Broker Check

Weekly Market Update, Week Ending February 16, 2024

February 20, 2024

Market-Moving News[i]

Slight pullback

The S&P 500 posted a fractional decline, snapping a five-week string of positive results that had left the index at a record high. Despite the setback, the S&P 500 remained nearly 22% above a recent low in late October. The Dow finished the week essentially flat while the NASDAQ slipped more than 1%.

Inflation’s persistence

Stocks fell and bond yields rose on Tuesday after a monthly inflation report showed that U.S. consumer prices rose more than most economists had expected in January, with the Consumer Price Index’s annual rate coming in at 3.1%. A separate report on Friday reinforced the narrative of continuing inflationary pressures, as wholesale prices rose at the fastest pace in five months.  

Shifting rate outlook

The latest inflation data dampened investors’ expectations for any interest-rate cuts over the short term, and government bond yields rose for the second week in a row. The yield of the 10-year U.S. Treasury bond closed at 4.30% on Friday, up sharply from a recent intraday low of 3.82% on February 1. 

Shopping slowdown

U.S. consumers trimmed their spending more than expected after the holiday shopping season. In January, retail sales fell 0.8% on a seasonally adjusted basis compared with the previous month. In addition, sales figures for December and November were revised lower than the initially reported numbers.

Overseas recessions

Initial estimates from Japan and the United Kingdom indicated that their economies fell into recessions in late 2023, as they recorded negative growth for the second quarter in a row. In Japan, fourth-quarter GDP fell at an annual rate of 0.4%; in the U.K., the economy contracted 0.3%. 

Earnings scorecard

With earnings season nearing an end, expectations for overall performance improved slightly. Net income was expected to rise an average 3.2% compared with the same quarter a year earlier, based on the four-fifths of the S&P 500 companies that had reported results as of Friday plus forecasts for those that hadn’t released results. At the end of the previous week, the growth rate was projected to be 2.8%. 

Improving sentiment

A survey of U.S. consumers’ sentiment about the economy rose for the third month in a row, climbing to the highest level since July 2021. The University of Michigan said its preliminary February sentiment reading rose to 79.6. The figure is up sharply from a recent low of 61.3 in November.  

Small-cap comeback 

After underperforming large caps in January, U.S. small-cap stocks outperformed their bigger peers by a wide margin for the second week in a row. A small-cap benchmark rose more than 1% for the week; over two weeks, the index was up nearly 4%.

The Week Ahead:  February 12-16

  • Monday
    • President’s Day, U.S. financial markets closed
  • Tuesday
    • The Conference Board Leading Economic Index for the U.S.
  • Wednesday
    • Release of minutes from the January 30-31 meeting of the U.S. Federal Reserve.
  • Thursday
    • Existing home sales, National Association of Realtors
    • Weekly unemployment claims, U.S. Department of Labor
  • Friday
    • No major reports scheduled


 

 

Stoic Quote of the Week:  Protect Your Peace of Mind

  • “Putting things off is the biggest waste of life: it snatches away each day as it comes, and denies us the present by promising the future. The greatest obstacle to living is expectancy, which hangs upon tomorrow and loses today. You are arranging what lies in Fortune’s control, and abandoning what lies in yours. What are you looking at? To what goal are you straining? The whole future lies in uncertainty: live immediately.” On the Shortness of Life

Tax Tips

Property Tax Valuation[ii]

Marching through the weeks of the New Year, we step into march.  This is the time when  winter gradually makes way for spring and while enjoying the beauty of your garden, there is another task you need to do.

Usually each year in March, property owners start receiving annual Property Tax Valuation Notices.  These are notices from the County Assessor that inform real property owners how much property tax is owed for each house or piece of real estate.  This will be based on the assessed value of the property from last year.  Typically, Property Tax Valuations are 18 months behind current property values.

While people know the property valuation notices may reflect some DIFFERENCE from the current value of their real estate, they still need to consider whether they want to appeal the Property Tax Valuation they receive.  Sometimes the valuation notice will be lower than your property’s current value and sometimes it may be higher.  Remember, appealing your valuation notice could either increase or decrease what taxes you owe on your real estate. 

To fully comprehend your property taxes, there are some points to understand.  The Full Cash Value (FCV) should reflect current market value.  Your Limited Property Value (LPV) is the figure that will likely change on your new Valuation Notice.  This number is what is used to assess taxes for school districts, cities, community colleges, and counties.  It’s important to appeal sooner, rather than later.

Each owner has 60 days from the notice date to appeal the property valuation either online or by mail.  If you don’t think you can sell your property for the Full Cash Value listed, consider appealing.  If there is something wrong with the information the County Assessor used to value your home, such as square footage, consider appealing.  If you believe bad comparisons or sales of comparable homes (“comps”) have been used to assess the value of your home, consider appealing.

Additionally, each piece of real estate is divided into a specific property class such as residential, commercial, raw land, and rental classifications.  Each classification determines the rate at which the property will be assessed.  For instance, residential property might get (.1) tax rate assessment while a rental property might get a (.3) tax rate assessment, etc.

Often property owners do not let the assessor know when they are renting real estate to others and this can cause real problems with property assessments, since you can only have ONE primary residence at a time, and you must attach a copy of the written appraisal along with the tax return.  If you file electronically, you will attach a PDF of the appraisal to the tax return, otherwise you can send in a written copy of the appraisal when filing a paper tax return.

It's a best practice to take pictures of items donated when giving away non-Cash items (clothes, furniture, household items, artwork, etc.), because this helps you show the condition and number of the items donated.  This way you can better prove your valuation amount used.

The Salvation Army has a website that is used to value items that are given to charitable organizations, by simply going to the website www.salvationarmyusa.org, and type in the word “valuation” in the search bar.  You will see different items that are given away and the valuation that has been accepted by the IRS for charitable donation purposes, based on the condition of the item, for each item donated.

Here are Some Points To Remember

  • Most families donate closer to $3,000 worth of non-cash items, but only claim about $500 on their tax returns.
  • Be sure to get a written receipt for any cash, check or credit card contribution of $250 or more
  • Use Form 8283 if the amount of total non-cash charity contributions is $500 or more
  • Take pictures of items donated, to prove condition and number of items given
  • You will need a written appraisal (stating that it is for tax purposes) if the value of the item being donated is $5,000 or more, for any one item
  • Use Salvation Army website (www/salvationarmyusa.org) to determine the value of the items donated

Health Tip of the Week[iii]

8 Brain Tips for A Healthier You

At 3 pounds, the brain isn't very large, but it is a powerhouse. Those 3 pounds hold your personality and all your memories. The brain coordinates your thoughts, emotions and movements.

Billions of nerve cells in your brain make it all possible. Called neurons, these brain cells send information to the rest of your body. If they aren't working properly, your muscles may not move smoothly. You might lose feeling in parts of your body. Your thinking could slow.

The brain doesn't replace neurons that are damaged or destroyed. So it's important to take care of them. Head injuries, drug use, and health conditions like Alzheimer's and Parkinson's disease can cause brain cell damage or loss.

Developing brain health habits is a key way to keep your brain healthy. That includes following safety measures and keeping your brain active and engaged. Try these brain health tips:

  • Work up a Sweat
  • Protect Your Head
  • Take Care of Your Health
  • Meet Up With Friends
  • Get a Good Night’s Rest
  • Make a salad
  • Challenge your brain
  • Be careful with medicines and limit alcohol


[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 02.12.2024.

[ii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, 2nd Edition.  Kindel Edition, location 39-40 of 226.  Accessed 02.20.2024.

[iii]https://www.mayoclinic.org/healthy-lifestyle/healthy-aging/in-depth/brain-health-tips/art-20555198, accessed 02.20.2024