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Weekly Market Insights: Stocks Jump After Inflation Gauge Cools

Weekly Market Insights: Stocks Jump After Inflation Gauge Cools

July 31, 2023

Happy Monday!

In this edition of the weekly newsletter, we cover our upcoming virtual event Medicare & Group Coverage – How Do They Coordinate?, credit resilience, and stocks end positive amidst a new interest rate hike. It's a great day to start a new month on a good note!

- Javier Hernandez

Friendly Reminder!!!

We still have room for our upcoming Medicare & Group Coverage virtual event. You don't want to miss out on this opportunity! Register here.

Robust Corporate Credit Resilience

Since the beginning of the Fed hiking cycle, the decline in US corporate credit quality has been mild, with companies maintaining strong profitability and debt service capacity, allowing them to handle increased balance sheet leverage. This is evident in the positive rating migrations compared to previous post-recession periods. Following the COVID pandemic, the issuance of rising star bonds has outpaced fallen angels by a larger margin compared to the Global Financial Crisis (GFC). To learn more, check out the most recent Market Monitor here.

Stocks' Roller Coaster Ride Ends Positively Amid Economic Data and Earnings Surprises

Last week, stocks experienced fluctuations but ended on a positive note. Initially, stocks were flat, influenced by earnings reports, a 0.25% interest rate hike, and robust economic data. Following the Fed's rate hike announcement, stocks lost momentum. However, they rebounded on Thursday after a mega-cap tech company's positive earnings report but retreated due to increased bond yields. On Friday, stocks recovered significantly due to the release of the personal consumption expenditures price index, which reached its lowest level in two years. The market's focus on earnings results was evident, with 78% of S&P 500 companies surpassing Wall Street forecasts. The fear of an impending recession was alleviated by second-quarter GDP data, indicating economic expansion of 2.4%, driven by a rise in consumer spending. Fed Chair Powell also contributed to the positive sentiment by stating that the Fed no longer foresaw a recession.

Upcoming Economic Data and Earnings Reports - July

This week's economic calendar features key U.S. economic data releases, including the Institute for Supply Management (ISM) Manufacturing Index, Job Openings and Labor Turnover Survey (JOLTS), Automated Data Processing (ADP) Employment Report, Jobless Claims, and ISM Services Index. Additionally, numerous companies are scheduled to report their earnings, such as Advanced Micro Devices, Pfizer, Apple, and many others. Please note that the information provided is for informational purposes only, and investing decisions should be made considering individual goals, time horizon, and risk tolerance.

"I have found the paradox that if I love until it hurts, then there is no hurt, but only more love."

– Mother Teresa

Who Qualifies for the Child and Dependent Care Tax Credit?

Let's outline who the Internal Revenue Service (IRS) defines as a qualifying person under this care credit:

  • A taxpayer’s dependent who is under the age of 13 when the care is provided.
  • A taxpayer’s spouse who cannot care for themselves has lived with the taxpayer for more than half the year.

In addition to spouses and dependents, the credit may also cover someone who is mentally or physically unable to care for themselves and lives with the taxpayer for six months. This is the case if that person was the taxpayer's dependent or if they would have been the taxpayer's dependent except for one of the following:

  • The qualifying person received a gross income of $4,400 or more.
  • The qualifying person filed a joint return.
  • If filing jointly, the taxpayer or spouse could be claimed as dependent on someone else’s return.

*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

Healthy Summer Tips

Staying healthy this summer will help you enjoy the season even more. Here are some of our favorite healthy summer tips:

  • Stay safe in the sun, and always wear sunscreen. Use an SPF 30 or above with both UVA and UVB protection. If possible, hang out in shaded areas.
  • Challenge your family and friends to some healthy competition, like a game of capture the flag, a scavenger hunt, volleyball, flag football, or dodgeball.
  • Eat smart by indulging in a few of your favorite foods but still making healthy choices. Swap red meat out for chicken, choose fruits and veggies instead of chips, and eat sweets sparingly. Countless healthy barbecue and cookout recipes are delicious and will still satisfy that summer picnic spirit.

So what are you waiting for? Get out there and enjoy some summer swimming, games, or your favorite healthy snacks.

Tip adapted Prevent Cancer Foundation8

This word signifies a gap between hills or mountain ranges. Yet remove just one letter, and it signifies a gap between buildings. What is this six-letter word?


Last week’s riddle: 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? Answer: Time.

Taktshang (Tiger's Nest Monastery), Kingdom of Bhutan

Footnotes and Sources

1. The Wall Street Journal, July 28, 2023.

2. The Wall Street Journal, July 28, 2023.

3. The Wall Street Journal, July 28, 2023.

4. CNBC, July 28, 2023.

5. CNBC, July 27, 2023.

6. CNBC, July 27, 2023.

7., May 1, 2023

8. Prevent Cancer Foundation, 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.

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