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Weekly Market Update, Week Ending May 24, 2024

Weekly Market Update, Week Ending May 24, 2024

May 28, 2024

Market-Moving News [i]

Divergent paths

It was a week of starkly different results for the major U.S. stock indexes, with the Dow down more than 2%, the NASDAQ up more than 1%, and the S&P 500 posting a tiny gain. The Dow snapped a string of five positive weeks in a row and fell more than 900 points below the record-high 40,000-point threshold that it had breached the previous week. 

Tech leadership

The NASDAQ’s weekly outperformance relative to its peers was driven in part by another strong week for information technology stocks, the broad market’s top weekly performer at the sector level with a return of 3.4%. The tech sector is coming off a solid earnings season in which its earnings growth rate ranked third highest among the 11 S&P 500 sectors.   

Oil slick

The price of oil fell around 2% for the week to its lowest level in more than three months as a report showed an increase in U.S. crude inventories. At Friday afternoon’s price of less than $78 per barrel, U.S. crude was down sharply from a year-to-date high of $87 in early April. 

Earnings season recap

With 96% of first-quarter earnings results in as of Friday, companies in the S&P 500 were recording an average earnings increase of 6.0% versus the same quarter a year earlier, according to FactSet. If that result ends up being the final number, it would mark the strongest growth rate since the first quarter of 2022. 

Sentiment heads south

A recent trend of mixed data on inflation appears to be weighing on U.S. consumers, as a measure of consumer sentiment weakened. The University of Michigan’s sentiment survey for May posted a final reading of 69.1 on Friday―up from a preliminary 67.4 result released two weeks earlier but down sharply from 77.2 in April. 

Higher-for-longer Fed

An unspecified number of U.S. Federal Reserve policymakers indicated a willingness to tighten monetary policy further rather than loosen it if inflation risks re-escalate, according to Wednesday’s release of minutes from the Fed meeting that concluded on May 1. The prospect of an additional interest-rate increase was discussed as policymakers weighed recently mixed inflation readings. 

Housing setback

U.S. sales of existing homes fell unexpectedly in April amid twin challenges from high mortgage rates and high home prices. The National Association of Realtors reported on Wednesday that sales dropped 1.9% to a seasonally adjusted annual rate of 4.14 million units. Most economists had expected a monthly sales increase. 

GDP update ahead

Thursday’s scheduled release of an updated U.S. GDP estimate will be among the most closely watched economic reports of the holiday-shortened week. An initial estimate released in late April indicated that GDP expanded at an annual rate of 1.6% in the first quarter, down from a 3.4% figure in last year’s fourth quarter.

The Week Ahead:  May 27-31

  • Monday
    • Memorial Day holiday, U.S. financial markets closed
  • Tuesday
    • S&P/Case-Shiller 20-City Composite Home Price Index
    • Consumer Confidence Index, The Conference Board
  • Wednesday
    • No major reports scheduled
  • Thursday
    • First-quarter GDB, second estimate, U.S. Bureau of Economic Analysis
    • Weekly unemployment claims, U.S. Department of Labor
    • Pending home sales, National Association of Realtors
  • Friday
    • Personal Consumption Expenditure Price Index, U.S. Bureau of Economic Analysis


    Philosophy Quote of the Week[ii] 

    Sweat the Small Stuff 

    “Well-being is realized by small steps, but is truly no small thing.” 

    Zeno, quoted in Diogenes Laertius, Lives of the Eminent Philosophers, 7.1.26


     Tax Tips[iii]

    Fear of Filing Tax Returns and Unclaimed Tax Refunds

    The IRS gives you an opportunity to pay your taxes over time or even receive interest if a refund is due for you.  But if you do not file a tax return within 3 years of when it’s due, and you are entitled to a refund, the IRS will just keep it! 

    Key points to remember

    1. Collect all expense and tax information, schedule an appointment with your tax professional and ask the professional to help you sort through your information and prepare the returns.
    2. Filing a tax return that’s due a refund protects the refund to you (you must file within 3 years of due date) even if the IRS takes a long time to refund you. The IRS pays you interest on refunds due.
    3. Filing sooner reduces penalties (penalties for failure to file on time can be as high as 25% of the tax owed) and interest.
    4. You can file a tax return even if you don’t have all the facts (you can always amend the return up to three years after the original filing).
    5. You can pay your taxes over time with the IRS if what you owe them is less than $50,000, using Form 9465, Tax Installment Payment Agreement. 

    Facts to know about unclaimed refunds:

    1. The unclaimed refunds apply to people who did not file a federal income tax return. The IRS estimates that half the potential refunds are more than $1595 per return.
    2. Some people, such as students and part-time workers, may not have filed because they had too little income to require filing a tax return. They may have a refund waiting if they had taxes withheld from their wages or made quarterly estimated payments.  A refund could also apply if they qualify for certain tax credits, such as the Earned Income Tax Credit.
    3. If you don’t file a return, the law generally provides a three-year window of the original due date to claim a refund from that year.  For 2020 returns, the window closed on April 15, 2024
    4. The law requires that you properly address, mail and postmark your tax return by that date to claim your refund. We always suggest when mailing returns, do so, certified mail, return receipt requested.  Also remember you can e-file your past returns from 2012 tax years forward.  Be sure to use the correct address to send returns, which is different from the address you send payments.  Your tax professional can help with the correct address or you can go to irs.gov and find the correct address to mail in returns or payments, based upon where you live.
    5. If you don’t file a claim for a refund within three years, the money becomes property of the U.S. Treasury. There is no penalty for filing a late return if you are due a refund.
    6. The IRS may delay your 2024 refund if you have not filed returns for 2022 and 2023. The U.S. Treasury will apply the refund to any federal or state tax owed.  It may also use your refund to offset unpaid child support or past-due federal debts such as delinquent student loans.
    7. If you’re missing Forms W-2, 1098, 1095, 1099 or 5498 for prior years, you should ask for copies form your employer, bank or other payor. If you cannot get copies, get a free transcript showing that information by going to IRS.gov.  You can also file Form 4506-T to get a transcript.
    8. The three-year window also usually applies to a refund from an amended return. In general, you must file Form 1040X, Amended U.S. Individual Income Tax Return, within three years from the date you filed your original tax return.  You can also file it within two years from the date you paid the tax, if that date is later than the three-year rule.  This means the deadline for most people to amend their 2020 tax return and claim a refund will expire on April 15, 2024.
    9. The IRS sends letters and notices by mail. They do not contact people by email or social media to ask for personal or financial information.  Always be sure to send all correspondence by certified mail, return receipt required.
    10. For more information, visit https://www.IRS>gov/ or see Publication 594, The IRS Collection Process. Get professional help!  Remember the old saying, “the attorney who represents themselves has a fool for a client.”

     

    Health Tip of the Week[iv]

    The mental health benefits of nature: Spending time outdoors to refresh your mind

    March 4, 2024•

    By Sara Youngblood Gregory  

    Like many others at the height of COVID-19 lockdowns, I was suddenly working remotely, socially distancing from family and friends, and leaving the house only for trips to the grocery store. I craved the ability to get out and escape the overbearing presence screens had in my life.

    That‘s when I discovered my love of camping. Weekend camping trips let me take advantage of the gorgeous freshwater springs, trails and nature preserves in my area.

    I felt the difference almost immediately — out in the woods I wasn’t scrambling for my phone or thinking about work deadlines. My attention span seemed to lengthen and level out. I relaxed. I came home feeling rested and a little more cheerful, and these trips became a way to manage the stress of the pandemic.

    Aside from a nice weekend getaway, what I was actually experiencing were the benefits of nature on my mental health — something researchers and healthcare providers have long noted.

    “There are many studies that demonstrate how spending time in nature can improve mood, lower anxiety, and improve cognition and memory,” says Mayo Clinic nurse practitioner Jodie M. Smith, APRN., C.N.P., D.N.P., M.S.N. “Making time for nature is important in order for us to maintain resiliency and promote self-care in a world that demands a lot from us.”

    Below, Smith discusses exactly why nature is so good for your mental health.

    How does nature benefit mental health?

    First and foremost, Smith says that nature can be an effective tool to manage stress.

    “Stress stimulates our sympathetic nervous system, which is responsible for increasing our blood pressure, heart rate and blood sugar in order to react to a stimulus that is causing us stress,” says Smith.

    And while not all stress is bad — for example, stress can motivate you to meet a work deadline or keep an eye on your kids at the pool — prolonged or chronic exposure to stress can chip away at your emotional and mental well-being.

    But nature may be able to combat stress and its effects. For example, one study showed that exposure to nature can regulate the sympathetic nervous system in as little as five minutes.

    “This means that we can get an almost immediate benefit from stepping outside,” says Smith. And doing so on a recurrent basis may prevent cumulative effects from stress, which could mean a lower risk for chronic disease, illness and mortality.”

    In addition to alleviating stress, Smith says research indicates that exposure to nature can be an effective coping strategy for those with chronic mental health conditions, including depression, anxiety, post-traumatic stress disorder (PTSD) and attention-deficit/hyperactivity disorder (ADHD).

    Prolonged immersion in nature and nature-based therapy programs have shown promise as a way of managing PTSD.

    Even for those without serious mental health conditions, nature may help you manage emotions like lonelinessirritability and possibly even road rage.

    Finally, there is evidence that nature exposure is associated with better cognitive function — like memory, attention, creativity and sleep quality.

    But perhaps the best part is that nature makes it easy to soak in these benefits.

    “Being present in nature doesn’t ask or require anything of us, so it frees up our mind to think more deeply and clearly about things,” says Smith.

    Next time you’re outside, take a moment to listen, touch, smell. Notice the environment around you and simply be present.

    What if I live in the city without much nature around?

    According to the World Health Organization (WHO), over 55% of people live in urban areas — a number that is expected to rise to 68% by 2050. Increasing urbanization can bring unique health challenges, as WHO estimates that the majority of city-dwellers experience inadequate housing, transportation, sanitation and waste management, as well as low air quality. Combined with the lack of green space in many cities — or open, often walkable areas with plants, natural landscape and water — accessing nature isn’t always as simple as just going outside.

    “Cities can be very energetic and exciting but also can contribute to both conscious and unconscious stress from the sensory overload and challenges of maneuvering in those spaces,” says Smith. “If you live in an urban environment, exploring to find even a small natural reprieve can be extremely beneficial.”

    If you are unable to fully immerse yourself in nature — like by taking a weekend camping trip — you can still carve out opportunities in your area. This might look like finding a small park near your workplace, taking a moment to sit under a large tree, or taking the time to find a pond or body of water.

    “Taking a purposeful five-minute break during the day to refresh your mind in this type of environment can provide a benefit and can be justified by knowing that we will feel better and more productive afterward,” says Smith.

    Technology, too, represents a significant distraction — and barrier — to quality time outside and unplugged. Texts, email and social media require a lot of attention, which can take you out of the moment. Instead, Smith recommends leaving your phone behind when seeking green space.

    “Slow down, go outside, notice what’s around you,” says Smith. “Listen to the birds and the wind and the crackling of the leaves under your feet, and you really will notice a benefit in your well-being.”

    How can I interact with nature if I’m stuck inside all day?

    In addition to simply spending more time outdoors, there are several strategies to get more green space into your daily life.

    First, consider how you can enjoy nature even if you’re stuck inside. Although it’s not a replacement for fully immersive, outdoor green space, you can still engage your senses by listening to recorded bird songs or a rainstorm instead of music, bringing lush plants into your home and office, decorating with pictures of natural beauty, or using a diffuser with natural scents.

    “(These strategies) can improve relaxation and work satisfaction through the same mechanisms that being outdoors can provide,” says Smith.

    On a wider scale, you may consider working with your neighbors to plan a community garden, joining or coordinating a walking or bird watching club, and advocating for high-quality parks and environmental centers in your town or city.

    How much nature do I need?

    Some research suggests that even very quick visits outdoors can be beneficial. But there are indications that certain amounts and types of outdoor time may have greater impacts on well-being. A 2021 study, for example, found that the 20- to 90-minute sessions in nature were most beneficial for mental health, with gardening, nature-based therapy and exercise in green spaces being the most effective for adults.

    One large survey found that people who spent at least two hours a week in nature — whether in one longer outing or in multiple smaller chunks of time — were more likely to positively describe their health and well-being than were people who spent no time in nature. If that seems unattainable, Smith recommends that you aim for 15 minutes each day.

    “There are added benefits that can come from prolonged immersion, so each week try to spend an hour outside doing something you enjoy, and each month try to spend a half day [outside],” says Smith.

     


    [i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 05.27.2024.

    [ii] Holiday, Ryan.  The Daily Stoic:  366 Meditations on Wisdom, Perseverance, and the Art of Living.  Kindle edition, page 161.  Accessed 05.27.2024.

    [iii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money.  Kindle edition, pages 92-95, accessed 05.27.2024.

    [iv]https://mcpress.mayoclinic.org/mental-health/the-mental-health-benefits-of-nature-spending-time-outdoors-to-refresh-your-mind/, accessed 05.27.2024.