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
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:
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:
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
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. IRS.gov, May 1, 2023
8. Prevent Cancer Foundation, April 24, 2023
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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.
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