The Week on Wall Street
Stocks slipped in the final days of trading last week on higher jobless claims and rising tensions in the U.S.-China relationship.
The Dow Jones Industrial Average lost 0.76%, while the Standard & Poor’s 500 dipped 0.28%. The Nasdaq Composite Index dropped 1.33% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, rose 1.24%.[1],[2],[3]
Stocks Lose Momentum
Stocks marched higher to begin the week on progress with a COVID-19 vaccine and a string of upbeat corporate quarterly reports. Firming oil prices and the passage of a fiscal stimulus bill by the European Union also helped buoy investors’ spirits.
Market sentiment, however, turned negative after Thursday morning’s report of an uptick in new unemployment claims, which suggested a possible slowdown in hiring. The market was led lower by the technology sector ahead of quarterly reports from some of the sector’s biggest names.[4]
U.S.-China Tensions Escalate
Tensions escalated last week as the U.S. ordered China to close its consulate in Houston, which the White House claimed was stealing American information. A day earlier, the U.S. had accused China of attempting to steal COVID-19 research data. China responded by ordering the U.S. to close its consulate in the city of Chengdu.[5],[6]
The markets appear more focused on the apparent deteriorating relations between the two nations, worried about a repeat of the trade battle in 2018. Whether the rancor is managed is likely to remain a top concern for investors in the weeks ahead.
Final Thoughts
The mega-cap technology companies’ market dominance is a concern to some. Last week it was reported that six of these mega-cap stocks represent 41% of the Nasdaq market capitalization. Five mega-cap names included in the S&P 500 Index account for 22% of that index’s market capitalization.[7]
Investors have embraced these firms because they appear to be able to show solid financial performance in the midst of an economy coping with COVID-19.
THIS WEEK: KEY ECONOMIC DATA
Monday: Durable Goods Orders.
Wednesday: Federal Open Market Committee (FOMC) Meeting Announcement.
Thursday: Gross Domestic Product (GDP), Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, July 24, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THIS WEEK: COMPANIES REPORTING EARNINGS
Tuesday: Advanced Micro Devices (AMD), Visa (V), Pfizer (PFE), McDonalds (MCD), 3M Company (MMM), eBay (EBAY), D.R. Horton (DHI).
Wednesday: Facebook (FB), Boeing (BA), Qualcomm (QCOM), PayPal (PYPL), General Motors (GM), Shopify (SHOP), Teladoc Health (TDOC).
Thursday: Apple (AAPL), Ford (F), Alphabet (GOOGL), Mastercard (MA), Procter & Gamble (PG), Eli Lilly (LLY), United Parcel Service (UPS).
Friday: AbbVie (ABBV), Exxon Mobil (XOM), Caterpillar (CAT), Merck (MRK), Chevron (CVX).
Source: Zacks, July 24, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
How Are Bonds Taxed?
Bonds are sometimes used as an investment vehicle, but as with any investment, there are tax considerations as well. The interest you receive from corporate bonds may be taxable, which means that those taxes impact a portion of your earnings. In addition, savings bonds and government-issued Treasury bonds may be exempt from state and local taxes, but they may be taxable on the federal level. On the other hand, municipal bonds may be tax-exempt on the federal level, but they may be taxed at the state and local level.
With this being said, it’s always important to understand the tax implications of your investments. After all, it’s not about what you make – it’s about what you make after taxes!
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[8]
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial professional for further information.
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The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
[1] The Wall Street Journal, July 24, 2020
[2] The Wall Street Journal, July 24, 2020
[3] The Wall Street Journal, July 24, 2020
[4] NYTimes.com, July 23, 2020
[5] CBSnews.com, July 22, 2020
[6] APNews.com, July 24, 2020
[7] CNBC, July 22, 2020
[8] IRS.gov, July 23, 2020
