THE WEEK ON WALL STREET
Stocks were mixed last week as investors fretted over hot inflation reports, which offset the move in chipmaker stocks. The S&P 500 Index rose 0.13 percent, while the Nasdaq Composite Index edged down 0.08 percent. The Dow Jones Industrial Average lost 0.17 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.77 percent.
FACT OF THE WEEK
On May 18, 1910, Halley's Comet brushes Earth with its tail without causing a feared doomsday, easing widespread panic. Passing the planet every 75-76 years, it was first recorded in 1682, last seen in 1986—and is expected to return in 2061.
MARKET MINUTE
Volatile Week
Stocks ticked up to start the week, helping the S&P 500 close above 7400 for the first time. The Nasdaq also closed at a new high as chipmaker stocks continued to lead the tech sector.
Markets opened lower on Tuesday after the Consumer Price Index (CPI) report came in hotter than expected. Stocks pared the losses by the close, with the Dow Industrials managing to notch a slight gain.
The rally continued, with the S&P and Nasdaq hitting new intraday and closing records over the next two trading days. On Thursday, a strong Q1 report from a megacap tech company helped pace gains while investors kept one eye on the ongoing U.S.-China meetings. The S&P 500 closed over 7,500 for the first time, while the Dow reclaimed the 50,000 level.
Stocks were under pressure from the opening bell on Friday. Treasury yields rose as the three-day summit between U.S. and Chinese leaders came to a close. Investors seemed disappointed that there were no major agreements in the Middle East conflict.
Inflation in Focus
Both retail and wholesale inflation rose faster than expected in April, heavily influenced by higher energy prices.
The CPI increased 3.8 percent year over year in April, up from 3.3 percent in March. Fuel oil alone climbed 54 percent year over year, while gasoline jumped 28 percent. In fact, over 40 percent of the 0.6 percent month-over-month gain was driven by energy inflation.
Inflation also showed up in wholesale prices. The Producer Price Index rose 6 percent over the prior 12 months in April, also a 3-year high. Month over month, PPI rose 1.4 percent (a 4-year high) versus the 0.5 percent increase expected.
FINANCIAL STRATEGY OF THE WEEK
The ABC’s of Auto Insurance
The questions around auto insurance center not so much on whether to have it—it’s mandated by state law, required by your lender, and serves to protect your assets—but what kind of coverage you should purchase.
Types of Coverage
There are several forms of coverage that a car owner may purchase, some of which are required, others of which may be optional.
The coverage requirements in most states include:
- Bodily injury liability (pays for the cost of injuries you cause to another individual), and
- Property damage liability (pays for the damage you cause to another’s car or to objects or structures you hit).
Some, but not all, states will require that you have coverage for:
- Uninsured and underinsured motorists (covers the costs associated with being hit by an uninsured or underinsured driver, or in the case of a hit-and-run accident), and
- Medical payments or personal injury protection (PIP) (pays for medical treatment for you and your passengers). PIP coverage is available in “no-fault” states and may also cover lost wages and funeral costs.
If you borrowed to purchase your car, the lender may require collision and comprehensive coverage.
- Collision coverage reimburses you for damage to your car resulting from a collision with another car, object, or structure; a pothole; or from flipping over.
- Comprehensive coverage is designed to pay for car damage not arising from a collision, e.g., theft, hail, windstorm, flood, fire, and hitting animals. This coverage may also pay for windshield repairs.
If you own your car outright, you may want to consider purchasing collision and comprehensive coverage if your car has a significant market value. You may find that the potential economic loss is sufficient to warrant the cost of collision and comprehensive protection.