here are a few tips to help you prepare in case anything happens: 

• Update Your Family’s Emergency Plans: Your emergency plans can include knowing where to go, where you keep all necessary documents and possessions, and what you need to be prepared for. Check up on the emergency plans for your home or business frequently because things can change.

• Create Digital Copies Of Important Documents: Most financial organizations, such as banks and insurance companies, provide digital copies of bank statements, tax returns, and insurance policies anyway, and keeping all these digital copies saved and organized is an excellent practice to get into. If you only have paper copies of important documents, scan them and save them securely to access them in an emergency.
• Document Valuables: Documenting valuables makes it easier to claim insurance and tax benefits after a natural disaster. A disaster loss workbook will help you compile a list of belongings and photographs that can make this process even more accessible for both the IRS and your insurance provider. 

These tips may help you have everything you need ready in the case of a natural disaster or other emergency.

*This tax tip is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals for more specific information.

Tip adapted from IRS.gov⁶

Picking Up a Creative Hobby Is About More Than Passing the Time  

Creative hobbies like writing, knitting, and making clothes are about more than just passing time. Creative hobbies and side projects can make you happier, healthier, and more productive.

When considering a side project or hobby, experts suggest picking something low-risk, low-pressure, and a labor of love. The difference between a creative hobby and a side project is that creative hobbies are ongoing and don’t have a dedicated end goal. Side projects have a goal at the end of the tunnel. For example, your creative hobby could be writing, and your side project could be writing a book.

Coming up with a project or hobby can provide a big psychological lift and a boost to work productivity.

Tip adapted from Fast Company⁷

If a single-engine airplane taxied not onto a runway but onto an enormous conveyor belt whose speed precisely equaled that of the plane in the opposite direction, could the plane still manage to take off?

Last week’s riddle: Two men played five games of chess in the park. They both won the same number of games, yet none of the games they played ended in a draw. So how could this be? Answer: They were not playing each other.

A view of Mont-Saint-Michel at sunrise

Footnotes and Sources

^{1. The Wall Street Journal,February 4, 2024}

^{2. FactSet.com, February 9, 2024}

^{3. CNBC.com, February 9, 2024}

^{4. WSJ.com, February 8, 2024}

^{5. CNBC, February 9, 2024}

^{6. IRS.gov, March 8, 2023}

^{7. Fastcompany.com, October 9, 2023} 

Stocks pushed higher last week as investors cheered mega-cap tech corporate reports and a better-than-expected employment report.

Stocks At New Highs

At the beginning of the week, stocks surged, anticipating fourth-quarter corporate updates from tech companies and the Federal Reserve’s two-day policy meeting; this led to the S&P 500 Index reaching a new record high on Monday.

The market remained relatively stable for the rest of the week until Wednesday, when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The Federal Open Market Committee’s (FOMC) news unsettled investors, who anticipated that rates would remain unchanged but expected more specific guidance on the Fed’s plan to lower interest rates.¹

On Friday, the job report for January revealed the addition of 353,000 new jobs, surpassing the forecast of 185,000. This strong report did not negatively impact the markets. Instead, investors interpreted it as confirmation of a robust economy.²

Fed’s Mixed Signals

The Fed’s decision to keep rates steady left some investors disappointed, as they had been hoping for indications of rate cuts in the coming months; this led to a decline in stock prices on Wednesday, with increased selling towards the end of the trading day.

The Wall Street Journal’s headline after the FOMC meeting on Wednesday suggested that rate cuts were possible but not expected immediately. The FOMC’s policy language, released after the meeting, indicated a subtle shift from considering rate cuts to proposing they could be possible unless inflation became a concern.³

This Week: Key Economic Data

Monday: ISM Services Index.

Wednesday: International Trade in Goods & Services. EIA Petroleum Report.

Thursday: Jobless Claims. Fed Balance Sheet.

^{Source: Investors Business Daily – Econoday economic calendar; February 2, 2024
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: McDonald’s Corporation (MCD), Caterpillar (CPL)

Tuesday: Eli Lilly and Company (LLY), Amgen Inc. (AMGN), Fiserv, Inc. (FI)

Wednesday: The Walt Disney Company (DIS), Uber Technologies Inc. (UBER), PayPal Holdings Inc. (PYPL)

Thursday: AstraZeneca Plc (AZN), S&P Global Inc. (SPGI), Philip Morris International Inc. (PM)

Friday: PepsiCo Inc. (PEP)

^{Source: Zacks, February 2, 2024
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.}

“Your life does not get better by chance, it gets better by change.”

– Jim Rohn

Vacation Home Rentals

If you receive money for the use of your primary residence, you may have to report this rental income on your tax return; this means that the “vacation home rental” classification can apply to your home, even if you don’t own multiple short-term rental properties. The rental expense deduction is limited in the case of a property used as a home; the rental expenses can’t be more than the rent received. The rental income may not require reporting if you rent the house to your tenant for fewer than 15 days during the year.

A vacation home is a house, apartment, condominium, or other dwelling that you use to generate income, but you can also use it as a residence during the year. For tax purposes, it’s critical to divide the expenses of a property into personal and business purposes.

To report rental income and rental expenses, use Schedule E. In addition, rental income may be subject to a net investment income tax.

*This tax tip is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals for more specific information.

Tip adapted from IRS.gov⁴

Taking Care Of Your Mental Health 

Taking care of your mental health is just as important as your physical health—if not more so. Your mental health influences how you communicate with others, perform at work, and feel about yourself.

Here are some tips to help you focus on your mental health and understand what you need to be the best version of yourself:

• Start your day with coffee or tea and enjoy the warm drink without thinking about what’s ahead.
• Set up a getaway, even if you don’t go far. It could even be camping in your backyard.
• Think of something in your life you want to improve and figure out what you can do to take a step in the right direction.
• Learn something new, whether that’s a recipe, a song, a poem, or a skill.
• Show some love to someone in your life. Write a letter, send a text, or give a loved one a phone call.
• Go off the grid and leave your smartphone at home for a day (or a few hours).

Tip adapted from Mental Health America⁵

Two men played five games of chess in the park. They both won the same number of games, yet none of the games they played ended in a draw. So how could this be?

Last week’s riddle: What five-letter word becomes shorter when you add two letters to it? Answer: Short.

A camel caravan in front of the Great Pyramids of Giza, Egypt

Footnotes And Sources

^{1. CNBC.com, January 29, 2024}

^{2. The Wall Street Journal, January 31, 2024}

^{3. CNBC.com, February 2, 2024}

^{4. IRS.gov, September 25, 2023} 

^{5. Mhanational.org, October 9, 2023}