The Week on Wall Street
Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.
FACT OF THE WEEK
After the Roman Emperor Claudius II outlawed marriage, Saint Valentine continued to marry men and women in secret. Even then, it was traditional for men and women to exchange flowers on their wedding day, as a sign of good luck and the start of a "blooming" relationship.
Today, we continue to celebrate love on February 14th, the day Saint Valentine died, by exchanging flowers, chocolates, and teddy bears.
The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.
As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections. Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies. For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both.
March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.
The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We don't expect that to become clear until the deadline nears.
State of the Service Sector
Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector. The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.
Over the next several weeks, we're expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view.
FINANCIAL STRATEGY OF THE WEEK
What is the Small Business Health Care Tax Credit?
The Small Business Health Care Tax Credit is designed to help small business owners provide health care to their employees. It is worth up to 50% of the costs you pay for your employees' premiums (35% for non-profit employers).
To qualify for the tax credit, all of the following must apply:
• You have fewer than 25 full-time equivalent (FTE) employees
• Your average employee salary is about $50,000 per year or less
• You pay at least 50% of your full-time employees' premium costs
• You offer coverage to your full-time employees through the SHOP Marketplace. (You don't have to offer it to dependents or employees working fewer than 30 hours per week to qualify for the tax credit.)
The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.