The Week on Wall Street
Stocks touched new record highs last week as bond yields steadied, a fiscal relief bill was signed into law, and confidence in a strong economic recovery grew.
The Dow Jones Industrial Average gained 4.07%, while the S&P 500 tacked on 2.64%. The Nasdaq Composite index rose 3.09% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.01%.
FACT OF THE WEEK
The first man to give hope to dreams of space travel is American Robert H. Goddard, who successfully launched the world’s first liquid-fueled rocket in Auburn, Massachusetts on March 16, 1926. The rocket traveled for 2.5 seconds at a speed of about 60 mph, reaching an altitude of 41 feet and landing 184 feet away. The rocket was 10 feet tall, constructed out of thin pipes, and was fueled by liquid oxygen and gasoline.
MARKET MINUTE
Dow 32,000
Stocks marched higher as bond yields leveled off and the $1.9 trillion stimulus bill moved through the legislative process. A muted inflation number and a better-than-expected jobless claims report evidenced an improving economy absent an attendant rise in inflation.
The technology sector was particularly volatile, with the Nasdaq Composite falling into correction territory to start the week as investors rotated into cyclical opportunities.
Technology rebounded strongly as bond yields stabilized and bargain hunters purchased tech names at reduced prices. The bounce-back propelled the S&P 500 to a record high, while the reopening trade drove the Dow Industrials above 32,000 for the first time.
The week ended on a mixed note, with the Dow and S&P 500 adding to their record closes and the Nasdaq Composite trimming its weekly gain.
Treasury Auctions
Treasury auctions to finance federal spending are usually staid affairs, but investor trepidation was high ahead of last week’s auctions of 10-year and 30-year Treasuries. Investors were concerned that lukewarm demand amid a huge supply had the potential to drive yields higher and take the pressure on stock prices lower.
As it turned out, Wednesday’s auction of 10-year Notes was received with adequate demand, helped by a tame February inflation number and strong overseas interest. The following day’s 30-year auction also went relatively smoothly, though the auction yield was 36.2 basis points higher than last month’s auction. Despite $120 billion of federal debt issuance last week, yields steadied, easing investors’ interest rate concerns for the moment.
FINANCIAL STRATEGY OF THE WEEK
Rules for Home Office Deductions
If you have a business and work out of your home, the IRS allows you to deduct certain expenses on your return. Here are a few key things to keep in mind:
The IRS requires you to use your office (or a part of your home) for “regular and exclusive use.” The part of the house should be your principal place of business, a place where you meet customers, or a separate structure dedicated to the business, like a garage or studio.
To calculate your deduction, you can use two methods:
1) The simplified option allows you to multiply the allowable square footage of your office by $5 up to a maximum of 300 square feet.
2) The regular method allows you to specifically calculate the actual expenses like rent, mortgage interest, taxes, repairs, depreciation, and utilities you pay for the portion of your home used for the business. If you use only part of a space for your business, you’ll need to figure out the percentage devoted to business activities.
We recommend that you discuss your specific tax issues with a qualified tax professional.
As always, please let us know if there is anything we can help with along the way or any financial concerns you may have.