The Week on Wall Street
U.S. stock benchmarks opened a new quarter positively. The S&P 500 gained 1.65% in the opening week of July; the Dow Jones Industrial Average, 1.21%; the Nasdaq Composite, 1.94%. Overseas, stocks in developed markets, tracked by MSCI’s EAFE index, rose 1.43%.
FACT OF THE WEEK
Between Memorial Day and Labor Day, Americans eat over 7 billion hot dogs.
On July 3, the S&P posted its latest record close: 2,995.82. In other news, the Department of Labor said that the economy added 224,000 net new jobs in June, far more than the 160,000 projected by analysts in a Bloomberg poll. The headline jobless rate ticked up 0.1% to 3.7% in June; the U-6 rate, including the underemployed, also rose 0.1% to 7.2%.
Finally, the Office of the U.S. Trade Representative said that the federal government plans to levy new tariffs on $4 billion of food and beverages coming from the European Union. Monday, July 15 will mark the start of the next earnings season. Money-center banks report first, followed by companies from a variety of industries.
As Wall Street gets ready for their results, we will take a moment to recap Q2 index performance and the quarter’s two biggest news developments.
Stocks Rose, Fell, and Rose Again
The S&P 500 gained 3.93% in April, dropped 6.58% in May, and climbed 6.89% in June. In the end, it advanced 3.79% for the quarter, outdoing the Q2 gains of the Nasdaq Composite (3.58%) and Dow Industrials (2.59%).
The Fed Hinted at a Shift in Monetary Policy
The central bank’s June statement took out a reference about being “patient” on borrowing costs and noted that Fed policymakers would “act as appropriate” to try and sustain economic growth. The latest dot-plot, showing the opinions of Fed officials about where interest rates might be in the near future, showed nothing like consensus.
U.S.-China Trade Talks Stalled, But May Resume Soon
In May, the U.S. and China announced they would hike tariffs on each other’s exports during the quarter. Formal trade negotiations broke down for six weeks. On June 29, President Trump announced at the Group of 20 summit in Japan that talks would soon resume and that the U.S. would hold off on tariffs slated for another $300 billion in Chinese goods.
As the quarter gets underway, traders are wondering if an interest rate adjustment and a U.S.-China trade deal are in store for the summer; there is also some ambiguity about the economy’s momentum. Investors will have plenty to consider in the coming weeks.
FINANCIAL STRATEGY OF THE WEEK
LEAVING BEHIND A JOB AND YOUR 401(K) PLAN?
People no longer work for one company for their whole career before entering into retirement. On average, the typical worker today will have multiple job changes before retirement, which can have a negative impacts to retirement plans. Job changes means many Americans have old 401(k) plans that may not be allocated properly to help to prepare them for retirement. Every time you change jobs, you need to make some choices about what to do with your old 401(k) so that it keeps up with your financial needs. Generally, you have four basic options with any 401(k):
• You can leave the assets in the old employer’s plan (if the plan permits it).
• You can roll the assets over into your new employer’s plan (if one is available and the plan permits it).
• You can roll the assets over into an Individual Retirement Account (IRA).
• You can take a cash distribution (and deal with the potential tax consequences).
What should you do next? Discussing your situation with a financial professional can help you avoid common (and expensive) rollover mistakes and show you how you can use your 401(k) rollover as an opportunity to help your retirement preparations.
Please feel free to contact me if you or someone you know would like to discuss your specific options.