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Weekly Market Insights: Investors Celebrate Positive News

Weekly Market Insights: Investors Celebrate Positive News

February 05, 2024

Investors celebrated positive news from mega-cap tech companies and better-than-expected employment data, driving stocks higher last week.

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.

During the beginning of last week, the stock market experienced a surge in anticipation of 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.

For the rest of the week, the market remained relatively stable until Wednesday when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The news unsettled investors who had anticipated that rates would remain unchanged. They were also expecting more specific guidance from the Fed on their plan to lower the interest rates.

However, 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.

Source: YCharts.com, February 3, 2024. Weekly performance is measured from Monday, January 29, to Friday, February 2.
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.

Fed’s Mixed Signals

After the Federal Reserve's decision to keep interest rates steady, some investors were left disappointed as they were 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 Federal Open Market Committee (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 that they could be possible unless inflation became a concern.

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.

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Food For Thought

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

– Jim Rohn

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Tax Tip

Vacation Home Rentals

If you rent out your primary residence and receive money for it, you may need to report the rental income on your tax return. This means that even if you don't own multiple short-term rental properties, your home can fall under the "vacation home rental" classification. However, if you rent your house to a tenant for less than 15 days during the year, the rental income may not require reporting.

A vacation home can be any property, such as 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. To accurately report rental income and rental expenses, it's important to divide the property's expenses into personal and business purposes.

Please note that there is a limit to the rental expense deduction if the property is used as a home. Rental expenses cannot exceed the rent received. To report rental income and rental expenses, use Schedule E. Additionally, 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

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Food For Thought

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.

Taking care of your mental health is just as important as taking care of your physical health, if not more so. Your mental health affects 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 a cup of coffee or tea and enjoy the warm drink without worrying about what's ahead.
- Plan a getaway, even if it's just camping in your backyard.
- Think about something in your life that you want to improve, and figure out what steps you can take to move in the right direction.
- Learn something new, whether it's a recipe, a song, a poem, or a skill.
- Show some love to someone in your life by writing a letter, sending a text, or giving them a call.
- Take a break from your smartphone and disconnect from the digital world for a day or a few hours.


Tip adapted from Mental Health America5

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Food For Thought

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.

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Food For Thought

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

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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