Weekly Market Insights: 11-16-21 Stocks Tap the Brakes
This past week, we have seen an increasing concern from investors about the rising inflation indicators. Both the Bond and Stock markets appear to be torn between concerns of persistent inflation and the narrative that the Federal Reserve is saying about the inflation being transitory. This should prove interesting to watch unfold.
The CPI reading of 6.2%, released by the Bureau of Labor Statistics on Wednesday was well ahead of any forecasts, and the highest since 1990! This reading has caused speculation and concerns around the timing of the Federal Reserve raising the Federal Funds Rate earlier than forecast. Some are thinking this information could motivate the FED to act as early as next fall vs. the forecast of Mid-2023.
Growth oriented stocks that are more impacted by increasing rates also fell from all-time highs and we would not be surprised to see increase market volatility in the weeks ahead as investors digest income inflation readings and try to anticipate the FED's reaction to elevated rates.
Till we speak again- enjoy your Thanksgiving (taste testing)!
General Market Commentary
Stocks posted small declines last week as investors digested recent stock market gains and an unexpectedly high inflation read.
The Dow Jones Industrial Average slid 0.63%, while the Standard & Poor’s 500 retreated 0.31%. The Nasdaq Composite index slipped 0.69% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 0.78%.1,2,3
Market Takes a Pause
After moving higher on Congressional approval of a $1 trillion-plus infrastructure spending bill, stocks drifted lower as investors took a breather after a weeks-long run-up in prices. A high October inflation report on Wednesday sent bond yields higher and stock prices lower, especially technology and other high growth companies. Energy also fell.4,5
Higher-than-expected inflation elevated investor worries that the Fed may be forced to accelerate its bond tapering schedule and hike interest rates sooner than planned. Stocks found firmer footing following the inflation-related sell-off, closing the week on a strong note, though it wasn’t sufficient to keep stocks from ending the week in the red.
Hot! Hot! Hot!
Rising prices appear to be showing no signs of moderating. The first reading on inflation was Tuesday’s release of the Producer Price Index, which saw wholesale prices rise 0.6% in October and register an 8.6% increase from 12-months ago.4
A day later the Consumer Price Index came in above consensus estimates, with prices climbing 0.9% from September 2021 and increasing 6.2% year-over-year. The 12-month increase was the sharpest such rise since 1990. The 12-month core inflation rate (excludes the more volatile food and energy sectors) was 4.6%, the fastest pace since 1991.5
This Week: Key Economic Data
Tuesday: Retail Sales. Industrial Production.
Wednesday: Housing Starts.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Source: Econoday, November 12, 2021The 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
Monday: Lucid Group (LCID).
Tuesday: Walmart, Inc. (WMT), The Home Depot, Inc. (HD), NetEase, Inc. (NTES).
Wednesday: Nvidia Corporation (NVDA), Cisco Systems, Inc. (CSCO), Target Corporation (TGT), Lowe’s Companies, Inc. (LOW), The TJX Companies, Inc. (TJX).
Thursday: Palo Alto Networks, Inc. (PANW), Ross Stores, Inc. (ROST), JD.com (JD).
Source: Zacks, November 12, 2021Companies 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 IRS. Here are some tips to help:
The IRS taxes income differently, depending on whether the income stems 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 hobby/business.
In some instances, you can deduct approvable expenses only up to the amount you brought in for income.
* 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.gov6
Eat This, Not That: Easy Food Swaps Anyone Can Do
By swapping out unhealthy food options for healthier ones, you can cut out the bad stuff and still enjoy your meal. Here are some of our favorite food swaps:
Mustard instead of mayonnaise (0 calories vs. 90 calories)
Scrambled eggs with green onions instead of cheese (170 calories vs. 275 calories)
Sparkling water instead of soda (0 calories vs. 140 calories)
Fresh fruit instead of dried fruit (69 calories vs. 325 calories)
Greek yogurt instead of sour cream (28 calories vs. 60 calories)
Olive oil spray instead of a tablespoon of olive oil (5 calories vs. 120 calories)
Corn tortillas instead of flour tortillas (100 calories vs. 280 calories)
All-bran cereal instead of granola (80 calories vs. 200 calories)
Goat cheese instead of Brie cheese (70 calories vs. 100 calories)
There are lots of healthy swaps like these that can help you reduce your caloric intake, consume less sugar, and make it easy to create a more-balanced meal.
Tip adapted from Eat This, Not That7
An interesting occurrence happened about 25 minutes before 1 p.m. on May 6, 1978, involving numbers on the clock and months and years on the calendar. What was this numerically interesting moment?
Last week’s riddle: Complete these words by putting the same three letters into each one: F---RISH, C---DY, S---GH. Answer: LOU.
Florence Cathedral, Florence, Italy.
Footnotes and Sources
1. The Wall Street Journal, November 12, 2021
2. The Wall Street Journal, November 12, 2021
3. The Wall Street Journal, November 12, 2021
4. CNBC, November 9, 2021
5. The Wall Street Journal, November 10, 2021
6. IRS.gov, May 25, 2021
7. eatthis.com, June 24, 2021
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.
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