Weekly Market Insights: Investors Move Past Mixed Fed Message
Presented by Happy Valley Financial Services
Stocks pushed higher last week as investors cheered mega-cap tech corporate reports and a better-than-expected employment report. Stocks At New HighsAt the beginning of the week, stocks surged, anticipating fourth-quarter corporate updates from tech companies and the Federal Reserve’s two-day policy meeting; this led to the S&P 500 Index reaching a new record high on Monday. The market remained relatively stable for the rest of the week until Wednesday, when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The Federal Open Market Committee’s (FOMC) news unsettled investors, who anticipated that rates would remain unchanged but expected more specific guidance on the Fed’s plan to lower interest rates.1 On Friday, the job report for January revealed the addition of 353,000 new jobs, surpassing the forecast of 185,000. This strong report did not negatively impact the markets. Instead, investors interpreted it as confirmation of a robust economy.2 |
Source: YCharts.com, February 3, 2024. Weekly performance is measured from Monday, January 29, to Friday, February 2. ROC 5 = the rate of change in the index for the previous 5 trading days. 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. |
Fed’s Mixed SignalsThe Fed’s decision to keep rates steady left some investors disappointed, as they had been hoping for indications of rate cuts in the coming months; this led to a decline in stock prices on Wednesday, with increased selling towards the end of the trading day. The Wall Street Journal’s headline after the FOMC meeting on Wednesday suggested that rate cuts were possible but not expected immediately. The FOMC’s policy language, released after the meeting, indicated a subtle shift from considering rate cuts to proposing they could be possible unless inflation became a concern.3 This Week: Key Economic DataMonday: ISM Services Index. Wednesday: International Trade in Goods & Services. EIA Petroleum Report. Thursday: Jobless Claims. Fed Balance Sheet. Source: Investors Business Daily – Econoday economic calendar; February 2, 2024 This Week: Companies Reporting EarningsMonday: McDonald’s Corporation (MCD), Caterpillar (CPL) Tuesday: Eli Lilly and Company (LLY), Amgen Inc. (AMGN), Fiserv, Inc. (FI) Wednesday: The Walt Disney Company (DIS), Uber Technologies Inc. (UBER), PayPal Holdings Inc. (PYPL) Thursday: AstraZeneca Plc (AZN), S&P Global Inc. (SPGI), Philip Morris International Inc. (PM) Friday: PepsiCo Inc. (PEP) Source: Zacks, February 2, 2024 |
“Your life does not get better by chance, it gets better by change.” – Jim Rohn |
Vacation Home RentalsIf you receive money for the use of your primary residence, you may have to report this rental income on your tax return; this means that the “vacation home rental” classification can apply to your home, even if you don’t own multiple short-term rental properties. The rental expense deduction is limited in the case of a property used as a home; the rental expenses can’t be more than the rent received. The rental income may not require reporting if you rent the house to your tenant for fewer than 15 days during the year. A vacation home is a house, apartment, condominium, or other dwelling that you use to generate income, but you can also use it as a residence during the year. For tax purposes, it’s critical to divide the expenses of a property into personal and business purposes. To report rental income and rental expenses, use Schedule E. In addition, rental income may be subject to a net investment income tax. *This tax tip is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals for more specific information. Tip adapted from IRS.gov4 |
Taking Care Of Your Mental HealthTaking care of your mental health is just as important as your physical health—if not more so. Your mental health influences how you communicate with others, perform at work, and feel about yourself. Here are some tips to help you focus on your mental health and understand what you need to be the best version of yourself:
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Two men played five games of chess in the park. They both won the same number of games, yet none of the games they played ended in a draw. So how could this be?
Last week’s riddle: What five-letter word becomes shorter when you add two letters to it? Answer: Short. |
A camel caravan in front of the Great Pyramids of Giza, Egypt |
Footnotes And Sources
2. The Wall Street Journal, January 31, 2024 3. CNBC.com, February 2, 2024 4. IRS.gov, September 25, 2023 5. Mhanational.org, October 9, 2023 |
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