Weekly Market Insights | Powell Signal Leaves Investors Cold
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Weekly Market Insights | Mixed Data, Mixed Results.
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Stocks finished the week mixed, bookending losses around midweek gains as investors digested fresh inflation data. The Standard & Poor’s 500 Index slipped 0.64 percent, while the Nasdaq Composite Index ticked up 0.34 percent. The Dow Jones Industrial Average dropped 1.82 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 1.48 percent.1,2 Up and Down WeekStocks fell broadly over the first part of the week. Leading chipmakers who produce semiconductors for artificial intelligence applications were under pressure after Chinese regulators announced an antimonopoly investigation.3 Investors breathed a sigh of relief Wednesday morning following news that consumer inflation in November was in line with expectations. Mega-cap tech stocks led the rally, with the Nasdaq closing above 20,000 for the first time. Meanwhile, the Dow fell as healthcare stocks came under pressure.4 Stocks remained in the trading range for the rest of the week on mild concerns about Thursday’s warmer-than-expected wholesale inflation report and a spending slowdown among lower-income consumers. The Dow registered its worst losing streak since 2020.5,6,7 |
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Final Fed Meeting of 2024The consumer price index ticked up to 2.7 percent on an annualized basis in November, as expected. The market’s rally following the news reflected investor relief that inflation met expectations and that the increase from the prior month was slight. Those two factors may reinforce the belief that the Fed would follow through with the December rate adjustment, which it penciled in back in September. The bellwether inflation measure was the last critical data point before the Fed’s two-day meeting, scheduled to end on December 18.8 This Week: Key Economic DataTuesday: Federal Open Market Committee (FOMC) Meeting Begins. Retail Sales. Industrial Production. Business Inventories. Wednesday: Housing Starts and Permits. FOMC Announcement. Fed Chair Press Conference. Thursday: Gross Domestic Product. Existing Home Sales. Weekly Jobless Claims. Friday: Personal Income and Outlays. Consumer Sentiment. Source: Investors Business Daily – Econoday economic calendar; December 10, 2024 This Week: Companies Reporting EarningsWednesday: Micron Technology, Inc. (MU) Thursday: NIKE, Inc. (NKE), Cintas Corporation (CTAS), FedEx Corporation (FDX), Paychex Inc. (PAYX) Source: Zacks, December 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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“Who are wise in love, love most, say least.” – Alfred, Lord Tennyson |
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Have You Created Your IRS Online Account?The IRS makes it easy to create an online account where you can view all kinds of account information, such as:
You can even pay online and receive a digital copy of your most recent tax return transcript. This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. Tip adapted from IRS9 |
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A “Berry” Important SuperfoodNot only are blueberries delicious, but they are also a powerful superfood that has many potential health benefits. They are low in calories, can be added to countless dishes, and are the perfect easy snack. Here are some benefits of blueberries, according to Healthline:
Tip adapted from Healthline10 |
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It is in seconds, seasons, centuries, and minutes, but you won’t find it in years, decades, or days. What is it? Last week’s riddle: I have a bank, yet no cash. I can run, but can’t walk. I have a bed but never sleep. I have a mouth, but ingest no meals. What am I? Answer: A river. |
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Hong Kong Harbor Hong Kong, China |
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Footnotes and Sources1. The Wall Street Journal, December 13, 2024 2. Investing.com, December 13, 2024 3. CNBC.com, December 10, 2024 4. The Wall Street Journal, December 11, 2024 5. The Wall Street Journal, December 12, 2024 6. CNBC.com, December 13, 2024 7. The Wall Street Journal, December 13, 2024 8. The Wall Street Journal, December 11, 2024 9.. IRS.gov, August 1, 2024 10. Healthline, August 1, 2024 |
Weekly Market Commentary December 09, 2024
The Markets
U.S. stocks thrive amid turmoil.
The performance of the U.S. stock market is striking. Last week, the Standard & Poor’s (S&P) 500 closed at a record high for the 57th time this year, reported Rita Nazareth of Bloomberg. Here are some of the notable factors that sent stocks higher last week:
Political upheaval overseas. A declaration and cancellation of martial law in South Korea and the toppling of the French government roiled financial markets overseas, making United States markets attractive. “The political chaos spanning Seoul to Paris this week is reinforcing why many investors have chosen to stick to American markets,” reported Simon Kennedy and Phil Serafino of Bloomberg.
A powerful technology rally. Spending and excitement around the potential of artificial intelligence (AI) continue to delight investors. Both the communication services and information technology sectors are expected to report double-digit earnings growth during the last three months of 2024, reported John Butters of Factset.
Rising company profits have been driven by higher spending. “While the ROI [return on investment] of any given AI project remains uncertain, one thing is becoming clear: CIOs [chief investment officers] will be spending a whole lot more on the technology in the years ahead. Research firm IDC projects worldwide spending on technology to support AI strategies will reach $337 billion in 2025—and more than double to $749 billion by 2028,” reported Paula Rooney of CIO.
Continued U.S. economic strength. Employers added 227,000 new jobs in November. That was well above the 200,000 forecasted, reported Barron’s. Stocks rose on the news, and so did expectations that the Federal Reserve will lower interest rates again at its December meeting. Lower rates are typically good for companies because they often lower the cost of borrowing and lead to higher spending.
By the end of the week, the S&P 500 and Nasdaq Composite Indexes were higher. The Dow Jones Industrial Average finished lower as it has less exposure to technology stocks, according to Barron’s, and more significant exposure to a large health insurance company that saw its stock price fall sharply after the assassination of its chief executive officer last week, reported Caroline Valetkevitch of Reuters. Treasury bonds gained last week, too, as yields moved lower on expectations of a Fed rate cut.
When any asset class experiences significant gains during the year, it’s important to review your investment allocations and make adjustments to maintain the risk profile that makes you most comfortable. Rebalancing also helps investors follow an important investment strategy: buy low and sell high.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
‘TIS THE SEASON FOR CYBERCRIME. While scammers and cybercriminals are always on the take, people tend to be particularly vulnerable to fraud amid the whirlwind of winter holiday shopping, giving, and travel. In a recent survey, 82 percent of participants reported they had experienced online scams from “encountering a deceptive advertisement to receiving a fake shipment notice or request from a fraudulent charity,” according to Jennifer Sauer of AARP Research.
During 2023, losses from internet crime totaled $12.5 billion. It’s a staggering sum—and may wildly underrepresent the actual amount taken. The FBI’s 2023 Internet Crime Report stated, “…when the FBI recently infiltrated the Hive ransomware group’s infrastructure, we found that only about 20 [percent] of Hive’s victims reported to law enforcement.”
Common 2024 holiday scams
In 2024, cybercriminals have become more aggressive and more devious, according to the FBI. The top schemes this holiday season include scammers:
- Posting websites and social media ads offering goods at unusually low prices,
- Soliciting donations for fake charities,
- Encouraging “investment” through phony cryptocurrency platforms,
- Selling fake gift cards to be used for donations or time-sensitive purchases, and
- Offering fake gift cards and event tickets on social media to steal personal data.
Here’s how to protect yourself
Being aware of the risks is the first step toward protecting yourself from cybercrime. The FBI and Lars Daniel of Forbes offered tips for protecting yourself this holiday season. They include:
- Resist temptation. Do not click on links received via e-mail, text, or messaging apps. If you receive a communication that a delivery has been delayed or there was an issue with a payment or something else has happened, don’t click on the link provided. Go to the company’s website or app to check.
- Verify before sharing, donating, or paying. If you receive a communication from a charity or financial institution you know, take time to verify the contact is truly from the organization. Cybercriminals can fake real numbers on caller ID and send messages that lead you to fake websites. One way to verify is to contact the organization directly with a phone number or email found on its official website, an account statement, or the back of a credit or debit card.
Be wary of urgent requests. Holidays are often pressure-filled. Scammers often create a false sense of urgency, encouraging people to act without thinking carefully. Before you respond to an urgent and unexpected request, take time to think, research, and verify. Also, remember that government and law enforcement agencies will never ask that payments be made over the phone, via email, or through gift card purchases.
Any time you’re asked to share personal information, think carefully about who is asking and whether they should have the information. If you have any questions about how to protect yourself this holiday season, please get in touch.
Weekly Focus – Think About It
“We are all now connected by the Internet, like neurons in a giant brain.”
—Stephen Hawking, physicist and cosmologist
Sources:
https://www.bloomberg.com/news/articles/2024-12-05/stock-market-today-dow-s-p-live-updates?itm
https://www.cio.com/article/3601606/cios-to-spend-ambitiously-on-ai-in-2025-and-beyond.html
https://www.bls.gov/news.release/empsit.nr0.html
https://www.barrons.com/livecoverage/november-jobs-report-data-today?mod=hp_LEDE_C_1
https://www.ic3.gov/AnnualReport/Reports/2023_IC3Report.pdf [Pages 3 and 7]
Weekly Market Insights | Markets Mixed; Jobs Back on Track
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Stocks were mixed during the first trading week of December. Technology stocks led, while the widely followed Dow Jones Industrial Average struggled. The tech-heavy Nasdaq Composite Index picked up 3.34 percent while the Dow Industrials lost 0.60 percent. The Standard & Poor’s 500 Index added 0.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 1.46 percent.1,2 Tech Takes ChargeThe S&P and Nasdaq rallied to start the week, closing at record highs Monday and Tuesday. The Dow fell on both days. During a conference speech, Fed governor Christopher Waller said he supports a rate adjustment in December for now, which seemed to add momentum to the S&P’s and Nasdaq’s gains.3,4 Tech shares continued to propel stock gains midweek on the strength of a few better-than-expected Q3 reports.5 On Friday, the S&P and Nasdaq hit new record highs following the November jobs report. Both notched their third consecutive winning week. By contrast, the Dow was down four of the five trading days, ending the week in the red after two back-to-back weekly gains.6,7,8 |
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Jobs ReboundAfter two hurricanes and an aircraft maker strike weighed on the labor market in October, the November jobs report released Friday gave investors what they were looking for: confirmation that the October update was an anomaly. While November payrolls topped expectations, investors believed the hotter-than-expected report would not influence the Fed’s upcoming decision regarding short-term interest rates. The Fed’s scheduled two-day meeting ends on December 18.9 This Week: Key Economic DataTuesday: Productivity and Costs. Wednesday: Consumer Price Index (CPI). 10-Year Treasury Note Auction. Treasury Statement. Thursday: Weekly Jobless Claims. Producer Price Index (PPI). Fed Balance Sheet. Friday: Import and Export Prices. Source: Investors Business Daily – Econoday economic calendar; December 6, 2024 This Week: Companies Reporting EarningsMonday: Oracle Corporation (ORCL) Tuesday: AutoZone, Inc. (AZO) Wednesday: Adobe, Inc. (ADBE) Thursday: Broadcom Inc. (AVGO), Costco Wholesale Corporation (COST) Source: Zacks, December 6, 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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“Life is either a daring adventure, or nothing.” – Helen Keller |
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Beware of the Fake Charity ScamThere are so many scams out there. One of the most heartless is taking advantage of people who want to give money to a legitimate charity, especially after a tragedy or disaster. Scammers can set up fake organizations to take advantage of people’s generosity. These scams are usually over the phone, and while the organization may sound legitimate, the person on the other end might demand a donation immediately. Remember, a charity will happily receive a donation anytime, so you shouldn’t feel pressured. You can research charity organizations using the IRS Tax Exempt Organization Search tool—this will help you narrow down a list of legitimate charities. You may even be able to claim a deduction on your tax return. This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional. Tip adapted from IRS10 |
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How to Understand Your Blood Pressure ReadingsUnderstanding your blood pressure readings is important, especially if you are at a greater risk for high blood pressure. Here are the ranges you should know, according to the American Heart Association:
Tip adapted from American Heart Association11 |
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I have a bank, yet no cash. I can run, but can’t walk. I have a bed but never sleep. I have a mouth, but ingest no meals. What am I? Last week’s riddle: What has one eye and yet can’t see? Answer: A sewing needle. |
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The Shard Bermondsey, London, United Kingdom |
Footnotes and Sources1. The Wall Street Journal, December 6, 2024 2. Investing.com, December 6, 2024 3. CNBC.com, December 2, 2024 4. MarketWatch.com, December 3, 2024 5. CNBC.com, December 4, 2024 6. MarketWatch.com, December 5, 2024 7. MarketWatch.com, December 6, 2024 8. The Wall Street Journal, December 6, 2024 9. The Wall Street Journal, December 6, 2024 10. IRS.gov, April 4, 2024 11. American Heart Association, August 1, 2024 |
Weekly Market Commentary
The Markets
Not one, but two!
United States stock markets are serving another cup of cheer this year. The Standard & Poor’s (S&P) 500 Index returned more than more than 24 percent in 2023. This year, it was up 26.5 percent through the end of November.
It’s possible 2024 will end up in Wall Street’s bull market hall of fame, wrote Jan-Patrick Barnert of Bloomberg, because the year-to-date return of the S&P 500 ranks among its best performances of this century.
“Not many expected another blistering rally fueled by a handful of tech titans and market sentiment so bullish that one risk event after another got cleared without a scratch… Market swings were benign, with only one big valley of tears: a summer pullback that culminated in a small selloff around early August. The drop lasted for just less than a month and failed to cross the threshold of 10 [percent], typically seen as a correction.”
On a relative basis, U.S. stock markets have significantly outperformed stock markets elsewhere. Consider the performance of a few non-U.S. indexes through Thanksgiving.
Over the year, the number of U.S. stocks participating in the rally rose. “The rally is broadening out…more stocks are advancing than declining. Typically, that phenomenon bodes well for the entire stock market. It’s a sign of better market breadth, meaning that the major indexes aren’t being led by just a small handful of stocks,” reported Paul R. La Monica of Barron’s.
However, La Monica also cautioned against becoming complacent, “…given how long it has been since Wall Street has faced any significant obstacle, it isn’t entirely clear what might happen if market or economic conditions suddenly head south.”
Last week, stocks jolted up and down as investors responded to data about political appointments, tariffs, and inflation data. By the end of the week, major U.S. indices were higher. Treasury bonds gained, too, as yields moved lower after president-elect Donald Trump nominated hedge-fund billionaire Scott Bessent to be U.S. Treasury Secretary. Many believe Bessent could be a moderating influence when it comes to taxes, tariffs, and the deficit, reported Mitchell Hartman of Marketplace.
THERE ARE A LOT OF QUESTIONS ABOUT TARIFFS. Last week, president-elect Donald Trump took to social media, promising to increase tariffs on China, Mexico, and Canada. One result was that internet searches related to the term “tariffs” increased sharply. These searches included:
- How do tariffs work?
- What is Trump’s tariff plan?
- Things to buy before tariffs
- Tariffs for dummies
Here are a few answers to common questions about tariffs:
What are tariffs? Tariffs are a form of tax that one country assesses on materials, parts, and products imported from another country.
What do tariffs do? In theory, raising prices on foreign goods will protect U.S. companies and jobs by encouraging Americans to buy goods that are produced in the United States. It doesn’t always work that way because the country the U.S. imposes tariffs on is likely to respond in kind, adding tariffs to U.S. materials, parts, and products. A study of the 2018-19 trade war between the U.S., China and other nations found:
“The trade-war has not to date provided economic help to the U.S. heartland: import tariffs on foreign goods neither raised nor lowered U.S. employment in newly protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory U.S. agricultural subsidies.”
Who pays for tariffs? The cost of a tariff is paid by U.S. businesses and U.S. consumers. “The importer who brings the product into the country—be it a car or an avocado—is responsible for the tariff at the port of entry. Customs officials collect the tax and the money goes to the U.S. Treasury. The importer can pass the cost of the tariff along in the form of higher prices to the consumer. Or, in some cases, the manufacturer or importer may choose to absorb some or all of the cost, taking a hit to the bottom line,” reported Tim Smart of U.S. News & World Report.
How much will tariffs raise prices? After the president-elect announced his tariff intentions, Barron’s estimated “that a 10 [percent] tariff could raise the cost of a new car in the U.S. by 4 [percent] or 5 [percent] without any adjustments from auto makers. That was based [on] imports and where parts and cars are manufactured in North America. A 25 [percent] tariff on Canada and Mexico implies the price jump would be closer to 8 [percent],” reported Al Root of Barron’s.
When countries fight by raising tariffs, it’s called a trade war.
Weekly Focus – Think About It
“It is difficult to make predictions, especially about the future.”
—Karl Kristian Steincke, Danish politician
Sources:
https://www.macrotrends.net/2526/sp-500-historical-annual-returns
https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_Barrons_Data_2.pdf)
https://www.bloomberg.com/news/articles/2024-11-29/the-vintage-year-for-us-stock-markets-that-few-people-expected (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_Bloomberg_A%20Vintage%20Year_3.pdf)
https://www.msci.com/end-of-day-data-search (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_MSCI_End%20of%20Day%20Index%20Data%20Search_4.pdf)
https://www.barrons.com/articles/stock-market-rally-tech-nvidia-rates-304f6048 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_Barrons_Stock%20Market%20Isnt%20Just%20Big%20Tech_5.pdf)
https://finance.yahoo.com/personal-finance/what-is-a-tariff-194059448.html
https://trends.google.com/trends/explore?date=now%207-d&geo=US&q=what%20is%20a%20tariff&hl=en-US; https://trends.google.com/trends/explore?date=now%207-d&geo=US&q=who%20pays%20tariffs&hl=en-US; and https://trends.google.com/trends/explore?q=tarrifs&date=today%203-m&geo=US (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_Google%20Trends_8.pdf)
https://www.barrons.com/articles/trump-tariffs-ford-gm-stock-030da5ef?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-02-24_Barrons_Why%20GM%20Stock%20Is%20Getting%20Crushed%20by%20Trump%20Tariff%20Threats_11.pdf)