THE WEEK ON WALL STREET
A Friday surge pushed stocks solidly into positive territory last week, ignited by cooling in an inflation gauge closely tracked by the Federal Reserve. The Dow Jones Industrial Average advanced 0.66%, while the S&P 500 climbed 1.01%. The Nasdaq Composite index rose 2.02% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.74%.
FACT OF THE WEEK
On August 1, 1981, MTV: Music Television goes on the air for the first time ever, with the words (spoken by one of MTV’s creators, John Lack): “Ladies and gentlemen, rock and roll.” The Buggles’ “Video Killed the Radio Star” was the first music video to air on the new cable television channel, which initially was available only to households in parts of New Jersey. MTV went on to revolutionize the music industry and become an influential source of pop culture and entertainment in the United States and other parts of the world, including Europe, Asia, and Latin America.
In MTV’s early days, its programming consisted of basic music videos that were introduced by VJs (video jockeys) and provided for free by record companies. As the record industry recognized MTV’s value as a promotional vehicle, money was invested in making creative, cutting-edge videos. Some directors, including Spike Jonze (Being John Malkovich, Three Kings) and Michel Gondry (Eternal Sunshine of the Spotless Mind), worked on music videos before segueing into feature films. In the 1980s, MTV was instrumental in promoting the careers of performers such as Madonna, Michael Jackson, Prince, and Duran Duran, whose videos played in heavy rotation.
By the late 1980s, MTV started airing non-video programming, geared toward teenagers and young adults. Its popular reality series The Real World launched in 1992 and was followed by such highly rated shows as The Osbournes, Newlyweds: Nick and Jessica, Laguna Beach, My Super Sweet 16, and The Hills. MTV also debuted animated series including Beavis and Butthead and Celebrity Deathmatch, as well as documentaries, news, game shows, and public service campaigns on topics ranging from voting rights to safe sex. MTV developed a reputation for pushing cultural boundaries and taste; the airing of Madonna’s 1989 “Like a Prayer” video is just one famous example. In 1984, the channel launched the MTV Music Video Awards, which were followed in 1992 by the MTV Movie Awards.
MARKET MINUTE
Stocks Pop
Stocks were flat for much of last week amid a batch of new earnings, a 0.25% interest rate hike, and strong economic data. After beginning with gains, stocks lost momentum following the Fed’s expected rate-hike announcement on Wednesday. A bounce on Thursday sparked by a positive mega-cap tech company earnings reversed after bond yields increased. Stocks recovered strongly Friday on the release of the personal consumption expenditures price index, which fell to its lowest level in two years. Much of the market action was related to earnings results. With 44% of S&P 500 companies reporting, 78% have exceeded Wall Street forecasts.
Recession Deferred
Expectations of a recession were high coming into 2023. Last week may have erased this recession narrative overhang. Second-quarter gross domestic product (GDP) data released last week was one big reason why. Economic activity expanded by 2.4%, which was above the forecast of two percent and represented an acceleration from its first quarter GDP of 2.0%. Consumer spending was a major driver of that expansion, rising 1.6%. Joining the recession-deferred camp this week was Fed Chair Powell, who stated that the Fed was no longer forecasting a recession.
FINANCIAL STRATEGY OF THE WEEK
How do you picture your future? Some see retirement as a time to start a new career. Others see it as a time to travel. Still others plan to spend more time with family and friends. With that in mind, here are some things to consider.
What do you absolutely need to accomplish? If you could only get four or five things done in retirement, what would they be? Answering this question might lead you to compile a “short list” of life goals, and while they may have nothing to do with money, the financial decisions you make may be integral to pursuing them.
What would revitalize you? Some people retire with no particular goals at all. After weeks or months of respite, ambition may return. They start to think about what pursuits or adventures they could embark on to make these years special. Others have known for decades what dreams they will follow ... and yet, when the time to follow them arrives, those dreams may unfold differently than anticipated and may even be supplanted by new ones.
In retirement, time is really your most valuable asset. With more free time and opportunity for reflection, you might find your old dreams giving way to new ones.
Who should you share your time with? Here is another profound choice you get to make in retirement. The quick answer to this question for many retirees would be “family.” Today, we have nuclear families, blended families, extended families; some people think of their friends or their employees as family.
How much do you anticipate spending? We can’t control all retirement expenses, but we can manage some of them. The thought of downsizing your home may have crossed your mind. One benefit of downsizing is that it can potentially lead to no mortgage or a more manageable mortgage payment.
Could you leave a legacy? Many of us would like to give our kids or grandkids a good start in life, but leaving an inheritance can be trickier than many realize. Tax laws are constantly changing, and the strategies that worked years ago may have more limited benefits today.
How are you preparing for retirement? This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches may offer some guidance.