Stocks extended their August declines last week as higher yields and weak economic data out of China soured investor sentiment. The Dow Jones Industrial Average lost 2.21%, while the Standard & Poor’s 500 retreated 2.11%. The Nasdaq Composite index backtracked 2.59% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 2.83%.1,2,3
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Weekly Economic Update
Presented by Damon Walker, August 21, 2023
Rising bond yields, driven primarily by strong economic data and the release of the minutes from July’s Federal Open Market Committee (FOMC) meeting that pointed toward Fed officials’ potential need to raise rates further, weighed on stocks throughout the week.
In a week of light trading typical of August, stocks were additionally buffeted by a string of economic data that painted a flailing economic recovery in China and warnings of potential downgrades of dozens of U.S. banks by Fitch, a credit-rating agency.
After the 10-year Treasury yield rose to its highest level since October 2022 on Thursday, yields eased on Friday, helping to arrest the week’s downward trend.4
Retail Sales Surprise
Retail sales jumped 0.7% in July, the fourth-consecutive month of increasing consumer spending on goods. The report supported the growing narrative that the U.S. may be able to avoid a recession in the near term. The strong spending data, supported by a robust labor market, also may have placed the Fed in a more difficult position in trying to bring inflation down to its target rate without more rate hikes.5
Consumer spending was higher in most categories, including bars and restaurants, grocery and hardware stores, and back-to-school items like books and clothing. Sales of autos and electronics fell, a possible consequence of higher borrowing costs.5
TIP OF THE WEEK
This Week: Key Economic Data
Tuesday: Existing Home Sales.
Wednesday: Purchasing Managers’ Index (PMI) Composite Flash. New Home Sales.
Thursday: Durable Goods Orders. Jobless Claims.
Source: Econoday, August 18, 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)
Wednesday: Nvidia Corporation (NVDA), Autodesk, Inc. (ADSK), Analog Devices, Inc. (ADI), Snowflake, Inc. (SNOW)
Thursday: Marvell Technology, Inc. (MRVL), Ulta Beauty, Inc. (ULTA), Workday, Inc. (WDAY), Dollar Tree, Inc. (DLTR)
Source: Zacks, August 18, 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.
Is it Time for a Paycheck Checkup?
There's no better time than the present to check your withholding status and make sure your paycheck accurately reflects the taxes you should be paying.
These paycheck checkups are a great practice when something happens in your life that may change your tax status, such as getting married or getting divorced, having a baby, getting a new job, or getting a raise or promotion at work. You can also adjust your withholding status if you want to change how much tax you withhold due to other circumstances.
During your paycheck checkup, you can also check other factors, such as how much you contribute to your health insurance or retirement plan. These expenses can also impact your tax liability.
*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.gov6
5-Minute Core-Strengthening Workout
Even if you only have a little time to dedicate to a core workout, this circuit will get you going and only takes 5 minutes. Here are the moves:
- 1-minute high plank: Your hands are on the ground, your arms are straight, and you are holding your body up with your arms and a tight core.
- 30-second side plank on each side: One hand is on the ground, your arm is straight, and the other is in the air. You can do a side plank with your feet stacked on each other (most demanding), your feet staggered (a little easier), or your bottom knee on the ground.
- 1-minute boat poses: Your feet are in the air, and your arms are by your side, reaching to your feet. You can pose with your legs bent (easier) or straight out (harder).
- 1-minute crunches: Lift your shoulders and upper back off the ground without pulling your neck.
- 1-minute dead bug: Lay on your back and alternate, extending out the opposite arm and the opposite leg simultaneously.
Tip adapted from Mind Body Green Movement7
QUOTE OF THE WEEK
"Every individual matters. Every individual has a role to play. Every individual makes a difference."
– Jane Goodall
Which of these five words doesn’t belong on this list: that, what, cat, sat, chat.
Last week’s riddle: A man tells a friend that he married three women yesterday, which was legal. In fact, it was routine. How can he make such a statement? Answer: The man is a Justice of the Peace.
Footnotes and Sources
1. The Wall Street Journal, August 18, 2023
2. The Wall Street Journal, August 18, 2023
3. The Wall Street Journal, August 18, 2023
4. CNBC, August 18, 2023
5. The Wall Street Journal, August 15, 2023
6. IRS.gov, April 10, 2023
7. Mind Body Green Movement, April 24, 2023
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.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. 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 technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. 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.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
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