By: Sean Schmid, Chief Operating Officer – Penn Investment Advisors
Weekly Update – August 24, 2020
The Week on Wall Street
Stocks powered to another week of gains as the S&P 500 and Nasdaq Composite set multiple new record highs along the way.
The Dow Jones Industrial Average was essentially unchanged while the Standard & Poor’s 500 rose by 0.72%. The Nasdaq Composite index added 2.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.71%.[1],[2],[3]
The S&P 500 Sets Record High
The S&P 500 closed at a record high on Tuesday, erasing the steep losses suffered in February and March. The recovery has been powered by unprecedented monetary accommodation, fiscal stimulus, and investor willingness to look ahead with confidence that global economies will get past the pandemic challenge. Technology stocks continued to lead the market and helped push the NASDAQ Composite to new highs.[4]
Stocks were mixed as the week progressed amid some weak economic news, a message of economic caution from the Fed, and continuing uncertainty over a new fiscal stimulus plan. Technology momentum provided support for the broader market, with a late Friday afternoon rally pushing the S&P 500 and Nasdaq Composite to close out the week at fresh record highs.[5]
Not All Sectors Are Participating
Behind last Tuesday’s headline that the S&P 500 had set a new record high lies a story of a deeply bifurcated market.
Despite a new high, more than half the companies in the index were still trading below where they began the year. When dissected on an industry sector basis, the year-to-date performance dispersion was quite wide, with sectors like Technology (+25.53%), Consumer Discretionary (+16.68%), and Communication Services (+12.70%) posting strong performance, while Energy (-37.56%) and Financials (-20.08%) remained sharply down. In fact, nearly half (5 out of 11) of S&P 500 sectors were still in negative territory year-to-date.[6],[7],[8]
THE WEEK AHEAD
– KEY ECONOMIC DATA:
Tuesday: Consumer Confidence. New Home Sales.
Wednesday: Durable Goods Orders.
Thursday: Jobless Claims. Gross Domestic Product (GDP).
Friday: Consumer Sentiment
Source: Econoday, August 21, 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:
Tuesday: Salesforce.com (CRM), Best Buy (BBY), Intuit (INTU)
Thursday: Marvell Technology (MRVL), Dollar General (DG), Dollar Tree (DLTR), Dell Technologies (DELL), VMware (VMW)
Source: Zacks, August 21, 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.
Tax Tips
Do You Know the Difference Between Standard and Itemized Deductions?
Deductions may help you manage the amount of taxes you owe, but it’s important to understand the different types of deductions. You have the choice of either taking a standard deduction or itemizing your deductions. Here are some details to help you understand the difference between the two:
- The standard deduction may adjust every year and can vary by filing status. It also depends on a number of factors. You may be able to find the standard tax deductions on the first page of your filing form (such as Form 1040 or Form 1040-SR).
- Itemized deductions refer to individual expenses, such as state and local income or sales taxes, real estate taxes, mortgage interest, mortgage insurance premiums, and more. Taxpayers may be able to itemize deductions when the amount is greater than the standard deduction.
* 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[9]
Tip adapted from IRS.gov[10]
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, August 21, 2020
[2] The Wall Street Journal, August 21, 2020
[3] The Wall Street Journal, August 21, 2020
[4] The Wall Street Journal, August 18, 2020
[5] CNBC.com, August 19, 2020
[6] BBC News, August 18, 2020
[7] FactSet.com, August 21, 2020
[8] FactSet.com, August 21, 2020
[9] IRS.gov, August 21, 2020
[10] IRS.gov, January 21, 2020