Market-Moving News[i]
Momentum shift
The NASDAQ fell nearly 4%, snapping a six-week string of gains as several of the index’s mega-cap technology stocks slid for the second week in a row. The S&P 500 sustained a smaller weekly decline of around 2%, while the Dow was an outlier with a nearly 1% gain.
Market rotation
For the second week in a row, a U.S. small-cap stock benchmark outperformed by a wide margin, posting a 1.7% total return while its large-cap counterpart fell 1.8%. The Russell 2000 Index’s surge of 7.7% over two weeks was the clearest indicator of a rotation toward market segments seen as being the biggest beneficiaries of potential interest-rate cuts.
Style reversal
U.S. large-cap value stocks outpaced their growth counterparts for the second week in a row, chipping away at the growth style’s year-to-date performance leadership in another sign of a shift in market sentiment. Over the past two weeks, a value benchmark has risen a total of 3.5% versus a 4.3% decline for its growth counterpart.
Earnings gain
The second week of quarterly earnings season produced an uptick in expectations. Based on initial results and forecasts for upcoming reports, analysts on Friday were expecting S&P 500 companies to post an average second-quarter earnings increase of 9.7% compared with the same quarter a year earlier, according to FactSet. Just a week earlier, the projected growth rate was 9.1%.
Bumpier ride
In a week of choppy trading, an index that tracks investors’ expectations for short-term U.S. stock market volatility rose to the highest level in nearly three months. The Cboe Volatility Index climbed 32% for the week to its highest level since April 22, when the so-called VIX was near its year-to-date high.
Mixed signals
U.S. retail sales were unchanged in June relative to the previous month, beating the consensus forecast of economists, who had expected a sales decline of around 0.4%. However, another indicator came in worse than expected, as the latest weekly count of initial unemployment claims rose to 243,000. That figure was identical to the count from a weekly report last month, when the total was the highest since August 2023.
Europe holds steady
The European Central Bank kept its key interest rate unchanged, staying in a holding pattern for now after ordering an initial rate cut at a meeting last month. The bank’s rate cut in June widened a policy gap with the U.S. Federal Reserve, which hasn’t yet cut its key lending rate below its currently high level.
US GDP Ahead
Thursday’s scheduled release of the U.S. government’s initial estimate of second-quarter GDP is expected to show that the economy accelerated relative to the first quarter, when GDP grew at a 1.4% annual rate. An estimate released on Wednesday by U.S. Federal Reserve economists projected a second-quarter growth rate of 2.7%.
The Week Ahead: July 22-26
- Monday
- No major reports
- Tuesday
- Existing home sales, National Association of Realtors
- Wednesday
- New home sales, U.S. Census Bureau
- Thursday
- Second quarter GDP, advance estimate, U.S. Bureau of Economic Analysis
- Durable goods orders, U.S. Census Bureau
- Weekly unemployment claims, U.S. Department of Labor
- Friday
- Personal Consumption Expenditures Price Index, U.S. Bureau of Economic Analysis
- University of Michigan Index of Consumer Sentiment
Philosophy Quote of the Week[ii]
Forgive them because they don’t know
“As Plato said, every soul is deprived of truth against its will. The same holds true for justice, self-control, good-will to others and every similar virtue. It’s essential to constantly keep this in your mind, for it will make you more gentle to all.”
Marcus Aurelius, Meditations, 7.63
Tax Tips[iii]
Tax Benefits of Adoption
This week we discuss some of the tax benefits of taking advantage of the adoption credit opportunity. This tax credit is taken in the year the child is awarded to you by the courts, as your adopted child, and the adoption is final. Sometimes you pay for the adoption in an earlier year but you get the tax credit when the adoption is finalized.
Here are some points to consider for expenses used as an adoption credit:
- All expenses used to adopt a child are given as a tax credit for up to the limit on the IRS Tables. The tax credit is non-refundable, which means you will not receive a check, just reduce your taxes. You are NOT required to keep receipts for the adoption expenses.
- Each dollar of tax credit may be equivalent up to $3 of tax deductions because a tax credit reduces your tax directly. The impact depends on your tax bracket.
- The credits start to phase out when your household income exceeds certain IRS limits. Check with your tax professional for the limits.
- Employers can also pay for adoption expenses and receive a tax credit of the same amount as individuals. Self-employed? You may claim a tax credit through your C-corporation, but S-Corporation owners claim the credit on their personal returns.
- For 2020 and later you can distribute (penalty free) up to $10,000 per parent from retirement accounts. This is part of the SECURE Act, that allows parents to take money from retirement accounts to help pay to adopt a child.
- Special needs children qualify for bigger tax credits. Ensure you understand the scope of the “special needs” description. Abused children may qualify as special needs.
Health Tip of the Week[iv]
Family history, ethnicity give insights into glaucoma
Glaucoma has been called the silent thief of sight because its onset can be so gradual that you may not notice changes in your vision until the disease is in its later stages. About 3 million people in the U.S. have glaucoma. Half of those people don't know they have the condition.
How glaucoma affects your vision
Glaucoma is a group of eye conditions that damages the optic nerve, which sends visual information from your eye to your brain and is vital for good vision. Damage to the optic nerve often is related to high pressure in your eye.
There are six common types of glaucoma:
- Open-angle is the most common type. There are no symptoms in the early stages, but patchy blind spots may begin appearing in your side or peripheral vision. In later stages, these blind spots affect your side vision.
- Acute angle-closure glaucoma can be marked by severe headaches, eye pain, blurred vision, halos or colored rings around lights, eye redness and nausea.
- Normal-tension glaucoma doesn't have symptoms in the early stages, and there is no indication as to why the optic nerve is damaged despite normal pressure. Peripheral vision decreases and side vision can be lost.
- Pigmentary glaucoma symptoms include halos around lights, blurred vision with exercise and loss of side vision. It can affect young, healthy people who are nearsighted.
- Glaucoma also occurs in children, including infants. Babies may have dull or cloudy eyes, increased blinking and tears without crying. Older children may experience blurred vision, nearsightedness that gets worse and headaches.
- Pseudoexfoliative glaucoma is more common in people from northern Europe. White, powdery deposits can form on the lens and iris of those affected by this type of glaucoma.
Who is at risk for glaucoma?
Anyone can get glaucoma, but African Americans over age 40, all people over age 60 and those with a family history of glaucoma or diabetes are at higher risk.
After cataracts, glaucoma is the leading cause of blindness among African Americans, who are six to eight times more likely to get the disease than white people. African Americans also tend to get glaucoma about 10 years sooner than other ethnic groups. That's why it's crucial for them to get a comprehensive eye exam to check for glaucoma after age 35 or sooner if they have diabetes.
Risk factors for African Americans include those who:
- Are over 40
- Are extremely nearsighted
- Have diabetes
- Have high blood pressure
- Use steroids, such as those for controlling asthma, for a prolonged time
Other ethnic groups, including Hispanics and Asians, also are at greater risk for the disease.
In African Americans, genetic factors may be associated with their higher prevalence of glaucoma, as well as cultural factors such as lower rates of regular eye exams and less access to vision care.
How glaucoma is detected
A regular comprehensive eye exam can detect glaucoma in its early stages before significant damage to the optic nerve occurs. Your age and the presence of symptoms determine the frequency of eye exams.
Here's the recommended timing for having an eye exam:
- Under age 40 — every 5–10 years
- Ages 40–54 — every 2–4 years
- Ages 55–64 — every 1–3 years
- Age 65 and older — every 1–2 years
Diagnosing glaucoma isn't always easy, so your eye care professional will look at many factors before making decisions about your treatment. If your condition is challenging to diagnose or treat, you may be referred to a glaucoma specialist.
A typical comprehensive eye exam includes five tests that determine your eye health by:
- Checking the complete field of vision, including side and central vision.
- Evaluating the shape and color of the optic nerve by dilating the pupil.
- Measuring the angle in the eye where the iris meets the cornea.
- Measuring the inner eye pressure.
- Measuring the thickness of the cornea.
Treating and preventing glaucoma
If you have glaucoma, the primary treatment is prescription eye drops or laser treatment that can stop the condition from progressing and preserve your vision. If you've been prescribed eye drops, be sure to take them even if you don't have symptoms.
While there's no cure for glaucoma, you can take steps to prevent this condition, including:
- Know your family history. Since glaucoma tends to run in families, you may need more frequent eye exams.
- Schedule regular eye exams based on your age and symptoms.
- Wear eye protection, because glaucoma can be caused by a serious eye injury, especially from sports, such as baseball or boxing.
Consider enrolling in a glaucoma clinical trial, especially if you're African American, to help determine its causes and spur the development of new treatments and technologies.
Grant Heslep, M.D., is an ophthalmologist in Owatonna, Minnesota.
[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 07.22.2024.
[ii] Holiday, Ryan. The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living. Kindle edition, page 216. Accessed 07.22.2024.
[iii] Hockensmith, Robert F. 52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money. Kindle edition, page 135-136, accessed 07.22.2024.
[iv]https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/family-history-ethnicity-and-glaucoma, accessed 07.22.2024