THE WEEK ON WALL STREET
Falling bond yields–spurred by weak economic data–helped lift stocks to weekly gains. The Dow Jones Industrial Average advanced 1.43%, while the S&P 500 gained 2.50%. The Nasdaq Composite index increased 3.25% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, picked up 2.71%.
FACT OF THE WEEK
Seen by some as a vicious murderer and by others as a gallant Robin Hood, the famous outlaw Jesse Woodson James is born on September 5, 1847, in Clay County, Missouri.
Jesse and his older brother Franklin lost their father in 1849, when the Reverend Robert James abandoned his young family and disappeared forever into the California gold fields. Their mother, Zerelda, quickly remarried, but rumor had it that their new stepfather treated Jesse and Frank poorly, and a third husband soon followed. Perhaps it was a violent and unstable family life that led the young Jesse and Frank into lives of crime. Regardless, it is certain that the brothers first learned to kill during the Civil War. As Confederate sympathizers, both Jesse and Frank joined William Quantrill’s vicious Missouri guerilla force, and Jesse participated in the cold-blooded murder of 25 unarmed Union soldiers in August 1863.
When the war ended, neither man felt any enthusiasm for the drab life of a Missouri farmer-earning a living with their guns seemed easier and more exciting. Joining a motley band of ex-soldiers and common thieves, Jesse and Frank staged the first daylight bank robbery in U.S. history on Valentine’s Day in 1866, making off with $57,000 of the hard-earned cash of the citizens of Liberty, Missouri. For the next decade, the James Gang would steal many thousands more from banks, stores, stagecoaches, and trains.
The boldness of their crimes and the growing resentment among Westerners of big railroads and robber barons led some to romanticize Jesse and Frank, a process that was encouraged by the authors of popular dime novels who created largely fictional versions of the James brothers as modern-day Robin Hoods who stole from the rich to give to the poor. In reality, the James brothers’ crimes preyed as much on the common folks as on the very rich, and they did little to spare the lives of innocents caught in the crossfire. The Robin Hood myth conveniently ignores the little girl shot in the leg during a botched robbery at the Kansas City Fair; the train engineer killed when the James Gang derailed his locomotive, or the dozens of other innocent bystanders murdered or maimed by Jesse, Frank, or their gang. Nonetheless, the myth that Jesse James was a good-hearted hero of the common folk remains popular to this day. Robert Ford shot James in the back of the head, killing him on April 3, 1882.
MARKET MINUTE
Stocks Rise On Slowing Economy
Investor sentiment turned positive last week as signs of economic softness were interpreted as reason for the Fed to hold off on further rate hikes. A downward revision of Q2 economic growth and fresh signs of a cooling labor market reversed the recent rise in bond yield. They helped trigger a stock bounce back following Fed Chair Powell’s speech at Jackson Hole the previous Friday. It wasn’t all about bad news being viewed as good news, though. A series of solid earnings reports, an announcement by one mega-cap tech name introducing pricing for its AI tools, and fresh inflation data–in line with market expectations–further boosted enthusiasm for stocks.
Signs Of Labor Cooling
Despite historic monetary tightening, the labor market has exhibited remarkable resilience, but last week’s employment data showed a cooling trend. Job openings declined to their lowest level since March 2021, though they remained above pre-pandemic levels. Meanwhile, a survey of private sector hiring showed a slowdown in hiring, with employers adding 177,000 jobs in August–below the 371,000 added in July and short of economists’ forecast of 200,000. Finally, the government’s monthly employment report showed the number of nonfarm payroll gains continued to decelerate in August, while June and July estimates were revised lower by 110,000.
FINANCIAL STRATEGY OF THE WEEK
Managing an Inheritance
Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.
Take your time. If someone cared about you enough to leave you an inheritance, then you may need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can likely wait. You may be able to make more informed decisions once some time has passed.
Don’t go it alone. There are so many laws, choices, and potential pitfalls – the knowledge an experienced professional can provide on this subject may prove critical.
Think of your own family. When an inheritance is received, it may alter the course of your own financial strategy. Be sure to take that into consideration.
The taxman may visit. If you’ve inherited an IRA, it is important to consider the tax implications. Under the SECURE Act, distributions to non-spouse beneficiaries are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death.
It’s also important to highlight that the new rule does not require the non-spouse beneficiary to take withdrawals during the 10-year period. But all the money must be withdrawn by the end of the 10th calendar year following the inheritance. A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and children of the IRA owner who have not reached the age of majority may have other minimum distribution requirements.
Stay informed. The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct.
Remember to do what’s appropriate for your situation. While it’s natural for emotion to play a part and you may wish to leave your inheritance as it is out of respect for your relative, what happens if the inheritance isn’t appropriate for your financial situation? A financial professional can help determine if the inheritance fits with your overall goals, time horizon, and risk tolerance.