2022 | April3

The Market

Stocks Continue Gains

The S&P 500 and the NASDAQ added more than 3%, climbing for the third consecutive week and recovering more of the ground lost in a difficult February. The Dow also gained more than 3%, rising for the second week in a row.

The first quarter ended on Friday with a big divergence among the major U.S. stock indexes. The Nasdaq posted a 17.0% quarterly total return, owing in part to its relatively large weighting in technology stocks that recorded strong quarterly performance. The S&P 500 added 7.5% for the quarter while the Dow was up 0.9%.

Yields of U.S. government bonds rose, snapping a string of three consecutive weekly declines. The yield of the 10-year U.S. Treasury bond rose to about 3.49% on Friday—up from 3.38% at the end of the previous week but down sharply from a recent peak of 4.07% on March 2. 

An index that measures investors’ expectations of short-term U.S. stock market volatility fell sharply for the second week in a row as easing concerns about banks’ financial stability took some of the edge off the broader market. On Friday, the CBOE Volatility Index (VIX) fell to a level that was 29% below a recent closing high on March 13.

A gauge of U.S. consumer sentiment fell sharply, recording the first decline in four months. The University of Michigan said on Friday that its survey indicated a growing number of consumers expect a recession is ahead, although their near-term views of inflation moderated.

Inflation in the 20 countries that use the euro currency slowed to the lowest level in 12 months as energy costs moderated. The European Union said on Friday that overall consumer prices rose 6.9% on an annual basis in March, down from 8.5% in February. Eurozone inflation has been easing since peaking at 10.6% last October.

A report released on Friday showed that the U.S. Federal Reserve’s preferred gauge for tracking inflation rose 0.3% from January to February, down sharply from the 0.6% rate in the previous monthly update. On an annual basis, the Personal Consumption Expenditures Price Index rose 5.0%, down from the prior month’s 5.3% figure.

A labor market update due out on Friday will show whether the strong jobs numbers recorded in recent months extended into March. The most recent report showed that the U.S. economy generated 311,000 new jobs in February—above most economists’ expectations but below January’s gain of 504,000.  

Source: John Hancock Investment Management

Back Door Roth IRA

If You're Wondering About Taxes and Retirement...

Tax Day is almost here – it’s April 18 this year. If you’re retired or planning for retirement, it’s important to know that some states are more tax-friendly for retirees than others. Typically, in tax-friendly states, Social Security benefits are exempt from state tax and pension payments and/or IRA withdrawals may receive more favorable state tax treatment, reported David Muhlbaum and Rocky Mengle of Kiplinger.

“Our results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, traditional IRAs, Roth IRAs, private pensions, 401(k) plans, interest, dividends, and capital gains. One couple had $50,000 in total income and a $250,000 home, while the other had $100,000 in income and a $350,000 home.”

The most tax-friendly states were:

1. Delaware
2. Hawaii
3. Colorado
4. Wyoming
5. Nevada

The least tax-friendly were:

1. New Jersey
2. Illinois
3. Kansas
4. Vermont
5. Connecticut

When you’re deciding where to settle in retirement, there’s a lot more to consider than taxes. Family, friends, cost of living and weather also are key considerations. Weather is becoming more important as the number and intensity of natural disasters has been increasing, raising the cost of insurance significantly in some places, reported Kate Dore of CNBC.

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