Market-Moving News[i]
NASDAQ record
The S&P 500 rose around 1% and the NASDAQ added nearly 2%, with the latter index on Thursday surpassing its previous record high set in November 2021. So far in 2024, the indexes have generated positive results in seven out of nine weeks.
Another monthly gain
The S&P 500 pushed its record level higher eight times in February and climbed 5.2% overall, extending its positive streak to four months in a row. Over that stretch, the index’s cumulative gain was 21.5%. All 11 sectors were positive last month, led by communication services.
Bitcoin surge
The price of the most widely traded cryptocurrency eclipsed $60,000 for the first time since November 2021 but remained below the record of nearly $69,000 that it set that month. Bitcoin’s price jumped about 44% during February and rose 20% over the latest week, as it traded above $62,000 on Friday.
Earnings scorecard
Companies in the S&P 500 posted an average earnings gain of 4.0% over the same quarter a year earlier, according to FactSet data from the recently concluded fourth-quarter earnings season. That result marked the second consecutive year-over-year earnings increase following the third quarter’s 4.7% rise. Communication services posted a 45.0% gain, marking that sector’s second consecutive quarter as the earnings leader.
U.S. inflation moderation
The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that consumer prices continued to rise at a slower pace. The Personal Consumption Expenditures Price Index posted a 2.8% annual rate in January, excluding volatile food and energy prices. That result matched most economists’ expectations and marked the slowest increase since March 2021.
Crude awakening
The price of U.S. crude oil topped $80 per barrel on Friday, rising to the highest level in about four months. For the week, oil rose more than 4% amid concern that a consortium of oil-producing countries could extend the duration of recent production cuts.
Eurozone inflation
Inflation slipped in the 20 countries that use the euro as their currency, as the eurozone’s annual inflation rate fell to 2.6% in February from 2.8% the previous month. Excluding the volatile food and energy categories, core inflation fell to 3.1% from 3.3%.
Jobs ahead
A monthly labor market report due out on Friday will show whether the recent trend of better-than-expected jobs numbers extended into February. In January, the economy generated 353,000 new jobs—about double the number that most economists had been expecting. The unemployment rate stayed unchanged at 3.7%.
The Week Ahead: March 4-8
- Monday
- No major reports scheduled
- Tuesday
- Factory orders, U.S. Census Bureau
- Institute for Supply Management’s Nonmanufacturing Index
- Wednesday
- ADP National Employment Report, ADP
- Job Openings and Labor Turnover Survey, U.S. Bureau of Labor Statistics
- Wholesale Inventories, U.S. Census Bureau
- S. Federal Reserve Chair Jerome Powell testifies before Congress
- Thursday
- Productivity and Labor Costs, U.S. Bureau of Labor Statistics
- Weekly Unemployment Claims, U.S. Department of Labor
- Trade Balance, U.S. Census Bureau
- Consumer Credit, U.S. Federal Reserve
- Friday
- Jobs and Unemployment, U.S. Bureau of Labor Statistics
Philosophy Quote of the Week:
Awareness is Freedom
“The person who is free lives as they wish, neither compelled, nor hindered, not limited – whose choices aren’t hampered, whose desires succeed, and who don’t fall into what repels them. Who wishes to live in deception – tripped up, mistaken, undisciplined, complaining, in a rut? No one. These are base people who don’t live as they wish; and so, no base person is free.”
- Epictetus, Discourses, 1.1-3a
Tax Tips
Retirement Savings Tips and Making IRA Contributions[ii]
Who doesn’t aspire for peace of mind during their sunset years? We all know that to have a good retirement you must start saving early in life. Disciplined savers will get closer to their retirement dream. This week let’s discuss retirement savings programs that encourage taxpayers to save for the future.
You can boost your retirement savings even more this year, thanks to higher limits on some of the most popular savings strategies. Stretch your budget to take maximum advantage of these new limits, especially as studies show most of us save way too little.
Here are some retirement savings plans that are available:
- You can save into your 401(k). The deferral also applies to Tax Sheltered Annuities (TSAs) that are available to teachers and some government workers. The deferral limit for Simple IRAs is a different amount form the other IRA plans.
- Catch-up contributions for those of age 50 and over are available for most retirement plans.
- The limit of both retirement savings accounts and catch-up amounts are indexed for inflation. Check out 2024’s numbers at irs.gov
- There are Traditional and Roth IRAs in addition to retirement savings plans. The limits for Traditional and Roth IRAs can be found at irs.gov or asking your tax professional.
Tips to Maximize Your Retirement Savings
- Contribute enough to obtain your employer’s match in a retirement plan.
- Defer as much income as you can each month. Try to max out the up-front contribution, which gives you bigger take-home pay later. If you turn 50 during the year, remember to factor in your catch-up contribution for that year as you will be allowed to make extra contributions.
- Contribute to an IRA as early in the year as possible to maximize savings.
- You might be entitled to a Retirement Savings Credit if you contribute to a Retirement Savings Plan. Your tax preparer can help you with that determination, which could save you thousands in taxes.
- Be sure to contribute to some type of retirement plan each year to plan for retirement. There are many types of plans, so be sure to speak to your tax professional to see what you are eligible for.
Making IRA Contributions
- There is no age limit to contribute to an IRA.
- You must have taxable compensation to contribute to an IRA. This includes wages and salaries and net self-employment income. It includes tips, commissions, bonuses and alimony. If you’re married and file a joint return, generally only one spouse needs to have compensation.
- You can contribute to an IRA at any time during the year. To count for this year, you must make all contributions by the due date of your tax return. This does NOT include extensions. That means you must contribute by April 15th. If you contribute between Jan 1 and Apr 15, ensure your plan sponsor applies it to the right year.
- The most you could contribute to your IRA for 2023 was the smaller of either your taxable compensation for the year or $6,500. If you were age 50 or older at the end of 2023, the maximum you can contribute increases to $7,500.
- You normally won’t pay income tax on funds in your traditional IRA until you start taking distributions from it. Qualified distributions from a Roth IRA are tax-free.
- You may be able to deduct some or all of your contributions to your traditional IRA. See your tax professional’s instructions to figure the amount that you can deduct. Unlike a traditional IRA, you can’t deduct contributions to a Roth IRA.
- If you contribute to an IRA, you may also qualify for the Saver’s Credit. The credit can reduce your taxes by thousands of dollars. Use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.
Inheriting Retirement Accounts Post-2020
The Setting Every Community up for Retirement Enhancement Act (SECURE Act) changed the way some people inherit retirement accounts. Before the SECURE Act was passed and signed into law, Dec 29, 2019, you were able to inherit retirement accounts and stretch the amount of time you took to receive the money, so you could pay less taxes over time.
The SECURE Act eliminated that strategy for many people who inherit retirement accounts. New rules require that inherited retirement accounts must be completely distributed to heirs within 10 years of inheriting them! This means no more stretching out the payments and the resulting taxes from the extra income.
Exceptions include:
- Inherited accounts prior to 2020
- Spouses
- Minor children
- Disabled or chronically ill beneficiaries
- Heirs not more than 10 years younger than the deceased
Points to Remember When Saving for Retirement
- 401(k), 403(b), 457, Thrift Savings Plans, SIMPLE IRAs and SEP IRAs are workplace plans that can help you save for retirement.
- Catch-up provisions apply for people age 50 and older.
- Contribute enough to get the employer match.
- Consider the Retirement Saver’s Credit.
- Find the annual limits of the retirement savings accounts and the catch-up amounts from your tax professional.
- The SECURE Act changed how inherited retirement accounts are distributed.
Health Tip of the Week[iii]
Weight Loss: 6 Strategies for Success
Hundreds of fad diets, weight-loss programs and outright scams promise quick and easy weight loss. However, the foundation of successful weight loss remains a healthy, calorie-controlled diet combined with increased physical activity. For successful, long-term weight loss, you must make permanent changes in your lifestyle and health habits.
How do you make those permanent changes? Consider following these six strategies for weight-loss success.
1. Make sure you're ready
Long-term weight loss takes time and effort — and a long-term commitment. While you don't want to put off weight loss indefinitely, you should make sure you're ready to make permanent changes to eating and activity habits. Ask yourself the following questions to help you determine your readiness:
- Am I motivated to lose weight?
- Am I too distracted by other pressures?
- Do I use food as a means to cope with stress?
- Am I ready to learn or use other strategies to cope with stress?
- Do I need other support — either from friends or professionals — to manage stress?
- Am I willing to change eating habits?
- Am I willing to change activity habits?
- Do I have the time to spend on making these changes?
Talk to your doctor if you need help addressing stressors or emotions that seem like obstacles to your readiness. When you're ready, you'll find it easier to set goals, stay committed and change habits.
2. Find your inner motivation
No one else can make you lose weight. You must undertake diet and exercise changes to please yourself. What's going to give you the burning drive to stick to your weight-loss plan?
Make a list of what's important to you to help you stay motivated and focused, whether it's an upcoming vacation or better overall health. Then find a way to make sure that you can call on your motivational factors during moments of temptation. You might want to post an encouraging note to yourself on the pantry door or refrigerator, for instance.
While you have to take responsibility for your own behavior for successful weight loss, it helps to have support — of the right kind. Pick people to support you who will encourage you in positive ways, without shame, embarrassment or sabotage.
Ideally, find people who will listen to your concerns and feelings, spend time exercising with you or creating healthy menus, and share the priority you've placed on developing a healthier lifestyle. Your support group can also offer accountability, which can be a strong motivation for sticking to your weight-loss goals.
If you prefer to keep your weight-loss plans private, be accountable to yourself by having regular weigh-ins, recording your diet and exercise progress in a journal, or tracking your progress using digital tools.
3. Set realistic goals
It may seem obvious to set realistic weight-loss goals. But do you really know what's realistic? Over the long term, it's smart to aim for losing 1 to 2 pounds (0.5 to 1 kilogram) a week. Generally to lose 1 to 2 pounds a week, you need to burn 500 to 1,000 calories more than you consume each day, through a lower calorie diet and regular physical activity.
Depending on your weight, 5% of your current weight may be a realistic goal, at least for an initial goal. If you weigh 180 pounds (82 kilograms), that's 9 pounds (4 kilograms). Even this level of weight loss can help lower your risk of chronic health problems, such as heart disease and type 2 diabetes.
When you're setting goals, think about both process and outcome goals. "Walk every day for 30 minutes" is an example of a process goal. "Lose 10 pounds" is an example of an outcome goal. It isn't essential that you have an outcome goal, but you should set process goals because changing your habits is a key to weight loss.
4. Enjoy healthier foods
Adopting a new eating style that promotes weight loss must include lowering your total calorie intake. But decreasing calories need not mean giving up taste, satisfaction or even ease of meal preparation.
One way you can lower your calorie intake is by eating more plant-based foods — fruits, vegetables and whole grains. Strive for variety to help you achieve your goals without giving up taste or nutrition.
Get your weight loss started with these tips:
- Eat at least four servings of vegetables and three servings of fruits daily.
- Replace refined grains with whole grains.
- Use modest amounts of healthy fats, such as olive oil, vegetable oils, avocados, nuts, nut butters and nut oils.
- Cut back on sugar as much as possible, except the natural sugar in fruit.
- Choose low-fat dairy products and lean meat and poultry in limited amounts.
5. Get active, stay active
While you can lose weight without exercise, regular physical activity plus calorie restriction can help give you the weight-loss edge. Exercise can help burn off the excess calories you can't cut through diet alone.
Exercise also offers numerous health benefits, including boosting your mood, strengthening your cardiovascular system and reducing your blood pressure. Exercise can also help in maintaining weight loss. Studies show that people who maintain their weight loss over the long term get regular physical activity.
How many calories you burn depends on the frequency, duration and intensity of your activities. One of the best ways to lose body fat is through steady aerobic exercise — such as brisk walking — for at least 30 minutes most days of the week. Some people may require more physical activity than this to lose weight and maintain that weight loss.
Any extra movement helps burn calories. Think about ways you can increase your physical activity throughout the day if you can't fit in formal exercise on a given day. For example, make several trips up and down stairs instead of using the elevator, or park at the far end of the lot when shopping.
6. Change your perspective
It's not enough to eat healthy foods and exercise for only a few weeks or even months if you want long-term, successful weight management. These habits must become a way of life. Lifestyle changes start with taking an honest look at your eating patterns and daily routine.
After assessing your personal challenges to weight loss, try working out a strategy to gradually change habits and attitudes that have sabotaged your past efforts. Then move beyond simply recognizing your challenges — plan for how you'll deal with them if you're going to succeed in losing weight once and for all.
You likely will have an occasional setback. But instead of giving up entirely after a setback, simply start fresh the next day. Remember that you're planning to change your life. It won't happen all at once. Stick to your healthy lifestyle and the results will be worth it.
[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 03.04.2024.
[ii] Hockensmith, Robert F. 52 Ways to Outsmart the IRS, 2nd Edition. Kindel Edition, location 45-49 of 226. Accessed 03.04.2024.
[iii]https://www.mayoclinic.org/healthy-lifestyle/weight-loss/in-depth/weight-loss/art-20047752 Accessed 03.04.2024.