Broker Check
Weekly Market Update, Week Ending May 10, 2024

Weekly Market Update, Week Ending May 10, 2024

May 12, 2024

Market-Moving News[i]

Maintaining momentum

U.S. stock indexes rose for the third week in a row as earnings season wound down, with the S&P 500 adding around 2% and the NASDAQ rising about 1%. The recent gains leave the indexes slightly below the record levels they achieved prior to a market pullback in the first half of April. 

Sagging sentiment

The recent trend of higher-than-expected inflation numbers appears to be weighing on U.S. consumers, as a measure of consumer sentiment fell sharply. The University of Michigan’s sentiment survey for May posted a preliminary reading of 67.4, down from 77.2 in April. Friday’s survey results also showed that consumers expect the inflation rate to rise rather than fall. 

Brigher earnings outlook

As the current first-quarter earnings season nears an end, expectations for pending results from the second quarter have recently been rising. Over the course of April, analysts lifted their earnings-per-share estimates for second-quarter results by 0.7%, according to FactSet. It’s the first time in more than two years that estimates have risen—rather than decreased—during the first month of a quarter.

China’s comeback

An index of Mainland Chinese stocks has rallied sharply over the past three weeks, gaining more than 14% compared with a roughly 5% rise for the S&P 500. The latest surge follows a tough 2023, when Chinese stocks lagged indexes in the United States and other major global markets by wide margins.

Anxiety eases

An index that measures investors’ expectations of short-term U.S. stock market volatility fell for the third week in a row. The CBOE Volatility Index was down nearly 7% for the week; relative to a recent high on April 15, the index was down more than 34%.

Softening labor market?

New filings for unemployment benefits rose to the highest level in more than eight months. The latest weekly update from the U.S. government recorded about 231,000 unemployment claims, up from 209,000 the prior week. The results follow a recent slowdown in U.S. jobs growth. 

U.K. economic rebound

The United Kingdom’s economy has returned to growth after experiencing a shallow recession in the second half of 2023. The government reported on Friday that GDP expanded at a 0.6% annual rate in this year’s first quarter. The figure exceeded economists’ expectations and marked the nation’s fastest growth rate in nearly three years. 

CPI ahead

A Consumer Price Index report scheduled for release on Wednesday will show whether a recent trend of slightly hotter-than-expected inflation extended into April. Last month’s CPI report showed an annual rate of 3.5% in March, up from 3.2% the previous month. Excluding volatile food and energy prices, core inflation rose 3.8% in March. 

The Week Ahead:  May 13-17

  • Monday
    • No major reports scheduled
  • Tuesday
    • Producer Price index, U.S. Bureau of Labor Statistics
  • Wednesday
    • Consumer Price Index, U.S. Bureau of Labor Statistics
    • Retail sales, U.S. Census Bureau
    • Business inventories, U.S. Census Bureau
    • Housing Marketin Index, National Association of Home Builders
  • Thursday
    • Housing starts, U.S. Census Bureau
    • Weekly unemployment claims, U.S. Department of Labor
    • Export and import prices, U.S. Bureau of Labor Statistics
    • Industrial production and capacity utilization, U.S. Federal Reserve
  • Friday
    • The Conference Board Leading Economic Index for the U.S.

    Philosophy Quote of the Week[ii] 

    Fueling the Habit Bonfire

     “Every habit and capability is confirmed and grows in its corresponding actions, walking by walking, and running by running…therefore, if you want to do something make a habit of it, if you don’t want to do that, don’t, but make a habit of something else instead.  The same principle is at work in our state of mind.  When you get angry, you’ve not only experienced that evil, but you’ve also reinforced a bad habit, adding fuel to the fire.”

    Epictetus, Discourses, 2.18.1-5

     Tax Tips[iii]

    Eight Facts About Penalties for Filing and Paying Late and How to Abate Penalties


    1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing.  The second is a failure-to-pay penalty for paying late.
    2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases it’s much more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and pay as much as you can.  You should try other options to pay, such as getting a loan or paying by credit card.  The IRS will work with you to help resolve your tax debt.  Most people can set up a payment plan with the IRS using the Online Payment Tool at IRS.gov.
    3. The failure-to-file penalty is normally 5% of the unpaid taxes for each month or part of a month that a return is late. It will not exceed 25% of your unpaid taxes.
    4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100% of the unpaid tax.
    5. The failure to pay penalty is generally 5% per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due.  It can build up to as much as 25% of your unpaid taxes.
    6. If the 5% failure-to-file penalty and the 5% failure-to-pay penalty both apply in any month, the maximum penalty amount charged for that month is 5%.
    7. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90% of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date.  You will owe interest on any taxes you pay after the April 15 due date, even if you filed an extension.
    8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time.

     

    IRS Penalty Abatement Procedures

    Taxpayers are often unaware that if they are late filing or paying for their tax return, and it causes penalties, they may be able to get out of paying them.  If you have demonstrated full compliance (meaning that you have filed your tax returns and paid any tax that was owed) over the last three years, you are then able to request a waiver of the penalties.

     The waiver is called “First Time Abatement” (FTA).   Internal Revenue Manual (IRM 20.1.1.3.6.1 (11-25-2011) tells us this is IRS policy and is used to reward past tax-compliant taxpayers and to promote future compliance.

     The Inspector General for Tax Administration (TIGTA) found that many taxpayers with compliant (good) tax histories have not been offered and do not receive the FTA waiver.  If you receive a penalty from the IRS and you have been in full compliance for the past three years, you should send a certified letter to the IRS requesting abatement of Failure-to-File, Failure-to-Deposit, or Failure-to-Pay penalties, whichever applies in your situation.  These abatement requests are approved if you meet the “clean” past three year rule.  You must request the abatement, it will not be offered.

     Check with your state Franchise Tax Board or Department of Revenue to see if they have a similar procedure or policy.  Always consult with a tax professional before you pay any tax or penalties.


     Health Tip of the Week[iv]

    Finding joy in every phase of your life

    Launching into the adult world, welcoming a child, transitioning to an empty nest or starting retirement — each phase of your life brings a range of emotions. Your initial feelings of excitement often are followed by being overwhelmed with all the unknowns and the demands of everyday life.

    You may be questioning your job or career choice, longing for one night when the baby doesn't wake you up, missing your kids, or wondering what you'll do with your time when you have nothing but time. This is reality. So where's the joy in that?

    Is it joy, or is it happiness?

    Joy is there, even during transitional or challenging times, but you have to look for it. First, you need to know what joy isn't and what it is.

    Joy isn't happiness. Happiness is a reaction to things happening around you, like having a fun outing with a friend. When you're struggling, it's harder to be happy, but you can still have joy.

    Joy is a state of mind. While happiness and joy can be entwined with each other, joy is more profound and longer lasting. Joy can be big, like meeting your soulmate or holding your baby for the first time, or it can be the small things that soothe your spirit. You need to be open to experiencing joy.

    For example, after a tough day at work, the last thing you want to do is take your dog for a walk on a gray, drizzly spring evening. But as you walk, you begin to notice little green shoots growing in a neighbor's garden, the mild breeze on your face, a cardinal calling from its perch, your dog snuffling along the path. And maybe, when you look up at the sky, the clouds part and you spot a rainbow.

    By noticing, acknowledging and savoring these moments, you're sparking joy. These sparks accumulate in your brain and support your mental health.

    How to find and cultivate joy

    How you find and cultivate joy is personal — one size does not fit all. To start, reflect on a time when you did feel joy. What were you doing? Who were you with? Evaluating these times of joy can help you home in on what matters to you.

    Finding joy is about paying attention to the moment — not looking ahead or ruminating on the past, but experiencing the now.

    It's easy to jump to the negatives of your life automatically. That's because the brain is hardwired for survival and safety, and anticipating what can go wrong protects you.

    Have you ever noticed that you fret about hitting all the red lights when driving but don't celebrate the green ones? Finding joy is about carving out an opening for the positives.

    By cultivating the pathway for positives, you start seeing them everywhere. Here are some techniques you can practice:

    • Appreciate seeing joy in others. When someone else experiences joy, it boosts your own.
    • Count your blessings more. Pay attention when things in your life go smoothly.
    • Do something that will remind you of moments of joy at those times when you don't feel joyful. For example, take photos of joy-filled moments and look through them later.
    • Name three things that happened in the past 24 hours that you're grateful for. Gratitude plays into joy.

    Open yourself to joy

    When you're struggling, it's hard to be open to positive experiences. It takes practice, but if you feel yourself going down the rabbit hole of negative thoughts and feelings, take a deep breath, pull yourself back and allow joy in.

    Explore these other resources for supporting a positive, joyful outlook:

    Rosean Bishop, Ph.D., is a psychologist in Psychiatry & Psychology in 


    [i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 05.12.2024.

    [ii] Holiday, Ryan.  The Daily Stoic:  366 Meditations on Wisdom, Perseverence, and the Art of Living.  Kindle edition, pages 146-147.  Accessed 05.12.2024.

    [iii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money.  Kindle edition, pages 85-88, accessed 05.12.2024.

    [iv]https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/finding-joy-throughout-life, accessed 05.12.2024