Stocks pushed higher last week as investors cheered mega-cap tech corporate reports and a better-than-expected employment report.
Stocks at New Highs
At the beginning of the week, stocks surged, anticipating fourth-quarter corporate updates from tech companies and the Federal Reserve’s two-day policy meeting; this led to the S&P 500 Index reaching a new record high on Monday.
The market remained relatively stable for the rest of the week until Wednesday, when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The Federal Open Market Committee’s (FOMC) news unsettled investors, who anticipated that rates would remain unchanged but expected more specific guidance on the Fed’s plan to lower interest rates.1
On Friday, the job report for January revealed the addition of 353,000 new jobs, surpassing the forecast of 185,000. This strong report did not negatively impact the markets. Instead, investors interpreted it as confirmation of a robust economy.2
Fed’s Mixed Signals
The Fed’s decision to keep rates steady left some investors disappointed, as they had been hoping for indications of rate cuts in the coming months; this led to a decline in stock prices on Wednesday, with increased selling towards the end of the trading day.
The Wall Street Journal’s headline after the FOMC meeting on Wednesday suggested that rate cuts were possible but not expected immediately. The FOMC’s policy language, released after the meeting, indicated a subtle shift from considering rate cuts to proposing they could be possible unless inflation became a concern.3
This Week: Key Economic Data
Monday: ISM Services Index.
Wednesday: International Trade in Goods & Services. EIA Petroleum Report.
Thursday: Jobless Claims. Fed Balance Sheet.
Source: Investors Business Daily – Econoday economic calendar; February 2, 2024
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
Monday: McDonald’s Corporation (MCD), Caterpillar (CPL)
Tuesday: Eli Lilly and Company (LLY), Amgen Inc. (AMGN), Fiserv, Inc. (FI)
Wednesday: The Walt Disney Company (DIS), Uber Technologies Inc. (UBER), PayPal Holdings Inc. (PYPL)
Thursday: AstraZeneca Plc (AZN), S&P Global Inc. (SPGI), Philip Morris International Inc. (PM)
Friday: PepsiCo Inc. (PEP)
Source: Zacks, February 2, 2024
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.
Vacation Home Rentals
If you receive money for the use of your primary residence, you may have to report this rental income on your tax return; this means that the “vacation home rental” classification can apply to your home, even if you don’t own multiple short-term rental properties. The rental expense deduction is limited in the case of a property used as a home; the rental expenses can’t be more than the rent received. The rental income may not require reporting if you rent the house to your tenant for fewer than 15 days during the year.
A vacation home is a house, apartment, condominium, or other dwelling that you use to generate income, but you can also use it as a residence during the year. For tax purposes, it’s critical to divide the expenses of a property into personal and business purposes.
To report rental income and rental expenses, use Schedule E. In addition, rental income may be subject to a net investment income tax.
*This tax tip is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals for more specific information.
Tip adapted from IRS.gov4
