Weekly Market Insights: Despite Stall, Debt Deal Optimism Cheers Markets

May 22nd, 2023

THE WEEK ON WALL STREET

Stocks rallied last week, propelled by growing optimism over reaching a deal on raising the debt ceiling and avoiding a technical debt default by the U.S.

The Dow Jones Industrial Average edged 0.38% higher, while the Standard & Poor’s 500 gained 1.65%. The Nasdaq Composite index advanced 3.04% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.47%.^1,2,3

Possible Debt Deal

After stumbling on weak April retail sales and a combination of disappointing earnings and weak guidance from a major retailer, stocks moved higher mid-week as the news on the debt negotiations turned more positive. 

The prospect of an agreement helped to lift a cloud of uncertainty that had weighed on markets in recent weeks and sparked sufficient optimism to shake off comments by the Dallas Fed President, who indicated that economic data may not support a pause in rate hikes yet. Aiding the market’s upbeat mood was a positive update on deposit growth at a troubled regional bank.

Stocks surrendered some of the week’s gains on Friday following reports of an impasse on debt talks and comments by Fed Chair Powell. 

Housing Mix

Recent updates have suggested that the housing market may be staging a turnaround after a long period of contraction. Last week’s data contained some fresh evidence of revival and caution that any potential recovery may remain further out.



The first positive sign was an increase in home builder sentiment that put the National Association of Home Builders Housing Market Index’s confidence level at the midpoint for the first time since July 2022. An unexpected 2.2% rise in housing starts in April followed. These encouraging reports, however, were followed by a disappointing 3.4% decline in April existing home sales.^{4, 5, 6}

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index (PMI) Composite. New Home Sales.

Wednesday: FOMC Minutes.

Thursday: Gross Domestic Product (GDP). Jobless Claims.

Friday: Consumer Sentiment. Personal Income and Outlays. Durable Goods Orders.

^{Source: Econoday, May 19, 2023}

^{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: Zoom Video Communications, Inc. (ZM)

Tuesday: Lowe’s Companies, Inc. (LOW), Palo Alto Networks, Inc. (PANW), AutoZone, Inc. (AZO), Intuit, Inc. (INTU)

Wednesday: Nvidia Corporation (NVDA), Analog Devices, Inc. (ADI), Snowflake, Inc. (SNOW)

Thursday: Costco Corporation (COST), Marvell Technology, Inc. (MRVL), Workday, Inc. (WDAY)

^{Source: Zacks, May 19, 2023}

^{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.}

TAX TIP OF THE WEEK

Taking A Side Gig? Here's How It May Affect Your Taxes

Taxpayers who work in the gig economy may benefit from having a better understanding of how their work affects their taxes.

People involved in the gig economy earn income as freelancers, independent workers, or employees. They use technology to provide goods or services, including renting out a home or spare bedroom and providing car rides.

Here are some things taxpayers should know about the gig economy and taxes:

• Money earned through this work may be taxable.
• Tax implications exist for the company providing the platform and the individual performing the services.

This income may be taxable even if the taxpayer providing the service doesn't receive a Form 1099-MISC, Form 1099-K, or Form W-2. This income may also be taxable if the activity is only part-time, side work, or if you’re paid in cash.

*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.



Tip adapted from IRS.gov⁷

^{1. The Wall Street Journal, May 19, 2023}

^{2. The Wall Street Journal, May 19, 2023}

^{3. The Wall Street Journal, May 19, 2023}

^{4. National Association of Home Builders, May 16, 2023.}

^{5. Fox Business, May 17, 2023}

^{6. The Wall Street Journal, May 18, 2023}

^{7. IRS.gov, April 4, 2023} 

Advisory services offered through Meridian Wealth Management, LLC., a Registered Investment Advisor. For more information, please visit our website www.meridianwealthllc.com.

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