Market-Moving News[i]

Steady gains

The S&P 500 and the NASDAQ nudged their record levels higher again, posting fractional gains and recording their eighth positive week out of the past nine. The Dow climbed more than 1% but remained more than 2% below its record high set a month earlier.

Midyear deja vu

Approaching the midpoint of 2024, the U.S. stock market’s top-performing sectors are the same pair that led the market in 2023. As of Friday, information technology led year to date with a nearly 29% average return followed by communication services with 25%. In full-year 2023, information technology's average return was about 58% and communication services posted 56%.

Crude awakening

U.S. crude oil prices rose for the second week in a row, climbing above the $80-per-barrel level for just the second time since late April. On Friday afternoon, oil was trading around $81—up from a recent low of less than $73 on June 5. 

Retail slump

U.S. retail sales fell short of expectations in May, barely rising from the prior month’s figure. Sales rose 0.1% in May after recording a 0.2% decline in April. In contrast, sales rose 0.6% and 0.9% in March and February, respectively.  

Housing setback

High mortgage rates appear to be weighing on the U.S. housing market, as sales of previously owned homes fell for the third month in a row. The National Association of Realtors reported that sales of existing homes fell 0.7% in May to a seasonally adjusted annual rate of 4.11 million. 

U.K. rate outlook

The United Kingdom’s central bank held its key lending rate at 5.25% for the seventh straight meeting, although policymakers signaled that they could cut rates in coming months. The Bank of England and the U.S. Federal Reserve are among the major central banks that have recently been reluctant to cut rates, in contrast with the European Central Bank, which lowered its key rate on June 6. 

Buyback scorecard

U.S. companies spent more than 8% more to buy back their shares in this year’s first quarter compared with last year’s fourth quarter. Share repurchases by companies in the S&P 500 climbed to nearly $237 billion, according to S&P Dow Jones Indices. Compared with the same quarter a year ago, buybacks were up nearly 10%.

Price check ahead

A report scheduled to be released on Friday could clear up some of the recent uncertainty over inflation’s trajectory. The Personal Consumption Expenditures Price Index is the U.S. Federal Reserve’s preferred gauge for tracking inflation. The index recorded annual rates of 2.5% in both January and February before rising to 2.7% in March and April. 

The Week Ahead:  June 24-28

• Monday
  • No major reports scheduled

• Tuesday
  • S&P/Case-Shiller 20-City Composite Home Price Index
  • Consumer Confidence Index, The Conference Board

• Wednesday
  • New home sales, U.S. Census Bureau

• Thursday
  • First-quarter GDP, third estimate, U.S. Bureau of Economic Analysis
  • Pending home sales, National Association of Realtors
  • Durable goods, U.S. Census Bureau
  • Weekly unemployment claims, U.S. Department of Labor
• Friday
  • Personal Consumption Expenditures Price Index, personal income and spending, U.S. Bureau of Economic Analysis
  • University of Michigan Index of Consumer Sentimeny

Philosophy Quote of the Week[ii] 

The truly educated aren’t quarrelsome

 “The beautiful and good person neither fights with anyone nor, as much as they are able, permits others to fight…this is the meaning of getting an education – learning what is your own affair and what is not.  If a person carries themselves so, where is there any room for fighting?”

 Epictetus, Discourses, 4.5.1; 7b-8a

Tax Tips[iii]

Child and dependent care tax credits this summer

Utilize the option of child and dependent care tax credits to help ease the financial burden of caring for dependents

• In 2023 the maximum allowed credit with one child was $4,000. With multiple dependents the maximum allowed credit is $8,000.  The numbers change every year so check with your tax professional to see what current rates are.

Here are 10 facts from the IRS about dependent care tax credits

1. You may qualify for the credit if you paid someone to care for your child, dependent or spouse last year.
2. The care you paid for must have been necessary, so you could work or look for work, or attend school. This also applies to your spouse if you are married and filing jointly.
3. The care must have been for “qualifying persons.” A qualifying person can be your child under age 13, a spouse or dependent who is physically or mentally incapable of self-care (regardless of age) and must have lived with you for more than half the year.
4. You, and your spouse if filing jointly, must have earned income. Special rules apply to a spouse who is a student or disabled.
5. The payments for care can’t go to your spouse, the parent of your qualifying person or to someone you can claim as a dependent on your return. Care payments also can’t go to your children under the age of 19, even if the child isn’t your dependent.
6. The credit is worth up to 50% of qualifying costs for care, depending on your income. That credit is limited, based on the number of dependents, your childcare expenses, and your taxable income.
7. Overnight camp or summer school tutoring costs do not qualify. You may not count the cost of care given by a person you can claim as your dependent.  Special rules apply if you get dependent care benefits from your employer.  See Form 2441, Child and Dependent Care Expenses.
8. Include the Social Security number of each qualifying person to claim the credit. You must report this information when you claim the credit on your tax return.
9. You must include the name, address and identifying number of your care provider to claim the credit. This is usually the Social Security number of an individual or the Employer Identification Number of a business.
10. Remember that this credit is not just a summer tax benefit. You may be able to claim it for care you pay for throughout the year.  To claim the credit, attach Form 2441 to your tax return.

Ensure you consider the following when preparing Form 2441:

• The maximum amount of expenses allowed for one dependent and multiple dependents is limited each year. Ask your tax professional for the amounts.
• You need the name, address and taxpayer identification number of the dependent care provider to complete Form 2441.
• If your employer offers dependent care reimbursement, that will reduce the credit amount that is available to you, dollar-for-dollar.
• This credit helps reduce regular income tax but may not reduce alternative minimum tax.

Health Tip of the Week[iv]

The power of neuroplasticity: How your brain adapts and grows as you age

April 12, 2024

By Sara Youngblood Gregory

Over the summer, I spent an evening with my wife’s family, many of whom had recently flown in from France for their annual visit. All crammed on the back patio, we were quite the crowd: my wife and I, her mother, her sister, her nephew, her aunt, and family friends all catching up while sharing drinks. By convenience and habit, the majority of the conversation was in French, which I don’t speak. However, I’d known the visit was coming and had done my best to prepare. I enlisted my wife for tutoring sessions, changed all my favorite shows to French subtitles and dubs, and practiced with a language learning app every day for months.

Of course, aside from courtesies and a few phrases here and there, the conversation was too fast and too complex for me to keep up with. Mostly, I just enjoyed the challenge and quick translations from my mother-in-law.

However, what really struck me was how effortlessly my 4-year-old nephew worked the crowd. As the two most recent additions to the family — through birth in my nephew’s case and marriage in mine — he and I were both still learning the language. Though he was often too shy to speak, it was clear he knew what was going on and was able to adapt to the language much more quickly.

Unlike me, my nephew is not poring over grammar books or language apps — he simply has the advantage of a younger brain with incredible neuroplasticity.

“The ability of the brain to change — to adapt based on the environment, stimuli or experiences — is termed broadly as neuroplasticity,” says Mayo Clinic expert Prashanthi Vemuri, Ph.D., who researches the brain and neurodegenerative disorders.

Though it’s true that people of any age can benefit from the power of neuroplasticity, the brain does change as you get older, meaning it’s important to understand how to care for your cognitive health.

Below, Dr. Vemuri discusses exactly what neuroplasticity is, why it matters and how to optimize your brain’s potential.

Understanding neuroplasticity, even as you age

To understand neuroplasticity, it’s important to get familiar with the basic functioning of the brain. The brain is composed of billions of neurons — nerve cells that collect, process and send information — as well as a complex network of electrical circuits that allow these neurons to “talk” with one another. These connections are crucial, as neurons in the brain also can send messages to other parts of the body through the nervous system. In short, neuroplasticity is the brain’s ability to form and adapt this vast network of neural connections.

When you’re younger, your brain has an abundance of young neurons, which helps your brain take in new information quickly and form new neural connections. And this greater plasticity is exactly why kids have a much easier time learning a new language than adults do, explains Dr. Vemuri.

“Your brain is still developing when you are young — the brain volume is increasing, the brain connectivity is still maturing and the brain development hasn’t yet peaked,” says Dr. Vemuri. “Your brain is still growing and because of that, you can learn new things and the brain adapts much more easily.”

Dr. Vemuri says brain development continues to mature into mid-to-late 20s. From there, the brain slowly shrinks, with the rate of shrinkage increasing after 60 years of age. This change can affect cognitive functions like memory, processing speed, decision-making and learning — all the areas that may leave you feeling a little less sharp as you get older.

However, the brain still has an incredible capacity for change, in large part due to neuroplasticity. Though the number of neurons may decline with age, emerging research has shown that neuroplasticity helps the brain retain its ability to adapt both structurally and functionally throughout life. In short, neuroplasticity means you can retrain your brain, tap into new skills and maybe even learn a new language, no matter your age.

How neuroplasticity can help heal the brain after damage

Interestingly, neuroplasticity can play a key role in helping people bounce back from serious conditions like stroke and even COVID-19.

During a stroke, adequate blood supply doesn’t reach a portion of the brain or bleeding occurs in the brain, typically due to a blocked or burst blood vessel. As a result, brain cells become damaged or die. However, the brain can sometimes recover from this damage, says Dr. Vemuri.

“Let’s say you experience motor or speech symptoms with the stroke — that is, difficulty with mobility or speech. You could, over time with a lot of practice, recover that function because the brain functionally reorganizes itself.”

Additionally, neuroplasticity is helping some people recover from COVID-19. An estimated 20% of those who acquire the illness experience a change in their sense of taste and smell, with another 20% experiencing prolonged changes lasting for weeks to months. But in an estimated 95% of people with these changes, neuroplasticity helps senses improve in less than a year — most effectively through olfactory retraining, which involves smelling scents like clove or lemon to train the nerves to heal and adapt.

How to maintain your neuroplasticity

There are a number of strategies to maintain, and potentially even improve, your brain health.

Dr. Vemuri says sleep is one of the most important — though often overlooked — strategies to maintain your brain health and reduce the risk of Alzheimer’s disease and other types of dementia. Researchers believe that sleep disruption is associated with beta-amyloid, a protein that can harden into plaque — an early sign of the Alzheimer’s cascade.

During sleep, the brain clears itself of toxins like the amyloid protein, Dr. Vemuri explains, potentially lowering the risk of Alzheimer’s. In fact, studies show that people who don’t sleep enough may be twice as likely to develop Alzheimer’s disease, in addition to having an increased risk of dementia.

Other lifestyle factors like regular exercise, managing stress and blood pressure, limiting alcohol consumption, not smoking, and maintaining a strong social network all play a role in maintaining brain health.

And research suggests that the phrase “use it or lose it” applies to your brain and cognitive abilities. To use neuroplasticity to your advantage, especially as you age, Dr. Vemuri recommends regularly stimulating your brain with puzzles and challenges like sudoku, Wordle, or family game night. The more you cultivate this habit, the better. Research suggests that the benefits of these activities accrue over your lifetime.

Likewise, research suggests that you can build up your cognitive reserve — or how your brain copes with certain changes or even cognitive decline — through moderately challenging activities like reading, playing an instrument or learning a new skill. In fact, people who spend more time learning tend to have neural networks better equipped to adapt to the changes brought on by brain disorders.

Retirement is an especially important time to focus on neuroplasticity, says Dr. Vemuri, as many people experience a significant shift in lifestyle at this time.

Often, “cognitive function can decline because you’re doing less complicated tasks and the demands on the brain are lower,” she says. “Retirement therefore presents an opportunity to continue using it to keep it.”

[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 06.24.2024.

[ii] Holiday, Ryan.  The Daily Stoic:  366 Meditations on Wisdom, Perseverance, and the Art of Living.  Kindle edition, page 190.  Accessed 06.24.2024.

[iii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money.  Kindle edition, pages 112-114, accessed 06.24.2024.

[iv]https://mcpress.mayoclinic.org/healthy-aging/the-power-of-neuroplasticity-how-your-brain-adapts-and-grows-as-you-age/, accessed 06.24.2024.