The Week on Wall Street
Upbeat comments by the Federal Reserve Chairman and more signs of an economic turnaround combined to help fuel a powerful rally in the stock market last week.
FACT OF THE WEEK
Memorial Day, formerly known as Decoration Day, originated in the years following the Civil War in 1868, as a day of remembrance on May 30. In 1968, under the Uniform Monday Holiday Act, Memorial Day became an official Federal holiday observance on the last Monday in May effectively in 1971.
MARKET MINUTE
The Dow Jones Industrial Average rose 3.29%, while the S&P 500 advanced 3.20%. The Nasdaq Composite climbed 3.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.87%.
Stocks Cheer Fed Support
The markets surged higher to open the week, buoyed by a Sunday night “60 Minutes” interview with Fed Chair Jerome Powell, who said that the Federal Reserve would do everything necessary to support economic recovery. Rising oil prices and more states lifting restrictions added to the overall improving investor outlook.
After a day digesting those gains, stocks moved another leg higher on strong earnings from big retailers and growing optimism over the global economic recovery. Stocks drifted in the final two days of trading as investors worried about heightening tensions between the U.S. and China.
Different Views on the Economic Recovery
Treasury Secretary Steven Mnuchin and Fed Chair Powell testified last week before the Senate Banking Committee, providing Senators with two views of the nation’s economic outlook.
Secretary Mnuchin suggested a wait-and-see approach before moving ahead with additional fiscal measures. He wants to pause new spending first to assess the impact of the already-approved stimulus program. He believes that the economy will experience a “V-shaped” recovery.
Fed Chair Powell, on the other hand, expressed worries that waiting too long for additional fiscal measures may hamper the fragile economic recovery. It was the third time in a week that the Fed Chair suggested more federal spending is needed to help the economic recovery.
Final Thoughts
One of the challenges of assessing the U.S. economy using specific government reports, like the consumer price index or the employment report, is that they are considered “lag indicators.” Lag indicators provide useful insight into where we have been, but are less helpful in looking at the current state of economic activity.
Looking at some “real-time” data can help investors better assess the here-and-now. For example, gasoline deliveries are trending higher, consumer confidence appears to have stabilized, and airlines are seeing more bookings. Even the supply of toilet paper seems less of a concern these days, with Google searches falling to near-normal levels.
FINANCIAL STRATEGY OF THE WEEK
HEALTHY BODY, HEALTHY POCKETBOOK
People save for a variety of things in retirement. Of all the activities you are saving for in retirement, did you know that healthcare may have the most significant price tag? One study found that an individual would need to save $127,000 - $143,000 for healthcare in retirement to secure a 90% chance of being able to pay all their future medical bills.
Thankfully, your retirement health costs are not permanent. Of course, you won’t have total control over your health in retirement, but there are things you can do to manage your health risks and potential costs. Here are a few tips.
Get informed — Medical expertise and advice are always changing. Keep yourself up to date on healthcare news, particularly concerning issues that have affected you or those related to you. Ask your doctor to help you identify areas of particular concern.
Develop a maintainable healthy lifestyle — This boils down to simple wisdom: eat healthily, exercise regularly. Limit fats and sugars and increase your intake of whole grains, fruits, and vegetables. If you haven’t already, embark on an exercise program that you can stick with long term. If it’s been a while since you last exercised, consult with your doctor before you begin. Start slowly and work up to your goals.
Relax — Stress can be detrimental to your health. Maintaining friendships, focusing on hobbies, and taking time to relax may help ensure good mental health. Research shows that staying socially active in retirement can alleviate stress and reduce the risk of depression. It may also aid in the prevention of Alzheimer’s disease.
Learn your numbers — Staying healthy means monitoring a few key numbers. You should know your blood pressure, cholesterol, and body mass index (BMI). Your blood sugar level indicates your risk for diabetes. Your doctor can perform simple tests to identify these numbers and recognize any vulnerability you may have.
Get preventative care — Preventing a disease or illness can be much less expensive (and painful) than treating one. As recommended by your doctor, take advantage of free
or low-cost diabetes and heart disease screenings, mammograms, vaccinations, and annual physicals.
There is no way to guarantee you won’t have unexpected healthcare costs in retirement. But maintaining a healthy lifestyle can help you reduce possible health-related expenses and to avoid spending precious time in the recovery room.
As always, please contact my office with any questions or financial concerns you may have.