Weekly Stock Market Commentary | Research Financial Strategies

Weekly Market Insights: Fed Cuts Interest Rate by Half-Point

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

Stocks moved higher last week after the Federal Reserve’s half-point rate cut, bolstered by multiple data points supporting a cooling but still strong economy and decelerating inflation.

The Standard & Poor’s 500 Index gained 1.36 percent, while the Nasdaq Composite rose 1.49 percent. The Dow Jones Industrial Average moved ahead by 1.62 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, inched up 0.42 percent.^1,2

Fed Cuts Rate 0.5 Percent

Stocks traded in a narrow range for the first half of the week as anxious investors awaited the outcome of the Federal Open Market Committee’s (FOMC) September meeting.^3,4

Shortly after 2 pm ET Wednesday, the Fed announced it was cutting rates by a half percentage point—a more significant cut than some investors anticipated. Stocks initially rose in response and then fell. Some market watchers attributed the decline to concern that the Fed might be concerned about economic growth.^5,6

But after sleeping on it, stocks rallied Thursday, with the Nasdaq, S&P, and Dow climbing 2.5 percent, 1.7 percent, and 1.3 percent, respectively. The Dow topped 42,000 for the first time, while the S&P crossed the 5,700 mark.^7,8

Fed’s Move

The half-point cut was the first change in the Fed Funds Rate in 14 months and the first reduction in 4½ years, bringing its target range to 4.75-5.0 percent. Fed Chair Powell said the decision reflected the Committee’s “greater confidence that inflation is moving sustainably toward 2 percent” and that the “risks to achieving its employment and inflation goals are roughly in balance.”⁹

This Week: Key Economic Data

Monday: Fed Officials Raphael Bostic, Austan Goolsbee and Neel Kashkari speak.

Tuesday: Case-Shiller Home Price Index. Consumer Confidence.

Wednesday: New Home Sales. EIA Petroleum Status Report.

Thursday: Gross Domestic Product. Durable Goods. Fed Chair Powell speaks. Pending Home Sales. Fed Officials Michael Barr, John Williams and Neel Kashkari speak. 7-Year Treasury Note Auction.

Friday: Personal Income & Outlays. International Trade in Goods. Consumer Sentiment.

^{Source: Investors Business Daily – Econoday economic calendar; September 19, 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

Tuesday: AutoZone, Inc. (AZO)

Wednesday: Micron Technology, Inc. (MU), Cintas Corporation (CTAS)

Thursday: Costco Wholesale Corporation (COST)

^{Source: Zacks, September 19, 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.}

“We are born not with purpose, but with potential.”

– Octavia Butler

Tax Treatment of Hobbies

Taxpayers who earn money from their hobbies might have to report the income to the Internal Revenue Service (IRS). Here are some tips to help:

The IRS taxes income differently depending on whether it comes from a true hobby or a for-profit business.
Your hobby may entail expenses required to do it well. For example, you may need to buy yarn to knit scarves. You might be able to deduct expenses associated with your hobby or business.
In some instances, you can deduct approvable expenses only up to the amount you brought in for income.

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

Tip adapted from IRS.gov¹⁰

Rest, Relaxation, and Healthy Nutrition

Here are some tips on how to stay healthy, even during long trips:

Before heading to the airport, pack a snack box of fruits, veggies, nuts, lean proteins, and healthy bars. This way, you won’t be tempted by chips and soda while you wait for your flight.
Get plenty of sleep. Like at home, getting a good night’s sleep while traveling is essential. Sleep helps your body reset for the next day and will help you maintain your weight.
Hydrate often.
Take your vitamins to ensure you’re at your best. A daily pill organizer can help you remember to take them, even while traveling.

There’s no reason why you must sacrifice all your hard work and healthy habits while visiting family or heading to warmer destinations. Continuing a healthy lifestyle while traveling will help you have even more fun!

Tip adapted from Travel & Leisure¹¹

8549176320 is a large number and unique for two reasons. First, it presents all numerical digits from 0 to 9 without repeating; what is the other reason?

Last week’s riddle: In the morning, I lie at your feet. I almost vanish in the midday sun. But I’ll be with you all day as you stand, walk, leap, and run. What am I?
Answer: Your shadow.

Trondheim old town with colourful Old warehouses in Ovre Elvehavn

Trondheim, Trondheim, Norway

Footnotes and Sources

^{1. The Wall Street Journal, September 20, 2024}

^{2. Investing.com, September 20, 2024}

^{3. CNBC.com, September 16, 2024}

^{4. The Wall Street Journal, September 18, 2024}

^{5. CNBC.com, September 18, 2024}

^{6. The Wall Street Journal, September 18, 2024}

^{7. The Wall Street Journal, September 19, 2024}

^{8. The Wall Street Journal, September 20, 2024}

^{9. The Wall Street Journal, September 18, 2024}

^{10. IRS.gov, May 8. 2024}

^{11. Travelandleisure.com, May 8. 2024}

Weekly Market Insights: Stocks Rally Ahead of Fed Meeting

by Jim Streight | Sep 16, 2024 | Weekly Stock Market Commentary

Stocks rallied last week as investors received better-than-expected consumer and producer inflation data.

The Dow Jones Industrial Average rose 2.60 percent, while the Standard & Poor’s 500 Index gained 4.02 percent. The Nasdaq Composite led, picking up 5.95 percent as tech stocks rebounded. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.01 percent.^1,2

A Wednesday to Remember

Stocks bounced out of the gate at the start of the week as “risk on” investors made moves before the pending release of the twin inflation reports–the Consumer Price Index (CPI) and Producer Price Index (PPI). The three major averages added slightly more than 1 percent in Monday trading.³

On Wednesday, stocks initially dipped following the release of the CPI as traders appeared disappointed by the report. By midday, sentiment changed. The S&P 500, down as much as 1.6 percent in early trading, gained 1.1 percent by the closing bell. More inflation data out Thursday showed wholesale price increases were tempered, which helped stocks move higher through the balance of the week.^4,5

Small Caps Shine

Small-cap stocks, as measured by the Russell 2000 Index, have pushed higher in recent weeks, which is a telling move for some Wall Street observers. The Russell 2000 has outperformed the S&P 500 by more than 4 percent during Q3 so far.⁶

One reason is that smaller stocks tend to respond when they anticipate interest rates will trend lower. Investors appear to be positioning themselves in small cap issues, expecting the Fed may adjust rates at its September meeting as it looks to guide the economy to a soft landing.⁷