December 2024 - Research Financial Strategies

Weekly Market Insights | Holiday Spending Up

by Jim Streight | Dec 30, 2024 | Weekly Stock Market Commentary

Stocks notched a slight gain over the holiday week. A tech-driven rally in the first half of the week was clawed back in the second half as investors took profits following the market holiday.

The Standard & Poor’s 500 Index advanced 0.67 percent, while the Nasdaq Composite Index rose 0.76 percent. The Dow Jones Industrial Average added 0.35 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.54 percent.^1,2

Ho-Ho, Then No-Go

Stocks rallied during the first half of a shortened holiday trading week. Holiday cheer won out despite news of declining consumer confidence in December, a drop in durable goods, and new home sales reporting below expectations.^3,4

The “Santa rally” lost its ho-ho-go after the midweek holiday. Megacap technology stocks led markets down on Friday, giving back most of the gains from the first half of the week.^4,5

^{Source: YCharts.com, December 28, 2024. Weekly performance is measured from Friday, December 20, to Friday, December 27.}^{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.}

The Real Santa

While Santa got the headlines, the consumer drove the holiday shopping sleigh this year.

Holiday spending—defined by the period from November 1 through December 24—rose 3.8 percent in 2024, compared with 3.1 percent in 2023. Economists closely follow consumer activity since consumer spending makes up roughly two-thirds of total gross domestic product. Market watchers attributed the strong job market and growth in household wealth as the primary drivers of consumer strength.⁶

This Week: Key Economic Data

Monday: Pending Home Sales. 3-Month Treasury Bill Auction.

Tuesday: Case-Shiller Home Price Index.

Wednesday: Stock market closed.

Thursday: Jobless Claims. EIA Petroleum Status Report. Fed Balance Sheet. 30-Year Treasury Bond Announcement.

Friday: Motor Vehicle Sales. ISM Manufacturing Index. Federal Reserve Officials Thomas Barkin and Mary Daly speak.

^{Source: Investors Business Daily – Econoday economic calendar; December 27, 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

Friday: The Greenbrier Companies, Inc. (GBX)

^{Source: Zacks, December 27, 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.}

“The strongest of all warriors are these two — Time and Patience.”

– Leo Tolstoy

Do You Have to Pay Taxes on Your Hobby?

Whether you picked up embroidering, dog grooming, or making jewelry, a side hobby may or may not require paying taxes.

Does your kids’ lemonade stand need to pay taxes? Probably not but if you’re doing something like selling cookies out of your kitchen, you might need to check out the rules.

Here are some things to consider when determining whether your activity is a hobby or business:

Is your hobby carried out in a businesslike manner?
Do you maintain complete and accurate books and records for your hobby?
Is the effort you put into your hobby intended to make a profit?
Do you depend on the income from your hobby for your livelihood?
Do you know how to carry out your hobby as a successful business?
Have you made a profit from your hobby?

If you receive income from your hobby with no intention of making a profit, you may have to report the income to the IRS.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁷

How Well Do You Know Your Sunburn Protection Factor?

We all know that protecting your skin from the sun is important, but did you know that not all sunscreens are made equal? Dermatologists have some specific recommendations when it comes to your Sunburn Protection Factor (SPF). Here are some tips:

Choose a broad-spectrum sunscreen that protects you from both UVB and UVA rays.
Always use at least SPF 30
Choose a water-resistant sunscreen.
Don’t forget your lips! Apply sunscreen to your lips or use a chapstick with SPF 30 or higher.
Reapply your sunscreen every 2 hours if you’re sweating a lot in the water.
Apply enough sunscreen to cover all skin that clothing will not cover. Most adults need about 1 ounce—or enough to fill a shot glass—to cover their bodies completely.
Apply your sunscreen 15 minutes before going outdoors.

These tips will help you choose the best sunscreen to protect your skin for years.

Tip adapted from American Academy of Dermatology⁸

Throughout Friday, Hanna asks her mother the same four-word question. On each occasion, her mother gives her a different answer. What is the question?

Last week’s riddle: It softly goes up and down the stairs in many homes and office buildings, yet it never moves. What could it be?
Answer: Carpet.

Delicate Arch

Arches National Park, Utah, USA

Footnotes and Sources

^{1. The Wall Street Journal, December 27, 2024}

^{2. Investing.com, December 27, 2024}

^{3. MarketWatch.com, December 23, 2024}

^{4. CNBC.com, December 26, 2024}

^{5. The Wall Street Journal, December 27, 2024}

^{6. MarketWatch.com, December 26, 2024}

^{7. IRS.gov, March 18, 2024}

^{8. American Academy of Dermatology, August 1, 2024}

Weekly Market Insights | Powell Signal Leaves Investors Cold

by Jim Streight | Dec 23, 2024 | Weekly Stock Market Commentary

Stocks were under pressure last week as the Fed Chair’s hawkish comments unsettled investors ahead of the holiday season.

The Dow Jones Industrial Average received the hardest hit, falling 2.25 percent. The Standard & Poor’s 500 Index lost 1.98 percent, while the Nasdaq Composite Index dropped 1.78 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, retreated an eye-catching 3.38 percent.^1,2

No Santa Yet

Divergence marked the start of the week as megacap tech stocks rallied while the Dow Industrials fell for the eighth-straight session—its longest losing streak since 2018.³

Following its scheduled December meeting, the Fed announced it was cutting short-term rates by a quarter point, as widely expected. However, Fed Chair Jerome Powell also signaled fewer rate reductions next year. “From here, it’s a new phase and we’re going to be cautious about further cuts,” he said in his post-meeting news conference.

The rate news surprised investors, who were anticipating more dovish comments from the Fed Chair.^4,5

Markets were under pressure again early Friday as the spending bill to fund the federal government appeared to stall. But a lower-than-expected inflation update boosted the market and helped erase some of the earlier losses.^6,7

Holiday Cheer

Despite a difficult week, stocks are on track to have their second consecutive year of double-digit returns. Year to date, through Friday’s close, the S&P 500 was ahead by about 24 percent. In 2023, the S&P 500 also tacked on 24 percent for the full year.⁸