Weekly Market Update, Week Ending February 9, 2024

Market-Moving News[i]

S&P 500 @ 5K

The S&P 500’s more than 1% gain for the week pushed the index above the 5,000-point threshold for the first time and marked its 14^th positive result out of the past 15 weeks. The NASDAQ added more than 2%  while the Dow posted a fractional gain. 

1,000-point Steps

The 5,000-point mark that the S&P 500 eclipsed on Friday came two years and 10 months after the index closed above 4,000 points for the first time in April 2021. Prior to that, the S&P 500 cleared 3,000 in July 2019, 2,000 in August 2014, and 1,000 in February 1998. 

Earnings Turnaround

In the space of three weeks, slightly negative expectations for the current quarterly earnings season turned solidly positive. As of Friday, fourth-quarter net income was expected to rise 2.9% compared with the year-ago quarter, based on the two-thirds of S&P 500 companies that have already reported plus projections for those that haven’t yet reported. As recently as January 19, earnings had been forecast to decline 1.8%. 

Growth Style's Lead

Strong earnings results from selected technology companies fueled another week of equity market style leadership for growth stocks relative to value stocks. Year to date, the total return for a U.S. large-cap growth benchmark was 8.8% versus 1.1% for its value counterpart.

Bitcoin Rally

Bitcoin climbed about 5% on Friday to cap a strong week in which the price of the most widely traded cryptocurrency rose 10%. Friday afternoon’s price of about $47,600 was the highest since Bitcoin briefly climbed to nearly $49,000 about a month earlier. 

Yields Rise

The yield of the 10-year U.S. Treasury bond climbed on Thursday to 4.17% after a weekly report on unemployment claims underscored the recent strength of the U.S. labor market. New applications for jobless benefits fell to 218,000, marking the first decline in three weeks. At Friday’s close, the 10-year yield was 4.17%, up from 4.03% the previous week. 

Small Caps’ Rough Ride

An index of U.S. small-cap stocks posted a 2.4% gain for the week, but that positive result came on the heels of a shaky start. The index dropped 1.3% on Monday, then rebounded to post daily gains the rest of the week. 

Price Check Ahead 

A Consumer Price Index report scheduled to be released on Tuesday will show whether recently mixed readings on inflation extended into January. In December, inflation posted a month-to-month rise of 0.3%—slightly above most economists’ expectations and the third monthly increase in a row. However, December’s Producer Price Index—which tracks prices that factories charge wholesalers—slipped 0.1%.

The Week Ahead:  February 12-16

• Monday
  • Treasury Budget, US Dept of Treasury
• Tuesday
  • Consumer Price Index, US Bureau of Labor Statistics
• Wednesday
  • No major reports scheduled
• Thursday
  • Retail Sales, US Census Bureau
  • Business Inventories, US Census Bureau
  • Industrial Production & Capacity Utilization, US Federal Reserve
  • Export and Import Prices, US Bureau of Labor Statistics
  • Weekly Unemployment Claims, US Department of Labor
  • Housing Market Index, National Association of Home Builders
• Friday
  • University of Michigan Index of Consumer Sentiment, preliminary result
  • Producer Price Index, US Bureau of Labor Statistics
  • Housing Starts, US Census Bureau

Index/Market Total Returns as of 2/9/24

U.S. Fixed-Income Style Total Returns as of 2/9/24

Stoic Quote of the Week:  Protect Your Peace of Mind

“Keep constant guard over your perceptions, for it is no small thing you are protecting, but your respect, trustworthiness and steadiness, peace of mind, freedom from pain and fear, in a word, your freedom.  For What would you sell these things?”

Epictetus, Discourses, 4.3.6b-8[ii]

Tax Tips

Top 10 Tips to help You Choose a Tax Professional[iii]

Choose wisely, when you intend to get the bang for your buck.  People who are very diligent about getting their money’s worth screen cautiously when it comes to choosing a tax preparer.  If you pay someone to prepare your income tax return, the IRS urges you to choose that person wisely.

• Check the Preparer’s Qualifications
  • All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. In addition to ensuring they have a PTIN, ask the preparer if they attend continuing education classes.  All licensed tax preparers must attend continuing education, annually.  You can see if a tax preparer is licensed with that State Board of Accountancy (CPAs) or is qualified with the IRS (EA) or are members of the state bar (Attorney).  The IRS provides links that allow taxpayers (you) the ability to verify whether a tax preparer is an Enrolled Agent (EA).  The link is at https://irs.treasury.gov/rpo/rpo.jsf
• Check the Preparer’s History
  • Check to see if the preparer has a questionable history. Look for disciplinary actions and for  the status of their licenses.
• Ask About Fees
  • Avoid preparers who base their fee on a percentage of your refund or those who say they can guarantee larger refunds than others can. Always ensure any refund due is sent to you or deposited into your bank account.  Taxpayers should never deposit their refund into a preparer’s bank account.  Ask what the estimated fees will be before the tax returns are prepared.  Your tax professional should be able to give you a good estimate, so the final bill is not a surprise!
• Ask to E-File Your Return
  • Ensure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns for clients generally must file the returns electronically.
• Make Sure the Preparer is Available
  • Make sure you’ll be able to contact the tax preparer after you file your return – even after the April 15 due date. This may be helpful in the event questions come up during the year.
• Provide Records and Receipts
  • Good preparers will ask to see your records and receipts. They’ll ask questions to determine your total income, deductions, tax credits and other items.  Do not use a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2, or substitute Form W-2.  This is against IRS e-file rules.
• Never Sign a Blank Return
  • Don’t use a tax preparer that asks you to sign a blank or incomplete tax form.
• Review Your Return Before Signing
  • Before you sign your tax return, review it and ask questions if something is not clear. Ensure you are comfortable with the accuracy of the return, before you sign it.  Remember, you are still legally responsible for what is on it.
• Ensure the Preparer Signs and Includes their PTIN
  • Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.  If a paid preparer does not sign a return, it is illegal, they can be sanctioned and even lose their licenses, plus face fines, penalties and possibly be barred from preparing future tax returns.  NEVER use a preparer that doesn’t sign the tax returns they complete.
• Report Abusive Tax Preparers to the IRS
  • You can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint:  Tax Return Preparer.  If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit.  You can get these forms at IRS.gov or by calling 1-800-TAX-FOR (800-829-3676

Health Tip of the Week[i]

5 Heart-Healthy Tips

• Veg Out
  • Adding vegetables and fruits to your diet boosts your heart health. Aim for five servings each day.
• Volunteer
  • Sharing your time and talents is good for your heart. Look for opportunities to get involved at your neighborhood school, place of worship, or community.
• Give Thanks
  • Gratitude can boost your immunity and help you to sleep. Keep a gratitude journal to help the act of regularly giving thanks become second nature.
• Stress Less
  • Exercising and meditation can help you manage stress. So can setting boundaries.  You can’t do everything.  Learn to say “no” occasionally.
• Sleep More
  • Make sleep a priority. Aim for eight hours a night.  Exercising during the day and avoiding heavy meals and electronics too close to bedtime may help you fall – and stay – asleep.

Have a great week!!

[i]https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/5-heart-healthy-tips, accessed 02.12.2024.

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

[ii] Holiday, Ryan and Stephen Hanselman.  The Daily Stoic.  New York, Penguin, 2016.  Page 52.

[iii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, 2^nd Edition.  Kindle Edition, location 545-546 of 3053.  Accessed 02.12.2024.