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

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 Mixed

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.}

"Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen."

– John Steinbeck

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

Show Your Heart Some Love

Heart disease is the number one killer of men and women in the U.S. While age, genetics, and family history are risk factors related to heart disease, some lifestyle factors are associated with better heart health. But first, discuss any medical concerns with your healthcare provider before beginning any diet or fitness regimen. The following information is not a substitute for medical advice:

• Manage your blood pressure: Make sure to check your blood pressure regularly. Hypertension is often asymptomatic.
  
• Maintain a healthy weight: Being overweight or obese may increase disease risk.
  
• Eat well and exercise: These two activities are associated with a lower incidence of heart disease.
  
• Drink less alcohol and don’t smoke: These habits are seen more frequently in heart disease patients.
  
• Sleep well and reduce stress: Lower cortisol levels may reduce your risk for heart disease.

While not all risk factors are controllable, some are. The list above is not comprehensive. Give your heart some love, and talk to your doctor about the best ways to care for it.

Tip adapted from MedlinePlus.gov⁸

I nearly always lie on a surface and come in different shapes and sizes, often with curves. You can put me anywhere you like, yet there is only one proper place for me. What am I?

Last week’s riddle: Note this alphabetic progression: B, C, D, E, G. What letter should then follow as the sixth letter in this successive series?  Answer: P, the next rhyming letter in the sequence.

S. American Saguaros, Purmamarca, Jujuy, Argentina.

Footnotes and Sources

^{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} 

^{8. MedlinePlus.gov, 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.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

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