Weekly Market Insights: Gloomy News For The End Of Summer

Last week, the stock market experienced a significant decline due to rising bond yields and concerns over a possible government shutdown. The technology sector was hit the hardest. The Dow Jones Industrial Average fell by 1.89%, while the Standard & Poor's 500 dropped by 2.93%. The Nasdaq Composite index took the biggest hit, experiencing a 3.62% decline for the week. Meanwhile, the MSCI EAFE index, which tracks developed stock markets overseas, fell by 1.77%.

Stocks Sell Off

Last week, investor sentiment took a negative turn when the Federal Reserve announced another potential rate hike this year, which caught investors off-guard. This upended hopes that the Fed might finish its current rate-hike cycle. As a result, stocks declined sharply following the announcement by the Federal Open Market Committee (FOMC). The decline continued on the following day as bond yields spiked. On Thursday, the 10-year Treasury yield hit 4.48%, which was its highest point in over 15 years. Stocks also reacted to news that the House of Representatives went into recess on Thursday, increasing the possibility of a government shutdown. The sell-off cooled on Friday, adding only incrementally to the week’s accumulated losses.

Fed Signals Rate Hike

The Federal Reserve kept interest rates unchanged as expected, but surprised investors by indicating that there may be another rate hike before the end of the year. Additionally, the Fed suggested that rates may need to remain high through 2024. In his post-announcement press conference, Fed Chair Powell stated that the battle against inflation would continue, and that upcoming economic data will be used to inform the FOMC’s decision on future rate hikes.

According to their economic projections, 12 out of 19 Fed officials expect to increase rates once more this year. The FOMC is scheduled to meet again on October 31-November 1 and in December. The Fed has also adjusted their unemployment projection from their June estimate and has revised their projection for annual core inflation to 3.7% in the fourth quarter, down from the previously forecasted 3.9% in June.

This Week: Key Economic Data

Tuesday: Consumer Confidence. New Home Sales.

Wednesday:Durable Goods Orders.

Thursday:Jobless Claims. Gross Domestic Product (GDP).

Friday:Personal Income and Outlays.

^{Source:Econoday, September 22, 2023}

The Econoday economic calendar provides a comprehensive list of upcoming U.S. economic data releases, including key economic indicators, Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is derived from sources that are believed to be reliable and provide accurate information. However, the forecasts and forward-looking statements are based on assumptions that may not materialize and are subject to revision.

This Week: Companies Reporting Earnings

Tuesday:Costco Wholesale Corporation (COST)

Wednesday:Micron Technology, Inc. (MU)

Thursday:Nike, Inc. (NKE)

^{Source: Zacks, September 22, 2023}

Please note that any companies mentioned in this text are included for informational purposes only. This text should not be considered as a solicitation to purchase or sell any securities. It is important to keep in mind that investing comes with risks, and investment decisions should always be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments can fluctuate based on market conditions, and when you sell your investments, they may be worth more or less than their initial cost. It's also important to be aware that companies may reschedule their earnings reports without prior notice.

__________________________________________________________________________________________________________

Food For Thought

"If you have passion, a chip on the shoulder, a sense of humor, and you can explain what you do very well, it doesn't matter if you're a plumber or a singer or a politician. If you have those four things, you are interesting."

– Larry King

__________________________________________________________________________________________________________

Tax Tip

Think about Credits and Deductions Now to Prepare for Filing

It's important to understand credits and deductions in order to effectively prepare for taxes year-round. Here are some key facts to keep in mind:
- Taxable income is what remains after deductions, including the standard deduction, have been subtracted from the adjusted gross income. Some taxpayers may choose to itemize their deductions instead of taking the standard deduction to manage their adjusted gross income.
- If a taxpayer's itemized deductions exceed their standard deduction, it's usually better to itemize. In some cases, it may even be mandatory.
- To reduce the total amount of tax owed, taxpayers can apply tax credits. It's important to keep proper records to prove eligibility for these credits. Some important tax credits include the Child Tax Credit, Child and Dependent Care Credit, American Opportunity Credit or Lifetime Learning Credit, and the Earned Income Tax Credit.

Please note that this information is not intended to replace personalized tax advice. We strongly recommend discussing your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁶

__________________________________________________________________________________________________________

Healthy Living Tip

Macro Dieting is a New Way to Approach Calorie Counting

Macro dieting goes a step further than just basic calorie counting. Instead of counting just the number of calories, you count the macronutrients, including proteins, carbs, and fats. How much of each macronutrient you need depends on your body type, goal, lifestyle, and activity level. Rather than depriving your body of nutrients, you are instead focusing on meals that give your body the nutrients it needs to be more efficient. 

To start a macro diet, you must first calculate how many grams of each macro you should eat. A rough breakdown is 50-25-25, meaning 50% of your calories come from carbs, 25% from protein, and 25% from fat. But this breakdown will depend on your goals. For example, if you focus on strength training, you should eat more protein. Naturally, you will want to discuss any significant changes to your diet with your medical professionals. 

Tip adapted from Eating Well⁷

__________________________________________________________________________________________________________

Weekly Riddle

Hannah went to a local hardware store to buy some small items. One would cost $2, two would run $4, but buying 122 would only cost $6. She purchased 122, yet she was not buying in bulk; she could carry what she bought with one hand. What did she purchase?

Last Week’s Riddle:  How can you turn the Roman numeral for 9 (IX) into 6 by merely drawing a single, continuous line? Answer: Draw the letter S to the left of the Roman numeral, and you will get “six”.

__________________________________________________________________________________________________________

Photo Of The Week

A surface-level sunrise view of Amsterdam at dawn

Footnotes and Sources

1. The Wall Street Journal, September 22, 2023

2. The Wall Street Journal, September 22, 2023

3. The Wall Street Journal, September 22, 2023

4. CNBC, September 21, 2023

5. The Wall Street Journal, September 23, 2023

6. IRS.gov, January 31, 2023

7. EatingWell.com, January 4, 2023

Investing always involves risks, and so your investment decisions should be based on your own goals, time horizon, and tolerance for risk. It's important to understand that the return and principal value of investments will fluctuate as market conditions change. When you sell your investments, they may be worth more or less than their original cost.

Forecasts or forward-looking statements are based on assumptions, and they may not materialize as expected. They are also subject to revision without any notice.

The market indexes discussed in this text are unmanaged, and they are generally considered representative of their respective markets. It is important to note that index performance is not indicative of the past performance of a particular investment. Additionally, indexes do not incur management fees, costs, and expenses. For individuals, it is not possible to directly invest in unmanaged indexes. It is also important to note that past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index, which is considered representative of large-capitalization companies on the U.S. stock market. The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market, and it 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 it 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.

It is always a good idea to consult your financial professional for additional information.

^{Copyright 2023 FMG Suite.}