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Stocks Gain
The prospect that an initial interest-rate cut could be delayed into the latter half of this year weighed on stocks, owing to strong economic data and cautious comments from U.S. Federal Reserve policymakers. The major indexes dropped more than 1% on Thursday, and a partial recovery on Friday didn’t prevent stocks from posting weekly declines.
High interest rates again appeared to do little to hold back the U.S. labor market, as March’s jobs gain of 303,000 exceeded economists’ expectations for around 205,000. The latest figure was the biggest in 10 months, matching the 303,000 jobs added in May 2023. The unemployment rate slipped to 3.8% from 3.9% the previous month.
The yield of the 10-year U.S. Treasury bond rose to the highest level in more than four months as the latest jobs data exerted further upward pressure amid a shifting interest-rate outlook. The yield closed around 4.39% on Friday, up from the prior week’s close of 4.20%.
For the second week in a row, oil and gold posted solid price gains, extending a run of recently strong results for both commodities. U.S. crude oil was trading at nearly $87 per barrel on Friday afternoon, up from $83 at the end of the previous week and $71 at the start of 2024. Gold spot prices on Friday were around $2,345 per ounce, a record high.
As major banks prepare to open quarterly earnings season, analysts on Friday expected that first-quarter earnings per share for companies in the S&P 500 rose by an average of 3.2%, according to FactSet. Such an outcome would mark the third consecutive quarter of year-over-year earnings growth.
The 20 nations that use the euro currency reported a steeper-than-expected decline in inflation, with consumer prices rising at an annual rate of 2.4% in March versus 2.6% in the previous month. While the eurozone’s inflation rate has steadily declined this year, the European Central Bank isn’t expected to begin cutting interest rates until June.
A Consumer Price Index report scheduled for release on Wednesday will show whether a recent trend of slightly hotter-than-expected inflation extended into March. Last month’s CPI report showed an annual rate of 3.2% in February, up from 3.1% the previous month; a separate report on wholesale prices also showed slightly higher-than-expected inflation.
Source: John Hancock Investment Management
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Historical Asset Class Performance | |
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We certainly have enjoyed higher interest rates on cash over the last year. The Schwab Money Market Fund is paying 5.17% today. However, history shows us these rates won’t last forever. Historically, rates drop 15-16 months after they peak.
We will continue to monitor these rates and be in touch if we feel clients should consider alternative options. But in the meantime, if your cash at the bank is not paying over 5%, please call us!
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It's a Jam-Packed Holiday Week! | |
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More than a dozen holidays are celebrated this week, including:
- Bat Appreciation Week,
- International Trombone Week,
- National Library Week,
- Take Your Poet to School Week, and
- America Saves Week.
This year, America Saves Week encourages people to build a secure financial future by saving for what matters most. That could mean setting aside money in an emergency fund, a college savings fund, a retirement account, or another opportunity. For some people, saving includes investing, buying stocks, bonds, and other assets with the goal of growing wealth, generating a stream of income, or doing both.
Why is saving important?
The Library of Economics and Liberty cited the Concise Encyclopedia of Economics to provide some insight to economists’ big-picture view of saving. “…consider an economy in which there is a single commodity, say, corn. The amount of corn on hand at any point in time can either be consumed (literally gobbled up) or saved. Any corn that is saved is immediately planted (invested), yielding more corn in the future. Hence, saving adds to the stock of corn in the ground, or in economic jargon, the stock of capital. The greater the stock of capital, the greater the amount of future corn, which can, in turn, either be consumed or saved...”
At a more granular level, saving confers a tax benefit to Americans who qualify, reported Kate Dore of CNBC, but few eligible taxpayers claim it.
“The retirement savings contribution credit, or ‘saver’s credit,’ can help low- to moderate-income filers offset part of the funds added to an individual retirement account, 401(k) plan or other workplace plan…For 2023, your adjusted gross income can’t exceed $21,750 for single filers or $43,500 for married couples for the 50% credit. The percentages drop to 20% and 10%, respectively, as earnings increase, with a complete phase-out above $36,500 for individuals or $73,000 for joint filers.”
If any members of your household qualify, you may want to let them know about the tax credit.
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AJ Advisors
www.ajadvice.com
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Phone: (615) 709-8709
Fax: (615) 505-3306
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John Stauffer, CFP®
Partner
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Andrew Quinn, CFP®
Partner
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