Market-Moving News[i]

Climbing back

The major U.S. stock indexes rose for the second week in a row, recovering much of the ground lost during three weekly declines in April. The latest week was choppy, as stocks tumbled on Tuesday before rebounding on Thursday and Friday amid positive sentiment over earnings and jobs data. 

Job growth moderates

U.S. stock indexes climbed on Friday and bond yields fell after a jobs report eased concerns about labor market-induced inflationary pressures, potentially shifting the outlook for interest-rate cuts. In April, the economy generated 175,000 jobs, down from an upwardly revised 315,000 figure in March. Wages rose at a 3.9% annual rate versus 4.1% in March.

Earnings pick up

Profits at some of the biggest technology companies continued to improve as earnings season neared an end. FactSet reported on Friday that analysts were expecting S&P 500 companies overall to post a 5.0% first-quarter earnings increase compared with the same quarter a year earlier, based on results released so far and projections for companies that haven’t yet reported. Just a week earlier, the projected growth rate was 3.5%.

Yields retreat

Yields of U.S. government bonds fell, snapping a string of four consecutive weekly gains that had pushed the yield of the 10-year U.S. Treasury bond to the highest level since last November. Friday's closing yield was 4.50%, down from 4.67% at the close of the previous week.

April showers

The S&P 500 fell nearly 4.2% last month, posting its first decline after five monthly gains in a row that had produced a cumulative gain of 25.3%. Utilities stocks rose an average 1.6% in April, standing out as the only sector among 11 to generate a positive result, according to S&P Dow Jones Indices. The real estate sector’s 8.6% decline was the weakest result. 

Fed holds steady

As expected, the U.S. Federal Reserve kept its benchmark interest rate at the highest level in more than two decades as it again held off on any rate cuts. Fed officials acknowledged that they have recently seen “a lack of further progress” in bringing inflation closer to the Fed’s 2% long-term target rate. 

Sagging confidence

A measure that tracks monthly changes in U.S. consumer sentiment fell sharply to the lowest level since 2022. Many consumers surveyed for the Conference Board’s latest report cited concerns about inflation and the jobs outlook. 

Eurozone rebound

The eurozone’s economy started 2024 on a moderately positive note as it recorded a 0.3% annual GDP growth rate in the first quarter. Tuesday’s report also revised the prior quarter’s figure to negative 0.1% from an initial 0.0% estimate, meaning the eurozone was technically in a recession in the latter half of last year, as its third-quarter 2023 result was also slightly negative. 

The Week Ahead:  May 6-10

• Monday
  • No major reports scheduled

• Tuesday
  • Consumer credit, U.S. Federal Reserve

• Wednesday
  • Wholesale inventories, U.S. Census Bureau

• Thursday
  • Weekly unemployment claims, U.S. Department of Labor

• Friday
  • University of Michigan Index of Consumer Sentiment, preliminary result
  • Federal budget, U.S. Department of the Treasury

Philosophy Quote of the Week  

Righteousness is Beautiful

“Then what makes a beautiful human being?  Isn’t it the presence of human excellence?  Young friend, if you wish to be beautiful, then work diligently at human excellence.  And what is that?  Observe those whom you praise without prejudice.  The just or the unjust?  The just.  The even-tempered or the undisciplined.  The even-tempered.  The self-controlled or the uncontrolled?  The self-controlled.  In making yourself that kind of person, you will become beautiful – but to the extent you ignore these qualities, you’ll be ugly, even if you use every trick in the book to appear beautiful.

Epictetus, Meditations, 7.47

Tax Tips[ii]

Tips for Farmers

Here are 10 things the IRS lists about farm income and expenses to help at tax time:

1. Crop insurance proceeds
   • Insurance payments from crop damage count as income. Generally, you should report thse payments in the year received.
2. Deductible farm expenses
   • Farmers can deduct ordinary and necessary expenses they paid for their business. An ordinary expense is a common and accepted cost for that type of business.  A necessary expense means a cost that is appropriate for that business.
3. Employees and hired help
   • You can deduct reasonable wages you paid to your full and part-time workers on the farm. You must withhold Social Security, Medicare and income taxes from their wages.
4. Sale of items purchased for resale
   • If you sold livestock or items that you bought for resale, you must report the sale. Your profit or loss is the difference between your selling price and your basis in the item.  Basis is usually the cost of the item.  Your cost may also include other amounts you paid such as sales tax and freight.
5. Repayment of loans
   • You can only deduct the interest you paid on a loan if the loan is used for your farming business. You can’t deduct interest you paid on a loan that you used for personal expenses.
6. Weather-related sales
   • Bad weather such as drought or flood may force you to sell more livestock than you normally would in a year. If so, you may be able to delay reporting a gain from the sale of the extra animals.
7. Net operating losses
   • If your expenses are more than your income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it.  You may get a refund of part or all of the income tax you paid in prior years.  You may also be able to lower your tax in future years.
8. Farm income averaging
   • You may be able to average some or all the current year’s farm income by spreading it out over the past three years. This may lower your taxes if your farm income is high in the current year and low in one or more of the past three years.  Farmers are the only ones allowed to average their income at this time.
9. Fuel and road use
   • You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.
10. Qualified Business Income deduction
    • The IRS gives you a deduction up to 20% of the profits just for being a business owner. Also, if you are a farmer or rancher forced to sell your livestock because of drought, flood, hurricane or other natural disaster, special IRS tax relief may help you.  The IRS extends time to replace livestock that their owners were forced to sell due to drought.  If you’re eligible, this may help you defer tax on any gains you got from the forced sales.  The relief extends to all or part of the states and Puerto Rico affected by drought.

Here's a few final thoughts from the IRS:

• Defer tax on drought sales
  • If the drought caused you to sell more livestock than usual, you may be able to defer tax on the extra gains from those sales
• Replacement period
  • You generally must replace livestock within a four-year period to postpone the tax. The IRS can extend that period if the drought continues.
• IRS grants more time
  • The IRS has added an additional year to the replacement period for eligible farmers and ranchers. The extension usually applies to certain sales due to drought.
• Livestock sales that apply
  • If you are eligible, your gains on sales of livestock that you held for draft, dairy or breeding purposes apply.
• Livestock sales that do not apply
  • Sales of other livestock, such as those you raised for slaughter or held for sporting purposes and poultry, are not eligible for this relief.
• Areas eligible for relief
  • Go to the IRS website to check current areas eligible for relief.

Health Tip of the Week[iii]

Mental health: What's normal, what's not

What's considered normal mental health? Patterns in thoughts, feelings and behaviors can suggest when to get help for yourself or someone you care about.

By Mayo Clinic Staff

What's the difference between normal mental health and mental disorders? Sometimes the answer is clear, but often the distinction isn't so obvious. For example, if you're afraid of giving a speech in public, does it mean you have a mental health disorder or a run-of-the-mill case of nerves? Or, when does shyness become a case of social phobia?

Here's help understanding how mental health conditions are identified.

What is mental health?

Mental health is the overall wellness of how you think, regulate your feelings and behave. Sometimes people experience a significant disturbance in this mental functioning. A mental disorder may be present when patterns or changes in thinking, feeling or behaving cause distress or disrupt a person's ability to function. A mental health disorder may affect how well you:

• Maintain personal or family relationships
• Function in social settings
• Perform at work or school
• Learn at a level expected for your age and intelligence
• Participate in other important activities

Cultural norms and social expectations also play a role in defining mental health disorders. There is no standard measure across cultures to determine whether a behavior is normal or when it becomes disruptive. What might be normal in one society may be a cause for concern in another.

How are mental health disorders defined?

The Diagnostic and Statistical Manual of Mental Disorders (DSM) is a guide published by the American Psychiatric Association that explains the signs and symptoms of several hundred mental health conditions, including anxiety, depression, eating disorders, post-traumatic stress disorder and schizophrenia.

The DSM provides criteria for making a diagnosis based on the nature, duration and impact of signs and symptoms. It also describes the typical course of the disorder, risk factors and common co-existing conditions.

Another commonly used diagnostic guideline is the International Classification of Diseases (ICD) from the World Health Organization.

Health insurance companies use the diagnostic coding system of the DSM and ICD in determining coverage and benefits and to reimburse mental health professionals.

How do mental health professionals diagnose disorders?

A diagnosis of a mental health condition may be made by a psychiatrist, psychologist, clinical social worker or other mental health professional. Your primary care doctor may also be involved in a diagnostic assessment or make referrals to a mental health specialist.

A diagnosis may be based on the following:

• A medical history of physical illness or mental health disorders in you or in your family
• A complete physical to identify or rule out a condition that may be causing symptoms
• Questions about your current concerns or why you're seeking help
• Questions about how recent events or changes in your life — trauma, relationships, work, death of a friend or relative — have affected how you think, feel or behave
• Questionnaires or other formal tests that ask for your feedback on how you think, feel or behave in typical situations
• Questions about past and current alcohol and drug use
• A history of trauma, abuse, family crises or other major life events
• Questions about past or current thoughts about violence against yourself or others
• Questionnaires or interviews completed by someone who knows you well, such as a parent or spouse

When is an evaluation or treatment needed?

Each mental health condition has its own signs and symptoms. In general, however, professional help might be needed if you experience:

• Marked changes in personality, eating or sleeping patterns
• An inability to cope with problems or daily activities
• Feeling of disconnection or withdrawal from normal activities
• Unusual or "magical" thinking
• Excessive anxiety
• Prolonged sadness, depression or apathy
• Thoughts or statements about suicide or harming others
• Substance misuse
• Extreme mood swings
• Excessive anger, hostility or violent behavior

Many people who have mental health disorders consider their signs and symptoms a normal part of life or avoid treatment out of shame or fear. If you're concerned about your mental health, don't hesitate to seek advice.

Consult your primary care doctor or make an appointment with a psychiatrist, psychologist or other mental health professional. It may be important for you to find a professional who is familiar with your culture or who demonstrates an understanding of the cultural and social context that's relevant to your experiences and life story.

With appropriate support, you can identify mental health conditions and receive appropriate treatment, such as medications or counseling.

[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 05.05.2024.

[ii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money.  Kindle edition, pages 81-84, accessed 05.05.2024.

[iii]https://www.mayoclinic.org/healthy-lifestyle/adult-health/in-depth/mental-health/art-20044098, accessed 05.05.2024.