Weekly Market Insights: Fed Talk Boosts Stocks

Stocks posted their best week of the year, sparked by news that the dovish Fed decided to keep rates steady and signaled three rate cuts were still possible this year.

Stocks Bounce Back

As widely expected, the Fed left rates unchanged at the conclusion of its two-day meeting. But somewhat less expected, the Fed signaled its inclination to cut interest rates three times this year—each time by a quarter percentage point. That was a positive surprise for some, who worried that recent hot inflation reports would cause the Fed to reconsider its stance.1

Markets pushed higher Wednesday following the news, with all three averages closing at record highs. The rally continued through Thursday, boosted further by news that existing home sales rose 9.5 percent in February.2,3

The week’s rally was broad-based overall, with 10 of the 11 S&P 500 sectors posting gains (health care dropped slightly). At one point late in the week, nearly one in four S&P 500 stocks were trading at 52-week highs. That was the highest proportion in three years, which supports the idea that the rally was broadening out from mega-cap tech stocks.4

Turning Point

The Federal Open Market Committee’s decision marks a turning point as the Fed signaled that its target range of 5.25 to 5.50 percent has topped out. That target range, in place since late last year, is the highest level in 23 years.

“We believe that our policy rate is likely at its peak for this type of cycle,” said Fed Chair Powell at the post-meeting press conference. He added that if the economy keeps on its current course, that the FOMC would likely “begin dialing back policy restraint at some point this year.” If the FOMC votes to ease it at its June meeting, it would be the first cut in four years.4,5

This Week: Key Economic Data

Monday: New Home Sales.

Tuesday: Durable Goods Orders. Case-Shiller Home Price Index.

Wednesday: EIA Petroleum Status Report. Survey of Business Uncertainty.

Thursday: Gross Domestic Product. Jobless Claims. Consumer Sentiment. Pending Home Sales.

Friday: Personal Income and Outlays. International Trade in Goods. Retail Inventories.

Source: Investors Business Daily – Econoday economic calendar; March 18, 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: McCormick & Company, Incorporated (MKC, MKC.V), Dave & Buster’s Entertainment, Inc. (PLAY)

Wednesday: Paychex, Inc. (PAYX), Carnival Corporation (CCL, CUK), Cintas Corporation (CTAS)

Thursday: Walgreens Boots Alliance, Inc. (WBA)

Source: Zacks, March 19, 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.

“There is nothing so pitiful as a young cynic because he has gone from knowing nothing to believing nothing.”

– Maya Angelou

Rules for Home Office Deductions

If you have a business and work out of your home, the IRS allows you to deduct certain expenses on your return. Here are a few key things to keep in mind:

  •  The IRS requires you to use your office (or a part of your home) for “regular and exclusive use.” The part of the house should be your principal place of business, a place where you meet customers, or a separate structure dedicated to the business, like a garage or studio.

  • To calculate your deduction, you can use one of two methods:
    • The simplified option allows you to multiply the allowable square footage of your office by $5, up to a maximum of 300 square feet.

    • The regular method allows you to specifically calculate the actual expenses, such as rent, mortgage interest, taxes, repairs, depreciation, and utilities you pay for the portion of your home used for the business. You must determine the percentage devoted to business activities if you use only part of a space for your business.


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

Tip adapted from IRS.gov6

Eating to Your Heart’s Content  

Deciding to change your diet can feel daunting. It can be challenging to figure out which one is “best” for you. Many fad diets come and go, but a few have stuck around. The most popular is the Mediterranean diet.

In this case, the Mediterranean diet is a lifestyle shift toward healthier eating patterns modeled after principles of Italian and Greek cuisine, which have remained relatively unchanged since the 1960s. Consuming this diet has been correlated with lower rates of heart disease, type 2 diabetes, and other chronic illnesses. The diet emphasizes eating more fruits, vegetables, legumes, nuts, seeds, fatty fish, whole grains, olive oil, and fewer meats and dairy products. The diet is flexible. Elimination isn’t the intention; the goal is to balance nutrient-rich and energy-dense foods.

Food is life, and healthy choices can help support a healthier life. While the Mediterranean diet could be a good option, no single diet will ideally fit everyone’s lifestyle, preferences, and health needs. So, discuss your dietary choices with your physician or registered dietitian first.

Tip adapted from Healthline.com7

Which positive whole number can you add 1.5 to and get the same result as multiplying it by 1.5?

 

Last week’s riddle: The letters in the words meter, man and uses may be rearranged to make a 12-letter word. What is this word? Answer: Measurements.

Peregrine Falcon, Cantabrian Coast, Spain

 

Footnotes and Sources

1. The Wall Street Journal, March 22, 2024

2. CNBC.com, March 20, 2024

3. Sectorspdrs.com, March 22, 2024

4. MarketWatch.com, March 22, 2024

5. The Wall Street Journal, March 21, 2024

6. IRS.gov, November 14, 2023 

7. Healthline.com, December 18, 2023

Special Edition from Research Financial Strategies

Dear Friends and Clients,

This week, a good friend and client brought something significant to my attention. Despite our initial struggles to uncover the full story, my resourceful son-in-law managed to locate it. It comprises three parts and runs approximately 45 minutes in length. I urge you to take the time to watch it.

Why? Firstly, it offers riveting entertainment as Jon Stewart effectively dismantles Jim Cramer’s narrative regarding the events spanning from October 2007 to March 2009. Secondly, it stands as a testament to its accuracy—Jim Cramer’s defense boiled down to mere claims of being misled by acquaintances. And thirdly, it resonates with a message I’ve been advocating since 1991: the narrative of bear markets. Over the past 99 years, there have been a total of 20 such markets. Do you believe there won’t be a 21st? As a reminder, during the 2007-2009 bear market, when the SP-500 was -57%, the RFS growth model was -4%.

Allow me to share something I am deeply passionate about—the untold side of the story. Yes, a market decline of 57% is staggering. But what many fail to grasp, unless they delve into the statistics or engage with mental health professionals, is the collateral damage. As the bear market persisted, reaching into the summer of 2009, we witnessed alarming spikes in suicides, depression, domestic abuse, violence, substance abuse, foreclosures, evictions, and repossessions. These are the grim realities obscured by the buy-and-hold rhetoric espoused by firms like Vanguard and Fidelity.

As a wise general once remarked, “Those who don’t learn from history are doomed to repeat it.” I implore you to watch the videos, encourage your adult children to do the same, and share them with anyone in your circle who could benefit from the unvarnished truth. For, alas, such truths are seldom found on the polished surfaces of Fidelity or Vanguard websites.

 Very seriously,

 Jack

 

Part 1: 
https://www.cc.com/video/fttmoj/the-daily-show-with-jon-stewart-exclusive-jim-cramer-extended-interview-pt-1

Part 2:
https://www.cc.com/video/iinzrx/the-daily-show-with-jon-stewart-jim-cramer-pt-2

Part 3: 
https://www.cc.com/video/gliow5/the-daily-show-with-jon-stewart-jim-cramer-pt-3

Weekly Market Insights: Second Week Of Stock Retreat

Stocks fell for the second straight week on inflation concerns despite a report on consumer prices that was initially well received by investors.

Stocks Slide

Tuesday was the only bright spot during the week as stock prices rose after the Labor Department report showed the Consumer Price Index rose 3.2% in February compared with a year earlier. It was a bit warmer than economists expected but cooler than investors feared. The news sparked a day-long rally, with the Standard & Poor’s 500 stock index setting its 17th record high of the year.1,2

Following Tuesday, caution lingered as investors parsed the underlying data behind headline consumer inflation numbers. Thursday’s fresh producer price index (PPI) report showed that wholesale prices increased by 0.6% in February, more than the expected 0.3% increase. Additionally, core PPI (excluding food and energy) was hotter than expected. 

Retail sales, also reported on Thursday, were disappointing, rising less than expected and adding to the inflation angst. The news rattled investors and contributed to stocks closing lower for three consecutive days to end the week.3,4

 
 

Broadening Leadership

Unlike the prior week when the S&P 500 fell the least, last week it lost slightly more than the Dow but less than the Nasdaq. That performance pattern suggests market leadership may be broadening. Also, the energy, financials, and materials sectors all posted gains last week, showing that other groups may join the tech-led rally.5

This Week: Key Economic Data

Monday: Housing Market Index.

Tuesday: FOMC Meeting Begins. Housing Starts and Permits. 20-Year Treasury Bond Auction.

Wednesday: FOMC Announcement. Fed Chair Press Conference. EIA Petroleum Status Report.

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

Source: Investors Business Daily – Econoday economic calendar; March 13, 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: GameStop Corp. (GME)

Wednesday: Micron Technology, Inc. (MU), General Mills, Inc. (GIS), Five Below, Inc. (FIVE), Chewy (CHWY)

Thursday: NIKE, Inc. (NKE), FedEx Corporation (FDX), lululemon athletica inc. (LULU), Darden Restaurants, Inc. (DRI)

Source: Zacks, March 13, 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.

“Little by little we human beings are confronted with situations that give us more and more clues that we aren’t perfect.”

– Fred Rogers

4 Facts About Capital Gains

When you sell a capital asset, such as an investment or a piece of property, the sale can result in a capital gain or loss. The IRS defines a capital asset as “most property you own for personal use or own as an investment.” Here are four 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 the asset.
  2. You must include all capital gains in your income, and you may be subject to the Net Investment Income Tax if your income is above certain amounts. Consult a qualified tax expert for help.
  3. The IRS allows you to deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
  4. If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.

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

Tip adapted from IRS.gov6

Finding Inner Peace Inside (And Indoors) 

Yoga has been practiced for thousands of years and 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, yoga is generally a low-impact form of exercise. In addition to 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 still enduring the remnants of winter, you can practice quieting your inner monologue by doing yoga from the comfort of your home.

Tip adapted from Healthline.com7

The letters in the words meter, man and uses may be rearranged to make a 12-letter word. What is this word?

 

Last week’s riddle: The 22nd and 24th U.S. presidents had the same parents– yet the 22nd and 24th U.S. presidents were not siblings. Why? Answer: The 22nd and 24th U.S. presidents were the same person – Grover Cleveland.

Reticulated Giraffes, National Reserve, Kenya

 

Footnotes And Sources

1. The Wall Street Journal, March 15, 2024

2. The Wall Street Journal, March 12, 2024

3. CNBC, March 15, 2024

4. CNBC, March 15, 2024

5. Sector SPDRs, March 15, 2024

6. IRS.gov, October 17, 2023

7. Healthline.com, December 18, 2023

Weekly Market Insights: Markets Take A Breather After Mixed Week

Stocks were down for the week as investors appeared to take some profits and traders parsed Fed Chair Jerome Powell’s Congressional testimony.

Markets Wobble 

Stocks had a rough start to the week, with the Dow, S&P 500, and Nasdaq each off more than one percent on Tuesday alone. Mega-cap tech stocks were under pressure as investors appeared to take some profits.

Markets clawed back much of their losses on Wednesday and Thursday, with the Fed Chair’s upbeat comments to the Senate Banking Committee boosting stocks. Chair Powell said that once the Fed was confident inflation was tracking “sustainably at 2%,” the Fed would consider cutting short-term interest rates. The S&P 500 and Nasdaq rallied, with the S&P hitting a record close.1,2,3

Friday’s employment news threw some uncertainty into the mix. The economy added 275,000 jobs in February—exceeding the 198,000 expected—but wage growth slowed, and jobless claims edged up. Some investors saw that as a negative, while others viewed it as a “Goldilocks” moment—an economy that’s not too hot or cold. Stocks initially rallied on the news, but profit-takers appeared to arrive as the day progressed.4,5

 
 

Fed Watch: Productivity

Productivity is one of the critical data points the Fed reviews to determine its next steps with monetary policy. Producing more goods or services with fewer resources helps the economy grow while managing inflation risks.

The 3.2 percent productivity gains in Q4 reported last week were mainly attributed to the post-pandemic repair of supply chains. However, investors may hope that artificial intelligence will play a more significant role in productivity increases.6,7

This Week: Key Economic Data

Tuesday: Consumer Price Index. Treasury Statement.

Wednesday: EIA Petroleum Status Report.

Thursday: Jobless Claims. Producer Price Index. Retail Sales. Business Inventories.

Friday: Industrial Production. Import and Export Prices. Consumer Sentiment.

Source: Investors Business Daily – Econoday economic calendar; March 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

Tuesday: Lennar Corporation (LEN, LEN.B)

Wednesday: Dollar Tree, Inc. (DLTR)

Thursday: Oracle Corporation (ORCL), Adobe Inc. (ADBE), DICK’S Sporting Goods, Inc. (DKS), Getty Images Holdings, Inc. (GETY)

Source: Zacks, March 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.

“Expect the best. Prepare for the worst. Capitalize on what comes.”

– Zig Ziglar

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 IRS, taxable income includes earned income like wages and any income earned by bartering or through the exchange of property or services. Rental income is taxable, as are other unearned incomes like interest and dividends or Social Security.

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 then 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, such as the following:

  • Gifts and inheritances
  • Child support payments
  • 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 may also 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 article is for informational purposes only and does not replace real-life advice, so consult your tax, legal, and accounting professionals before modifying your tax strategy.

Tip adapted from IRS.gov8

Choose To Make Your Plate “MyPlate”

The food pyramid had many flaws, including generalized recommended daily servings and poorly defined portion sizes. So, the U.S. Department of Agriculture implemented a user-friendly redesign, transforming the pyramid 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 of fruits and vegetables; the other half comprises grains and protein. A serving of dairy (or non-dairy alternative) goes 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.gov9

The 22nd and 24th U.S. presidents had the same parents– yet the 22nd and 24th U.S. presidents were not siblings. Why?

 

Last week’s riddle: You can’t outrun it or hide from it. You only notice it when there is light, but it shows only darkness. What is it? Answer: Your shadow.

Forbidden City, Beijing, China

 

Footnotes And Sources

1. The Wall Street Journal, March 8, 2024

2. MarketWatch, March 6, 2024

3. CNBC, March 7, 2024

4. CNBC, March 8, 2024

5. The Wall Street Journal, March 8, 2024

6. The Wall Street Journal, March 7, 2024

7. Bureau of Labor Statistics, March 7, 2024

8. IRS.gov, November 02, 2023 

9. MyPlate.gov, December 18, 2023

Weekly Market Insights: Tech And AI Lead Another Advancing Week

Stocks extended their tech-led advance last week as signs of a resilient and still-enthusiastic consumer boosted momentum.

Nasdaq Sets New High

Stocks traded in a narrow band early in the week but ended the five-trading sessions with a powerful advance.

While the Dow dipped lower, artificial intelligence (AI) names powered the gains in the S&P 500 and the Nasdaq Composite. The Nasdaq bobbed around the 16,000 level for most of the week before posting consecutive record highs on Thursday and Friday, surpassing its 2021 record. It was the last of the three major stock benchmarks to reach a record high this year.1

Economic news also helped boost markets. The Personal Consumption Expenditures (PCE) Index, the Fed’s preferred inflation gauge, rose 0.3 percent in January versus December—and 2.4 percent on a 12-month basis. Both were in line with expectations. Stocks ticked up on Thursday following the release of the report.2

 
 

Consumers Remain Upbeat

With all the excitement over AI, it’s easy to overlook some key economic indicators that also speak to the underlying strength of the economy—specifically, consumer data.

In addition to the closely watched PCE report, an end-of-week consumer survey revealed that while sentiment softened in February, it remained near a 32-month high. Fresh data this week also showed an unexpected jump in personal income.

Finally, the PCE report also reflected an ongoing consumer shift from goods to services—a sign the economy continues to normalize after the pandemic. Since two-thirds of gross domestic product comes from consumer spending, these consumer-related metrics helped support the narrative that the economy appears to be gathering momentum.3,4

This Week: Key Economic Data

Monday: Motor Vehicle Sales.

Tuesday: Factory Orders. ISM Services Index.

Wednesday: ADP Employment Report. JOLTS. Beige Book.

Thursday: Federal Reserve Chair Jerome Powell Speech. Jobless Claims. International Trade in Goods & Services. Productivity and Costs.

Friday: Employment Situation.

Source: Investors Business Daily – Econoday economic calendar; February 27, 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: Target Corporation (TGT)

Wednesday: Dollar Tree, Inc. (DLTR), Campbell Soup Company (CPB)

Thursday: Costco Wholesale Corporation (COST), Broadcom Inc. (AVGO), The Kroger Co. (KR)

Source: Zacks, February 27, 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.

“When there is freedom from mechanical conditioning, there is simplicity.”

– Bruce Lee

Owe The IRS Money? Here’s How To Pay

If you owe federal taxes, you must pay by the April deadline. Remember, if you get an extension to file your taxes, payment is still due by the April deadline. If you can’t pay the total amount you owe now, you may be able to set up a payment plan.

Here are some choices for making your payment:

  • Use Direct Pay: IRS Direct Pay is a free and secure way to pay directly from your checking or savings account.
  • Pay by debit or credit card: If you don’t want to link a bank account, you can use your credit or debit card. Remember that you’ll have to pay a processing fee and may incur interest charges.
  • Pay when you e-file: If you file your federal tax return electronically, you can pay directly from your bank account using electronic funds withdrawal.

*This article is for informational purposes only and does not replace real-life advice, so consult your tax, legal, and accounting professionals before modifying your tax strategy.

Tip adapted from IRS.gov5

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 in your current diet. You can cut calories and still enjoy your meal by swapping out unhealthy options for healthier picks. 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 caloric intake, consume less sugar, and create more balanced meals. 

Tip adapted from EatThis.com6

You can’t outrun it or hide from it. You only notice it when there is light, but it shows only darkness. What is it?

 

Last week’s riddle: Kristi and David live at opposite ends of a metro area but attend the same college. David left for campus 30 minutes before Kristi, and they met at a coffee house. Who was closer to campus when they met? Answer: They were both at the same distance from campus when they met each other, as they met at the same location.

Gherkin, Financial District, London, UK

 

Footnotes And Sources

1. The Wall Street Journal, February 29, 2024

2. CNBC.com, February 29, 2024

3. MarketWatch.com, March 01, 2024

4. CNBC.com, February 27, 2024.

5. IRS.gov, December 1, 2023

6. EatThis.com, December 18, 2023

6Lc_psgUAAAAAA9c7MediJBuq3wAxIyxDSt73c9j