The Week on Wall Street
Stocks were mixed last week as rising bond yields and heightening inflation fears sent stocks on a wild ride, capped by a remarkable Friday afternoon rally.
The Dow Jones Industrial Average gained 1.82%, while the S&P 500 increased by 0.81%. The Nasdaq Composite index fell 2.06% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 0.76%.
FACT OF THE WEEK
Flowers have been around for at least 150 million years, with new and captivating species springing up all over the place during that time. And they have long been a staple in various cultures all around the world, serving numerous purposes over the millennia including decorative and medicinal ones.
As early as 2,500 BC, the Ancient Egyptians were using flowers to adorn tables and great halls, as well as show respect to both the living and the dead, with the remains of many kinds of flowers uncovered in the tombs of pharaohs, high priests and other wealthy citizens. Later, both the Ancient Greeks and Romans continued to use flowers for these same purposes and also began to use some of them as herbs. This tradition continues today through herbal teas, medicines and spices. March 12 is annually recognized by many as National Plant a Flower Day.
Rising Yields Whipsaw Stocks
The week began on an ebullient note as stocks surged on a retreat in bond yields and approval of a new vaccine, with sharp gains in reopening stocks, hard-hit technology companies, and small-cap companies.
But the optimism proved fleeting as worries over rising bond yields upended the high valuation growth stocks and sent the broader market lower. Deteriorating investor sentiment culminated in a steep sell-off on Thursday, sparked by comments from Fed Chair Jerome Powell that did little to allay investors’ concerns about rising yields and festering inflation anxieties. Stock prices rallied on a strong employment report on Friday, but some of the enthusiasm was tempered by rising yields.
U.S. Dollar’s Surprising Strength
Last week, the U.S. dollar gained 0.93% against a basket of international currencies - a relatively big move in the currency market. Year-to-date the dollar has appreciated over 2%.
U.S. dollar strength this year has defied the expectations of many analysts who anticipated that a global economic recovery would prompt a shift away from the safe harbor of the dollar toward non-dollar denominated assets.
However, rising U.S. yields and a faltering economic rebound in Europe have instead propelled the U.S. dollar higher, raising concerns about tight financial conditions abroad and its potential adverse impact on an emerging markets recovery.
FINANCIAL STRATEGY OF THE WEEK
4 Facts About Capital Gains
When you sell a capital asset like an investment or a piece of property, the sale can result in a capital gain or loss. The IRS defines a capital asset as “most property you own for personal use or own as an investment.” Here are four facts you should keep in mind:
• A capital gain or loss is the difference between what you originally paid for the asset (your basis) and the amount you get when you sell an asset.
• You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. Consult a qualified tax expert for help.
• The IRS allows you to deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
• If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.
We would be happy to discuss this topic with you or to help answer any questions you might have. As always, please let us know if there is anything we can help with along the way or any financial concerns you may have.