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Weekly Market Insights: Anticipating Rate Cut

Weekly Market Insights: Anticipating Rate Cut

May 13, 2024


Stocks gained significantly last week as investors anticipated rate cuts, while Q1 earnings season came to an end.

Stocks Climb Steadily

Monday saw stocks continuing their upward trend from the previous Friday. The positive jobs data released over the weekend had eased investor concerns about a possible overheating of the economy. Additionally, reports of a potential ceasefire in the Middle East added to the positive sentiment, resulting in a rally in the stock market.

On Tuesday and Wednesday, the stock market saw little movement, with stocks trading in a narrow range. Economic news was scarce, and a few negative earnings results caused some concern. The Nasdaq, in contrast, experienced a slight dip over these two days.

On Thursday, the S&P 500 closed above 5,200 for the first time since early April, marking a significant milestone. The following day, stocks rallied, and the Dow Jones Industrial Average registered its eighth consecutive day of gains, its longest winning streak since December. This was also its best weekly performance this year. However, fresh data showed that consumers still have inflation concerns, which is a cause for worry.

Source: YCharts.com, May 11, 2024. Weekly performance is measured from Monday, May 6, to Friday, May 10.
ROC 5 = the rate of change in the index for the previous 5 trading days.
TR = total return for the index, which includes any dividends as well as any other cash distributions during the period.
Treasury note yield is expressed in basis points.

Jobs Market Shows a “Goldilocks” Outlook

The recent data on job statistics indicate that the unemployment rate has remained low, and job growth has been steady, but not excessively high. Moreover, the latest employment trends index from the Conference Board for April predicts a slowdown in job growth in the latter half of the year. The market has been positively responding throughout the year when the "Goldilocks" outlook indicates that the economic indicators are in a sweet spot - not too hot and not too cold.

This Week: Key Economic Data

Monday: Fed Official Loretta Mester Speech.

Tuesday: Producer Price Index. NFIB Small Business Optimism Index.

Wednesday: Consumer Price Index. Retail Sales. Business Inventories. Fed Official Neel Kashkari Speech.

Thursday: Housing Starts. Jobless Claims. Industrial Production. Import & Export Prices. Fed Official Speeches: Patrick Harker, Raphael Bostic.

Friday: Leading Indicators.

Source: Investors Business Daily - Econoday economic calendar;  May 10, 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: The Home Depot, Inc. (HD)

Wednesday: Cisco Systems, Inc. (CSCO)

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

Source: Zacks, May 10, 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.

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Food For Thought

"The secret of happiness isn't found in seeking more, but in developing the capacity to enjoy less."

– Socrates

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Tax Tip 


Are Social Security Benefits Taxable?

If you are receiving Social Security benefits, you may have to pay federal income tax on some of these benefits. The amount you'll have to pay will depend on your income and filing status.

If you're single, to determine whether your Social Security benefits are taxable, add half of the Social Security money you received throughout the year to your other sources of income such as pensions, wages, interest, dividends, and capital gains. If your income exceeds $25,000, a portion of your benefits may be taxable.

If you're married filing jointly, add half of the Social Security money you received throughout the year plus half of your spouse's Social Security benefits to your combined household income. If the total amount is over $32,000, a portion of your benefits may be taxable.

The IRS website provides a detailed breakdown of the taxable percentage of benefits based on the above calculation. These percentages vary from 50% to 85% and depend on your income levels and filing status. For instance, if you're filing as a single person with an income between $25,000 and $34,000, 50% of your Social Security benefits may be taxable.

To find out whether your Social Security benefits are taxable and, if so, how much, you can use the Interactive Tax Assistant available on IRS.gov.

*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.gov7

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Healthy Living Tip


Benefits of Yoga

Yoga is not just about touching your toes; it can bring many other benefits to your body and mind. By doing yoga, you can reduce stress and promote relaxation, as well as become more in tune with your body and where you hold stress. Additionally, yoga may relieve anxiety and help improve heart health by reducing several risk factors for heart disease. A study found that people who practiced yoga for five years had lower blood pressure and pulse rates than those who did not. Finally, yoga can help fight depression by decreasing cortisol levels, which is a stress hormone that influences serotonin levels, the neurotransmitter frequently associated with depression.


Tip adapted from Healthline8

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Riddle Of The Week

What should the following number be in this series: 103, 107, 109, 113, 127, ___ ?

  

Last week’s riddle: I can’t be captured or held, and I certainly am not seen ... yet I can occasionally be heard, and I am often all around you. What am I? Answer: The wind.

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Photo Of The Week

Doi Inthanon, Chom Thong District, Chiang Mai Province 

 

Footnotes and Sources


1. The Wall Street Journal, May 10, 2024

2. The Wall Street Journal, May 7, 2024

3. The Wall Street Journal, May 8, 2024

4. CNBC.com, May 9, 2024

5. The Wall Street Journal, May 10, 2024

6. The Wall Street Journal, May 10, 2024

7. IRS.gov, December 5, 2023

8. Healthline, January 24, 2023 

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.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

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