Happy Monday.

In this edition of Mondays With McKnight, we encourage you to update vital legal documents by taking advantage of our upcoming Legal Days at McKnight and stay focused on your long-term investment success with Capital Group’s “Guide to Market Recoveries”. 

- Javier Hernandez, Marketing Associate

Click on the image below for Capital Group’s “Guide to Market Recoveries”:

Navigating Golden Handcuffs

While housing shortages may offer some protection against price declines, homeowners face a unique challenge with "golden handcuffs." Attractive mortgage rates are discouraging borrowers from refinancing or moving homes, with less than 2% of conventional borrowers paying above the current market rate on a 30-year fixed-rate mortgage. To learn more, check out the most recent Market Monitor.

Stocks Swing with Earnings Season Performance

Stocks moved to the rhythm of earnings season last week, initially rising on positive earnings surprises and faltering later in the week on key earnings disappointments. 

The Dow Jones Industrial Average rose 2.08%, while the Standard & Poor’s 500 added 0.69%. The Nasdaq Composite Index slumped 0.57% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.32%.^1,2,3

Earnings Season Rally Sparks Investor Enthusiasm

The second quarter earnings season kicked off with a bang as solid reports from major banks fueled optimism and ignited a mid-week rally. Investors were further delighted by a mega-cap tech company's announcement of a new AI subscription plan and the stabilization of deposits at several regional banks.

Mixed Fortunes: Disappointing earnings from two big-tech players weighed down the market on Thursday, particularly impacting the Nasdaq composite. Nevertheless, the S&P 500 saw 20 stocks touch 52-week highs, with 11 reaching all-time highs.

An End to the Week: Stocks closed flat to wrap up an eventful yet mixed week. Stay tuned as we keep you updated on the latest market movements and trends.

Housing Recovery on Unsteady Ground: June Reports Raise Concerns

Investors got a reality check from June's housing reports, casting doubt on the strength of the emerging housing recovery. Following a whopping 21.7% surge in May, new home construction took an 8.0% dive in June, while building permits, a key indicator of future construction, also fell by 3.7%.⁵

Existing Home Sales Slump: June saw a 3.3% dip in existing home sales, hitting the slowest pace since January. Year-over-year sales suffered an 18.9% drop. Persistently low inventory levels played a significant role in this setback. Homeowners are hesitating to sell with historically low mortgage rates, as buying a new home at elevated prices and higher mortgage interest rates becomes a less appealing option. ^6

Upcoming Week: Crucial Economic Data Affects Markets

This week is packed with critical economic data that could impact the markets. On Monday, keep an eye on the Purchasing Managers' Index (PMI) Composite Flash for insights into the economy's health. Tuesday brings the Consumer Confidence report, while Wednesday includes the highly anticipated FOMC Announcement and New Home Sales data. On Thursday, expect to see reports on Gross Domestic Product (GDP), Durable Goods Orders, and Jobless Claims. Finally, on Friday, we'll get a glimpse of Personal Income and Outlays, providing valuable information on consumer spending.

^{Source: Econoday, July 21, 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.}

Earnings Week: Key Companies Revealing Financial Results

This week is packed with notable earnings reports from major companies. On Tuesday, keep an eye out for Microsoft Corporation, General Electric Company, Verizon Communications, Visa, Alphabet Inc., and more. Wednesday brings earnings updates from AT&T Inc., The Boeing Company, The Coca-Cola Company, and others. Thursday features earnings releases from Amazon.com Inc., Intel Corporation, McDonald's Corporation, and many more. Finally, on Friday, be sure to watch for updates from Exxon Mobil Corporation, Chevron Corporation, and The Procter & Gamble Company.

^{Source: Zacks, July 21, 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.}

"Freedom is not worth having if it does not connote freedom to err."

– Mahatma Gandhi

Tax Tips for Side Gigs

There are some important tips to remember if you work a side gig:

• All income from these sources is taxable, including both full-time and part-time work and any cash payment received.
• As a gig worker, correctly classify yourself as an employee or an independent contractor; this can depend on where you live, even for the same services.
• Lastly, it's important to consider paying quarterly taxes during the year to help avoid any federal or state tax penalties for underpayment.

*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

Summer Skincare Tips

The first and most important tip is always to wear sunscreen, even if you spend little time in the sun. Some skincare products, including makeup, have sunscreen built-in, but you should consider using a moisturizer with at least SPF 30 for extra protection.

Another good summer skincare tip is to lighten up your skincare routine. You'll likely be sweating, swimming, and spending time outside in the summer, so you might not need as much makeup or products as in the winter.

Tip adapted from Allure⁸

Sometimes you pass me slowly, yet other times I fly by. Sometimes I slip away. Regardless of how slow or fast I am, one thing’s certain: when I’m gone, I’m gone for good. So what am I?

Last week’s riddle: What is the longest word in English to have only one vowel repeated? (Hint: It has 18 total letters, and the vowel repeats four times.) Answer: Strengthlessnesses.

Holland, Netherlands

Footnotes and Sources

^{1. The Wall Street Journal, July 21, 2023.}

^{2. The Wall Street Journal, July 21, 2023.}

^{3. The Wall Street Journal, July 21, 2023.}

^{4. CNBC, July 20, 2023.}

^{5. Yahoo!Finance, July 19, 2023.}

^{6. The Wall Street Journal, July 20, 2023.}

^{7. IRS.gov, January 12, 2023.}

^{8. Allure, 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.}

^{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.}

^{Copyright 2023 FMG Suite.}