Weekly Market Insights: Investors Boost Stocks Ahead of Holiday Week

Investor optimism and fears of missing out on future gains propelled stocks higher in the last full week of trading before year-end.

The Dow Jones Industrial Average added 0.22%, while the Standard & Poor’s 500 gained 0.75%. The Nasdaq Composite index advanced 1.21% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.51%.^1,2,3

Stocks Build on Gains

The current market narrative of declining inflation, easing interest rates, and better earnings ahead continued to fuel stock market gains, with some of the year’s laggards, such as smaller cap stocks and energy names, leading the way.

While the stock market has repeatedly seen gains gather steam in the final trading hours, a late-day sell-off on Wednesday unnerved investors. While it’s difficult to know precisely why, the sharp decline may have resulted from profit-taking and low trading volumes, which can result in unexpected volatility or other technical reasons. Whatever the case, stocks rebounded nicely the following day and Friday.

Housing Revival?

The housing market struggled this year amid higher mortgage rates and rising home prices. Last week, several housing reports suggested the housing market may be improving.

New home construction rose 14.8% in November, reaching levels not seen since May, while existing home sales rebounded 0.8%, reversing five straight months of declines. Existing home sales have been hurt by low inventory since many homeowners with low-rate mortgages are hesitant to move and take on a higher-rate mortgage. This logjam may loosen as 30-year mortgage rates fell from 7.79% at the end of October to 6.95% in mid-November.^{4, 5}

New home sales disappointed, however, falling 12.2%, though they came in 1.4% higher from November a year ago.⁶

This Week: Key Economic Data

Thursday: Jobless Claims.

^{Source: Econoday, December 22, 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

No companies reporting earnings this week.

^{Source: Zacks, December 22, 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.}

“Humor is laughing at what you haven’t got when you ought to have it.”

– Langston Hughes

Tax Tips for Those in the Military

The Internal Revenue Service has certain special tax breaks and programs for members of the U.S. Armed Forces.

• If you get nontaxable combat pay, you may include it in your taxable income. Having it may boost your earned income tax credit, meaning you may owe less tax and could get a larger refund.
• As a rule, both spouses typically must sign a joint income tax return. If your spouse is absent due to military duty, you may be able to sign for your spouse. Remember, however, that you may need a power of attorney to file a joint return.
• If you leave the military and look for work, you may be able to deduct some job search expenses. You can include travel costs, resume preparation, and job placement agency fees.

*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

Stay Healthy During Flu Season

This flu season, it’s more important than ever to stay healthy. Fortunately, you may reduce your risk this flu season with a few simple steps.

• Get the flu vaccination: The Centers for Disease Control estimates that last year, just over half of all Americans got the flu vaccine. Recent studies show that the flu vaccine can reduce the risk of flu illness by 40% to 60%; this is especially important for anyone with a chronic health condition and those 65 years and older.
• Wash your hands: Handwashing remains one of the most effective ways to prevent the flu. Wash your hands with soap and water for at least 20 seconds, and wash your hands often.
• Disinfect: Disinfect objects that you touch every day, like doorknobs, your car’s steering wheel, and other household items that you use regularly.

While this information should not substitute for medical advice from your healthcare provider, implementing better habits, like frequent handwashing, wearing a face mask, and avoiding anyone ill, may help you and your loved ones stay healthy this flu season.

Tip adapted from The Centers for Disease Control⁸

Liz went into a convenience store at 1:58 AM on Sunday to get a coffee. She drove six miles away and then returned to the store to get a lotto ticket, also at 1:58 AM. The store’s clock was working perfectly, so how could it be 1:58 AM again when she returned?

Last week’s riddle: Ray slipped off of a 30-foot escalator and landed on a sidewalk. He was embarrassed, yet uninjured. How could this be?  Answer: He slipped off the escalator’s bottom step.

The hidden beach in Marietas Islands, Puerto Vallarta, Mexico

Footnotes and Sources

^{1. The Wall Street Journal, December 22, 2023}

^{2. The Wall Street Journal, December 22, 2023}

^{3. The Wall Street Journal, December 22, 2023}

^{4. MarketWatch, December 19, 2023}

^{5. Fox Business, December 20, 2023}

^{6. U.S. Census Bureau, December 22, 2023.}

^{7.  IRS.gov, October 23, 2023}

^{8. CDC.gov, December 11, 2023}