The Week on Wall Street
Stocks struggled during a 4-day market week as the U.S.-China trade standoff continued to weigh on the minds of market participants. From the Friday, May 24 close to the Friday, May 31 close, the S&P 500 retreated 2.62%; the Nasdaq Composite, 2.41%; the Dow Jones Industrial Average, 3.01%. The MSCI EAFE index of overseas stocks dipped just 1.47% in a week.
Trade is dominating the conversation in the financial markets, with developments steadily unfolding. Wednesday, China’s state media suggested that the country could soon cut off exports of rare earths to the U.S. Late Thursday, the Trump administration announced 5% tariffs on all imports from Mexico, effective June 10; these taxes could rise in the coming months.
FACT OF THE WEEK
Tomorrow marks the national celebration dedicated to one of mankind's multinational favorite foods: Cheese!
Cheese making began more than 5,000 years ago, and with over 2,000 varieties available today, cheese continues to be one of the most popular consumed products on the market, outperforming coffee, tobacco, tea, and cocoa beans combined.
Meanwhile, on Main Street...
The Conference Board’s consumer confidence index soared to 134.1 in May, its highest reading since November; the consumer view of present economic conditions was the best since the end of 2000. Additionally, the University of Michigan’s consumer sentiment index ended May at 100.00, near the 15-year peak of 102.4 seen earlier in the month.
Spring also brought a solid advance in consumer spending. April’s gain was 0.3%, according to the Bureau of Economic Analysis.
While Wall Street remains cautious and concerned about trade, consumers appear to be upbeat, sensing widespread economic prosperity. This underscores the fact that the state of the economy does not necessarily correspond to the state of the stock market (and vice versa).
FINANCIAL STRATEGY OF THE WEEK
AVOID BUYING MUTUAL FUNDS NEAR THE END OF THE YEAR
Mutual fund investors especially those who are new to the fund, often get surprised by year-end capital gains distributions that can have a dramatic impact on their tax liability.
It is essential to be aware of how different funds payout and upcoming distributions when making new investments to avoid paying unnecessary taxes on money that you haven't actually made.
The best strategy simply is to wait on purchasing new fund shares in a taxable account until after the year-end distribution gets paid. Those who invest in IRAs and other tax-favored accounts don't have to worry about the impact of fund distributions.
As always, please contact my office with any questions or financial concerns you may have.
Have a great week!