THE WEEK ON WALL STREET
Stocks were mixed last week following better-than-expected corporate reports and increasing optimism over a slowdown in interest rates. The Dow Jones Industrial Average edged lower, slipping -0.15%. The S&P 500 rose 1.62% while the Nasdaq Composite index led, picking up 3.31%. The MSCI EAFE index, which tracks developed overseas stock markets, increased by 1.16%.
FACT OF THE WEEK
While in orbit 170 miles above Earth, Navy Captain Bruce McCandless II becomes the first human being to perform an untethered spacewalk, when he exits the U.S. space shuttle Challenger and maneuvers freely, using a bulky white jet pack of his own design. McCandless orbited Earth in tangent with the shuttle at speeds greater than 17,500 miles per hour—the speed at which satellites normally orbit Earth—and flew up to 320 feet away from the Challenger. After an hour and a half of testing and flying the jet-powered backpack and admiring Earth, McCandless safely reentered the shuttle.
Later that day, Army Lieutenant Colonel Robert Stewart tried out the jet pack, which was a device regarded as an important step toward future operations to repair and service orbiting satellites and to assemble and maintain large space stations. It was the fourth orbital mission of the space shuttle Challenger.
Strong earnings reports and encouraging inflation data lifted stocks ahead of the Federal Open Market Committee’s (FOMC) decision on Wednesday to hike interest rates by 25 basis points. Markets rallied following the announcement, relieved that the increase was in line with expectations and buoyed by post-meeting comments in which Fed Chair Jerome Powell acknowledged the disinflationary forces in place. Fresh earnings reports fueled further gains, with positive earnings surprises from several big-name technology companies that benefited the larger universe of Nasdaq-listed high-growth companies. Disappointing earnings from three mega-cap tech companies and a strong employment report triggered a Friday pull-back, paring the week’s gains.
Another Rate Hike
The Federal Reserve raised interest rates by 0.25%, signaling to the financial markets that it would likely hike rates by another 25 basis points at its next meeting in late March. Fed officials said the slowdown in rate hikes might provide time to assess the impact of the accumulated rate hikes. The Fed retained language in its post-meeting statement that future rate hike plans were unchanged to discourage investors’ hopes of an imminent pause in the rate-hike cycle. In his post-meeting press conference, Fed Chair Powell reiterated the Fed’s commitment not to declare victory on inflation prematurely but acknowledged that a disinflationary trend was underway.
FINANCIAL STRATEGY OF THE WEEK
Mobile applications have become ubiquitous. While many of these apps are games and social media platforms, an increasing number have been developed to help individuals with their personal finances. Which leads to an interesting question: what should you look for in a personal finance app?
One of the first things to consider is what type of financial apps may be most useful. Five basic categories of these apps exist:
Budget tracking apps allow users to record expenditures as they are made to keep track of bank balances and budget categories. Some allow users to make a budget and then watch how closely expenditures are tracking to it.
Financial assistant apps collect, store, and report information from users’ various savings and investment accounts, providing a single place to keep track of asset performance.
Loan calculator apps estimate payments and current balances for loans. Some also track how long it will take to pay off one or more loans.
Spending and saving apps allow users to perform various activities, including “what-if” scenarios.
Banking apps offer FDIC-insured banking options, including (in some cases) faster direct deposits, bill paying, and other choices for your account.
Once a user has decided on a category of app that may be useful, there are additional criteria to consider.
Credibility As everyone knows, not everything written on the internet is true. For example, The Wall Street Journal and The New York Times are generally considered more credible than an anonymous blog. The same principle applies to apps: understand who’s providing the information.
Security Before using any financial app, read the privacy or security statement. This can typically be found at the bottom of the company's web page or in their website's “About” section. If you don't find one online, contact the company to request a copy.
Clarity A personal finance app should provide information that is easy to understand. There are some apps that provide detailed charts of stock performance using a wide variety of financial analyses. However, if you don’t understand the underlying analysis, the app may be useless.
Relevance Remember the old saying: “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” The same applies to financial information. A mutual fund company may be a great source of information about investing concepts, but it may be less useful at providing information about tax management.
Using an app to help with your personal finances may be a great first step in becoming a better money manager, but asking yourself a few key questions before you download may help you select the app that best fits your personal finance needs.
As always, we’re here to answer any questions or help with anything you or your family needs.