By: Sean Schmid, Chief Operating Officer – Penn Investment Advisors
Weekly Update – July 13, 2020
The Week on Wall Street
Stock prices notched solid gains last week, looking past an increase in COVID-19 cases and any potential economic concerns raised by the trend.
The Dow Jones Industrial Average increased by 0.96%, while the Standard & Poor’s 500 climbed 1.76%. The Nasdaq Composite Index bounded 4.01% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained just 0.07%.[i],[ii],[iii]
Virus Concerns
Stocks experienced a volatile week as investors negotiated the crosswinds of encouraging overseas economic data with an accelerating number of COVID-19 cases in several states. Ongoing support of the financial markets by the Federal Reserve appeared to offset any concerns about an economic rebound.
The big technology companies continued to shine, leading the Nasdaq Composite to multiple new record highs. News of positive trial results for a potential COVID-19 treatment boosted stocks on the final trading day, closing the week on an encouraging note.
On the Record
Regional Federal Reserve presidents had several speaking engagements last week, and the message was a consistent one: expect the economic recovery to remain bumpy.
Cleveland Fed President Loretta Mester said that the economy in her region is slowing due to rising COVID-19 cases. She linked gains in combating the virus with further economic progress. She also echoed earlier comments by Fed Chairman Powell that more fiscal support is necessary.[iv]
Meanwhile, San Francisco Fed President Mary Daly observed that it was unlikely many companies would be rehiring all their employees. Thomas Barkin, president of Richmond Federal Reserve, reiterated the challenges of a labor recovery, but also spoke of the strain on local and state governments.[v],[vi]
THE WEEK AHEAD –
KEY ECONOMIC DATA:
Tuesday: Consumer Price Index (CPI).
Thursday: Jobless Claims. Retail Sales.
Friday: Housing Starts.
Source: Econoday / Federal Reserve, July 10, 2020. 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. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material
THE WEEK AHEAD – COMPANIES REPORTING EARNINGS:
Monday: PepsiCo, Inc. (PEP).
Tuesday: JPMorgan Chase & Co. (JPM), Citigroup (C), Wells Fargo (WFC).
Wednesday: International Business Machines (IBM), Goldman Sachs (GS), eBay, Inc. (EBAY).
Thursday: Microsoft (MSFT), Netflix (NFLX), Bank of America (BAC), Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Abbott Laboratories (ABT), Morgan Stanley (MS), Honeywell International (HON).
Friday: Blackrock, Inc. (BLK).
Source: Zacks, July 10, 2020, Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. 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.
Quote of the Week
“The longer I live, the more I realize the impact of attitude on life.”
– Mark Twain
Tax Tips
Couples Who Work Together, Tax Together
More and more couples are starting to do business together. There are some considerations to working together, though, and they’re not just who’s going to drive the car to work that day.
In terms of taxes, there are a few considerations to be aware of.
- You should first establish if you have a partnership business (where both spouses have an equal say in the affairs, services, and capital of the business) or an employee-employer relationship (where one spouse substantially controls management decisions). These relationships face different tax situations.
- If there is an employee-employer relationship, the “employee” spouse may be subject to income tax, Social Security, and Medicare.
- If there is a partnership relationship, your business income may need to be reported on Form 1065, U.S. Return of Partnership Income.
*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[i]
Have investment questions? Call us at 1.800.626.1027 or email us at invest@pennadvisors.com.
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Footnotes, disclosures and sources:
Investment advisory services are provided through Penn Investment Advisors, Inc. (PIA), a Registered Investment Adviser. PIA is a wholly-owned subsidiary of Penn Community Bank (Bank). Investment products, securities and services offered by PIA are not a deposit of, or obligation of, or guaranteed by the Bank, or an affiliate of the Bank, are not insured by the FDIC or any agency of the United States, the Bank, or any affiliate of the bank and involve investment risk, including the possibility of loss of principal. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The 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 stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
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.
These are the views of Penn Investment Advisors, Inc., and other listed sources. This should not be construed as investment advice. Penn Investment Advisors, Inc., does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
[1] The Wall Street Journal, July 10, 2020
[2] The Wall Street Journal, July 10, 2020
[3] The Wall Street Journal, July 10, 2020
[4] CNBC, July 7, 2020
[5] MarketWatch, July 7, 2020
[6] MarketWatch, July 7, 2020
[7] IRS.gov, May 27, 2020