Domestic stocks posted losses on Friday, April 21, largely due to investor concerns about the French election. Despite these daily losses, U.S. indexes broke their two-week losing streak, with the S&P 500 adding 0.85%, the Dow gaining 0.46%, and the NASDAQ increasing 1.82%.
What Did We Learn Last Week?
The French Election Is Concerning Investors
Uncertainty surrounding France's presidential election contributed to investor caution last week. After Sunday's ballot, National Front candidate Marine Le Pen will advance to the second round of voting on May 7, which decides the new president. Le Pen has promised to remove France from the European Union if she wins, a choice that could affect markets and currencies.
- Quarterly Earnings Reports Are Mostly Strong
By Friday morning, 95 companies in the S&P 500 had reported their quarterly earnings; 77% of them beat earnings-per-share estimates.
- Existing Home Sales Jumped 4.4% in March
Sales of existing homes hit levels not seen since 2007, and median home prices are up 6.8% over a year ago. Supply levels remain tight, and demand is high, as 48% of homes sold last month were on the market for less than a month.
- Housing Starts Declined 6.8% in March
While the headline number for housing starts may seem pretty disappointing, it largely reflects the results of a return to typical March weather after unseasonably mild weather boosted starts in January and February. Overall, housing starts are up 9.2% over this time last year.
- The Consumer Price Index Missed Expectations
Declines in gas and other energy prices contributed to the U.S. Consumer Price Index (CPI) falling 0.3% in March - its first monthly decline in more than a year.
- Tax-Plan Information May Be on the Horizon
On April 20, Treasury Secretary Steve Mnuchin indicated that tax reform remains important. The next day, President Trump said a tax plan should be coming this week.
- Oil Prices Dropped
Crude oil prices fell below $50 a barrel after losing 2.15% on Friday. Investors are showing concern about whether output decreases by OPEC can balance out against increasing U.S. production and prevent oversupply.
Moving into the last week of April, we will learn both first quarter GDP readings and gain further insight into consumer confidence and housing performance. On Friday, April 28, initial readings for first quarter GDP will help deepen our understanding of where the economy stands right now. Consensus estimates are at a soft 1.1% growth, even lower than last quarter's 2.1% increase. After seeing this week's low CPI numbers, combined with retail and inventory data, Barclays decreased its GDP estimate to only 0.8%.
Last week provided a variety of data and perspectives that are continuing to reveal themselves. As momentum from the French presidential outcomes and our own economic growth unfolds, we will watch these developments closely. Meanwhile, we encourage you to continue a long-term focus on your goals, and we are here to discuss any questions you may have along the way.
Quote of the Week
"Leave the beaten track behind occasionally and dive into the woods. Every time you do, you will be certain to find something you have never seen before."
--Alexander Graham Bell
Golf Tip of the Week
Miss the Box and Stop Pop-Ups
When you're driving the ball, is your angle of attack too steep? If so, you may be sacrificing distance and creating those awful pop-ups everyone wants to avoid.
Unlike other clubs that require shallower angles of attack as the shaft gets longer, with a driver, hitting up on the ball is a good idea. However, players often let the driver head get too far in front of the ball before making contact. You can beat this bad habit with a surprisingly simple tool: a ball sleeve.
To do so:
- Place a ball sleeve 12 inches in front of your ball.
- Aim to create an upward angle of attack as you swing while completely missing the ball sleeve.
- Angle your head so it leans backward behind the ball, which enables you to create a shallower attack and ascend into the ball.
After trying this technique, you should find that you hit the ball farther and harder - and avoid those annoying pop-ups.
Tip courtesy of Golf Tips Magazine
Financial Question of the Week
Can I claim Employee Business Expenses?
As an employee, you may end up making out-of-pocket purchases to support your workplace responsibilities. When you do so, you may be able to deduct some expenses. Here is further guidance to help you manage employee business expense claims.
Is there any limit on how much you can claim?
Typically, yes. You're able to deduct employee business expenses that total more than 2% of your adjusted gross income.
Are all expenses deductible?
No. The IRS has rules for the type of employee business expenses you can claim. The expenses must meet two criteria for your workplace responsibilities: be ordinary and necessary.
- Ordinary: an expense that your industry identifies as common and accepted
- Necessary: an appropriate expense that also helps the business
What are common expense examples?
The below list represents a sample of expenses that you can typically deduct and meet the "ordinary" and "necessary" requirements:
- Any clothes or uniforms you must wear at work and not for everyday use.
- Any tools or supplies you need to do your job.
- Education that supports your role at work.
- Travel for work that takes you away from your home.
To claim your expenses, you will need to file Form 2106, Form 2106-EZ, or IRS Schedule A.