THE WEEK ON WALL STREET
Stocks rose last week, looking past the government shutdown and apparently discounting any impact it may have on the economy. The S&P 500 Index moved up 1.08 percent, while the Nasdaq Composite Index rose 1.32 percent. The Dow Jones Industrial Average advanced 1.10 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 2.53 percent.
FACT OF THE WEEK
On October 6, 1866, the brothers John and Simeon Reno stage the first train robbery in American history, making off with $13,000 from an Ohio and Mississippi railroad train in Jackson County, Indiana.
Of course, trains had been robbed before the Reno brothers’ holdup. But these previous crimes had all been burglaries of stationary trains sitting in depots or freight yards. The Reno brothers’ contribution to criminal history was to stop a moving train in a sparsely populated region where they could carry out their crime without risking interference from the law or curious bystanders.
Though created in Indiana, the Reno brothers’ new method of robbing trains quickly became very popular in the West. Many bandits, who might otherwise have been robbing banks or stagecoaches, discovered that the newly constructed transcontinental and regional railroads in the West made attractive targets. With the western economy booming, trains often carried large amounts of cash and precious minerals. The wide-open spaces of the West also provided train robbers with plenty of isolated areas ideal for stopping trains, as well as plenty of wild spaces where they could hide from the law. Some criminal gangs, like Butch Cassidy’s Wild Bunch, found that robbing trains was so easy and lucrative that for a time they made it their criminal specialty.
MARKET MINUTE
Shutdown Talk
The S&P and Nasdaq rose out of the gate Monday morning despite the threat of a possible government shutdown hanging over investor sentiment.
As the midnight deadline approached for Congress to pass a continuing resolution that would temporarily fund the federal government, the prospect of a shutdown dominated market sentiment. The White House discussed permanent layoffs of some federal workers, stoking fears of further slowing an already sluggish labor market.
Stocks initially fell on news of the shutdown but recovered by midday, driven by growing investor expectations that the shutdown would be short-lived. The S&P closed above 6700 for the first time.
Momentum tempered after Treasury Secretary Scott Bessent suggested gross domestic product (GDP) may take a hit due to the shutdown, but all three averages recovered and closed at record highs.
Stocks were mixed on Friday after the Senate failed to pass dueling funding bills that would have prevented the shutdown from entering its second week.
Jobs Report Delayed
Investors have looked past—but continue to be jittery about—the government shutdown and its potential impact on an otherwise resilient economy, which is experiencing a hiring slowdown. One of the first impacts felt from the shutdown was the Bureau of Labor Statistics' monthly employment report, scheduled for release on Friday, but delayed until the government reopens for business. However, ADP’s monthly report, released on Wednesday, showed that corporate employers shed 32,000 jobs in September, below the forecast of 45,000 new jobs.
FINANCIAL STRATEGY OF THE WEEK
Who Is Your Trusted Contact?
Investment firms have a client service feature that may be a benefit to certain investors. They will ask you whether you would like to provide the name and information of a trusted contact.1
You do not have to supply this information, but it may offer some advantages. The request is made with your best interest in mind – and to lower the risk of someone attempting to make financial decisions on your behalf.1
Why is setting up a trusted contact so important? While no one wants to think ill of someone they know and love, the reality is that there is $3.4 billion worth of suspicious transactions a year related to elder financial exploitation, according to the Financial Crimes Enforcement Network.2
The trusted contact request is a response to this reality. The Financial Industry Regulatory Authority (FINRA) now requires that investment firms make reasonable efforts to acquire the name and contact info of a person you trust. This person is someone that investment firms can contact if they suspect the investor is making an “unusual financial decision” or appears to be suffering a notable cognitive decline.3
Investment firms may put a hold on disbursements of cash or securities from accounts if they suspect the withdrawals or transactions may involve financial exploitation. In such circumstances, they are asked to get in touch with the investor, the trusted contact, and other agencies, if necessary.3
Who should your trusted contact be? At first thought, the answer seems obvious: the person who you trust the most. Yes, that individual may be one of the best choices – but keep some factors in mind.
Ideally, your trusted contact is financially savvy, or at the very least, has some basic financial knowledge. You may trust your spouse, your sibling, or one of your children more than you trust anyone else, but how much does that person know about investing and financial matters?
You should have a high level of confidence that your trusted contact will behave ethically and respect your privacy. This person may be given confidential information about your investments.
It is encouraged that your family members know who your designated trusted contact is. That way, any family member who might be tempted to take advantage of you knows another family member is looking out with your best interest in mind, which may be an effective deterrent to elder financial abuse. It should be noted that the trusted contact may, optionally, be an attorney, a financial professional, or a CPA.3
Your trusted contact is your ally. If you are being exploited financially or could be at risk of such exploitation, that person will be alerted and called to action.
As the old saying goes, money never builds character, it only reveals it. The character of your trusted contact should not waver upon assuming this responsibility.
1. FINRA.org, 2023
2. FinCen.gov, 2023
3. FINRA.org, 2023