Rising bond yields and fears of a government shutdown hammered stocks last week, with technology shares bearing the brunt of the retreat.

The Dow Jones Industrial Average lost 1.89%, while the Standard & Poor’s 500 dropped 2.93%. The Nasdaq Composite index tumbled 3.62% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.77%.^1,2,3

Stocks Sell Off

Investor sentiment took a decidedly negative turn last week when investors were caught off-guard by the Fed signaling another potential rate hike this year, upending hopes that the Fed might finish its current rate-hike cycle.

Stocks declined sharply following the Federal Open Market Committee (FOMC) announcement and continued to fall the following day as bond yields spiked. The 10-year Treasury yield hit 4.48% on Thursday, touching its highest point in more than 15 years.⁴ 

Stocks also reacted to news that the House of Representatives went into recess on Thursday, increasing the prospect of a government shutdown. The sell-off cooled on Friday, adding only incrementally to the week’s accumulated losses.

Fed Signals Rate Hike

As expected, the Fed held interest rates steady but surprised many investors by signaling another rate hike before year-end and suggesting that rates may need to remain high through 2024. In his post-announcement press conference, Fed Chair Powell remarked the inflation battle would continue, and upcoming economic data would inform the FOMC’s future rate hike decision.

In their economic projections, 12 of 19 Fed officials expect to raise rates once more this year. (The FOMC meets again on October 31-November 1, and in December.) The Fed also lowered their unemployment projection from their June estimate and revised their projection for annual core inflation to 3.7% in the fourth quarter, down from June’s 3.9% forecast.⁵

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 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: Costco Wholesale Corporation (COST)

Wednesday: Micron Technology, Inc. (MU)

Thursday: Nike, Inc. (NKE)

^{Source: Zacks, September 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.}

“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

Think about Credits and Deductions Now to Prepare for Filing

Here are a few facts about credits and deductions that can help you with year-round tax preparation:

• Taxable income remains after someone subtracts any eligible deductions from their adjusted gross income, including the standard deduction. Some taxpayers may itemize their deductions to manage their adjusted gross income.

• Generally, if a taxpayer’s itemized deductions are larger than their standard deduction, they should consider itemizing. Depending on the situation, some taxpayers may even be required to itemize.

Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records showing their eligibility. Some major tax credits include the Child Tax Credit and the Child and Dependent Care Credit, the American Opportunity Credit or Lifetime Learning Credit, and the Earned Income Tax Credit.

*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.gov⁶

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

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”.

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}

Falling bond yields–spurred by weak economic data–helped lift stocks to weekly gains.

The Dow Jones Industrial Average advanced 1.43%, while the Standard & Poor’s 500 gained 2.50%. The Nasdaq Composite index increased 3.25% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, picked up 2.71%.^1,2,3

Stocks Rise On Slowing Economy

Investor sentiment turned positive last week as signs of economic softness were interpreted as reason for the Fed to hold off on further rate hikes. A downward revision of Q2 economic growth and fresh signs of a cooling labor market reversed the recent rise in bond yield. They helped trigger a stock bounceback following Fed Chair Powell’s speech at Jackson Hole the previous Friday.

It wasn’t all about bad news being viewed as good news, though. A series of solid earnings reports, an announcement by one mega-cap tech name introducing pricing for its AI tools, and fresh inflation data–in-line with market expectations–further boosted enthusiasm for stocks.

Signs Of Labor Cooling

Despite historic monetary tightening, the labor market has exhibited remarkable resilience, but last week’s employment data showed a cooling trend.

Job openings declined to their lowest level since March 2021, though they remained above pre-pandemic levels. Meanwhile, a survey of private sector hiring showed a slowdown in hiring, with employers adding 177,000 jobs in August–below the 371,000 added in July and short of economists’ forecast of 200,000.^4,5

Finally, the government’s monthly employment report showed the number of nonfarm payroll gains continued to decelerate in August, while June and July estimates were revised lower by 110,000.⁶

This Week: Key Economic Data

Tuesday: Factory Orders.

Wednesday: Institute for Supply Management (ISM) Services Index.

Thursday: Jobless Claims.

Friday: Consumer Credit.

^{Source: Econoday, September 1, 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

Tuesday: Zscaler, Inc. (ZS)

Thursday: DocuSign (DOCU)

Friday:  The Kroger Co. (KR)

^{Source: Zacks, September 1, 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.}

“When people are friends, they have no need of justice, but when they are just, they need friendship in addition.”

– Aristotle

Protect Your Tax Data

Protecting your data is very important in today’s digital age. The Internal Revenue Service shared guidelines tax pros should follow to protect taxpayer data. But these are also great guidelines for individuals.

Anti-virus software: This software scans computer files for malicious software, or malware, on the device. Anti-virus vendors find new issues and update malware daily. Always install the latest updates of the software on your computer.

Two-factor authentication: Two-factor authentication adds an extra layer of protection beyond just a password. Not only do you enter your username and password, but you also enter a security code sent to another device for extra protection.

Drive encryption: Drive encryption transforms sensitive data into unreadable code that cannot be deciphered easily by unauthorized people, so only the authorized person can access the data.

*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

Tips For Eating Less Salt

Sodium isn’t completely bad for our bodies, but too much can increase blood pressure and cause stress on the heart and blood vessels. Because of this, it’s essential to monitor your sodium intake and be aware of how much sodium is in your foods.

If you want to tackle cutting back on sodium, choose unprocessed or minimally processed foods. Prepared foods are generally high in added sodium compared to fresh options. Cut back on sources of high sodium, such as pepperoni pizza, white bread, processed cheese, deli meat, hot dogs, and other red meat and processed foods. Instead, eat more fruits, veggies, and whole grains, all lower in sodium.

Tip adapted from Harvard Medical School⁸

You enter a college classroom with 13 22-year-olds, 10 21-year-olds, and 14 20-year-olds. How many people are in the room?

Last week’s riddle:  At a picnic, a photo has to be taken that depicts 6 children, 4 grandchildren, 2 brothers, 2 sisters, 3 sons, 3 daughters, 2 fathers, 2 mothers, 1 grandfather, 1 grandmother, 1 daughter-in-law, 1 mother-in-law, and 1 father-in-law. What is the smallest number of people that could appear in the photo? Answer: 8 – 4 young children, 2 of each gender; the children’s mother and father, and the children’s maternal grandmother and paternal grandfather.

Sea Otter in the Prince William Sound, Alaska

Footnotes And Sources

^{1. The Wall Street Journal, August 25, 2023}

^{2. The Wall Street Journal, August 25, 2023}

^{3. The Wall Street Journal, August 25, 2023}

^{4. The Wall Street Journal, August 29, 2023.}

^{5. CNBC, August 30, 2023.}

^{6. The Wall Street Journal, September 1, 2023.}

^{7. IRS.gov, 2023}

^{8. Harvard Medical School, April 24, 2023}