|Rising recession fears and uncertainty in the bond and currency markets sent stocks to new 2022 lows last week.
The Dow Jones Industrial Average declined 2.92%, while the Standard & Poor’s 500 slumped 2.91%. The Nasdaq Composite index fell 2.69%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.94%.1,2,3
A Tumultuous Week
U.S. stocks were under pressure all week due to recession concerns and unsettled trading in the bond and currency markets. This stress followed economic steps out of the U.K. During the previous week, the Bank of England (BOE) raised interest rates, and its prime minister announced unfunded tax cuts that the markets interpreted as inflationary.
U.S. bond yields rose early last week, sending stocks lower until Wednesday’s rally following news that the BOE would buy U.K. government bonds. U.S. stocks resumed their descent the following two days to close out a disappointing week, month, and third quarter.
The Bank Of England Acts
Global bond and currency markets have been volatile recently due to global central bankers raising interest rates to combat inflation. Developments in the U.K. took center stage last week when the BOE announced it would be buying long-dated U.K. government bonds. Upending the financial markets was the previous week’s announcement of tax cuts by the country’s new prime minister, a step many investors viewed as counterproductive to the BOE’s inflation-fighting efforts.
The BOE’s decision to begin temporary purchases of government bonds was well-received by capital markets, sending U.K. bond yields lower and boosting U.K. stock prices in the immediate aftermath.
This Week: Key Economic Data
Monday: Institute for Supply Management (ISM) Manufacturing Index.
Tuesday: Factory Orders. Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Automated Data Processing (ADP) Employment Report. Institute for Supply Management (ISM) Services Index.
Thursday: Jobless Claims.
Friday: Employment Situation.
Source: Econoday, September 30, 2022
This Week: Companies Reporting Earnings
Wednesday: Lamb Weston (LW).
Thursday: Constellation Brands, Inc. (STZ), McCormick & Company, Inc. (MKC), Conagra Brands (CAG).
Source: Zacks, September 30, 2022
|“The trust of the innocent is the liar’s most useful tool.”
– Stephen King
With Shared Custody, Taxes Can Get Complicated
If you have a legal agreement with your child’s other parent regarding custody, you likely have questions about claiming the child on your tax return and what credits (if any) for which you are eligible.
It may help if you research the Child Tax Credit as well. The parent who claimed the Child Tax Credit for a qualifying child the previous year may have received the advance child tax credit payments the following year. That means that “an eligible parent who did not receive advance payments for a qualifying child will be able to claim the full amount of the child tax credit for that child on a 2022 tax return even if the other parent received advance child tax credit payments.”
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov4
Sneak In More Veggies With Mashed Cauliflower
Mashed potatoes are a classic side at any meal, but they can be calorie-dense and don’t provide as much nutritional benefit as other veggies. If you want a tasty and easy way to incorporate more veggies into your meals this year, try this simple mashed cauliflower recipe:
Tip adapted from Downshiftology5
|Seven people stand in a square room which measures 30′ x 30′. Each one can see the entire room and everyone in it without making any physical movement (aside from eye movement). Where inside this room can you place an apple so that all but one person can see it?
Last week’s riddle: Alexandra’s mom had four children. The first one was named May, the second was named June, and the third was named August. What was the fourth child’s name? Riddle Answer: Alexandra
|Kirkjufell Mountain, Reykjavík, Iceland|
Footnotes And Sources
2. The Wall Street Journal, September 30, 2022
3. The Wall Street Journal, September 30, 2022
4. IRS.gov, February 23, 2022
5. Downshiftology.com, June 1, 2022
|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.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and 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 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.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Copyright 2022 FMG Suite.
|Stocks posted losses in a holiday-shortened trading week as the first-quarter earnings season kicked off and investors digested new inflation data.The Dow Jones Industrial Average declined 0.78%, while the Standard & Poor’s 500 fell 2.13%. The Nasdaq Composite index dropped 2.63% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.20%.1,2,3|
Stocks began the week moving lower as bond yields climbed higher, with growth stocks suffering some of the steepest declines. Investors considered China’s ongoing lockdown warily, worried it might worsen supply-chain issues.
Historically high consumer and producer price inflation reports were shrugged off by the stock and bond markets in the main, with bond yields slipping despite the hot inflation numbers. Despite an encouraging start to the first-quarter earnings season, stocks pulled back on Friday as bond yields resumed their move higher ahead of a three-day holiday weekend.
An Eye on Inflation
On Tuesday, March’s Consumer Price Index (CPI) report offered little indication that inflation may be moderating, as prices increased 8.5% year-over-year, the fastest pace in 40 years. Core inflation, excluding food and energy prices, recorded a 6.5% jump, the steepest rise since August 1982. One encouraging note was that core inflation showed potential signs of ebbing, posting a monthly increase of 0.3% versus expectations of a 0.5% increase.4
The following day, March’s Producer Price Index, a potential insight into future inflation, rose 11.2% year-over-year. A March survey by the National Federation of Independent Business released earlier in the week, indicated that half of the respondents were likely to raise prices in the next three months.5
This Week: Key Economic Data
Tuesday: Housing Starts.
Wednesday: Existing Home Sales.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Friday: Purchasing Managers’ Index (PMI) Composite Flash.
Source: Econoday, April 14, 2022
This Week: Companies Reporting Earnings
Monday: Bank of America Corporation (BAC), J.B. Hunt Transport Services, Inc. (JBHT).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), International Business Machines Corporation (IBM), Lockheed Martin Corporation (LMT), Prologis, Inc. (PLD).
Wednesday: Tesla, Inc. (TSLA), The Procter & Gamble Company (PG), Lam Research Corporation (LRCX), CSX Corporation (CSX).
Thursday: AT&T, Inc. (T), United Airlines Holdings, Inc. (UAL), Snap, Inc. (SNAP), Blackstone, Inc. (BX), Union Pacific Corporation (UNP), Dow, Inc. (DOW).
Friday: Verizon Communications, Inc. (VZ), American Express Company (AXP), KimberlyClark Corporation (KMB).
Source: Zacks, April 14, 2022
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|If you’re concerned about today’s market volatility, you might take some comfort from one of my favorite quotes by Warren Buffett.
“I would tell them don’t watch the market closely,” said the Oracle of Omaha.
Buffett’s quote was from 2016 when the markets were wrestling with Brexit, China’s economy, and, coincidentally, the Federal Reserve’s interest rate policy.
Fast forward to 2022, and rising bond yields, Federal Reserve uncertainty, and escalating tensions on the Ukrainian-Russian border all have taken turns rattling the markets.
Markets move in cycles, but after a period of solid performance like 2021, it’s easy to forget that pullbacks, corrections, and even bear markets happen from time to time. Some market watchers would even suggest down cycles are healthy in the long run.
But if you find yourself thinking, “this time, it’s different,” we should talk. Downtrends can be unnerving, and sometimes, they may cause you to rethink how you feel about market 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.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.
|Recently, the world has watched with great interest as a few companies have seen surprising rallies in their stock prices. You may have read stories of individual investors gaining massive returns on their investments, thanks to this phenomenon. However, many of these same assets have quickly suffered steep declines following their initial boost.1
During times like these, it can be tempting to pile into an asset that has seen such rapid growth. The excitement of the moment or the fear of missing out can cause even the savviest investor to act when they usually wouldn’t.
But what matters is what you do next. Right now, perhaps the best thing for your long-term future is to remove emotion from the equation. Remember, your investment strategy has been crafted to help pursue your long-term goals, regardless of what markets do in the short-term.
Volatile markets can be unnerving, but you’re always welcome to give me a call with your questions. Rest assured, we’re keeping a close eye on the markets, and most importantly, watching for any new long-term trends that may emerge on your behalf.
|1. CNBC.com, February 1, 2021|
|The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for gen|