The Week on Wall Street
Rising bond yields and improving economic conditions led to a choppy week of trading that ended in modest losses for investors.
The Dow Jones Industrial Average fell 0.46%, while the S&P 500 declined 0.77%. The Nasdaq Composite index lost 0.79% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 1.24%.
FACT OF THE WEEK
The first NCAA Division I men's basketball tournament was played in 1939. It had eight teams. Oregon is the first NCAA tournament champion, beating Ohio State for the title.
The NCAA tournament field grew to 16 teams in 1951, doubled to 32 in 1975 and expanded to its current size of 64 teams in 1985. An opening-round game was introduced in 2001. Three more games were added to that round in 2011 for the inaugural First Four.
The term 'March Madness' was first used in reference to basketball by an Illinois high school official, Henry V. Porter, in 1939. March Madness wouldn't become associated with the NCAA tournament until Brent Musberger used it during coverage of the 1982 tournament.
The stock market began the week on a positive note, rising on optimism over the economic re-openings and a decline in bond yields. Technology shares staged a strong turnaround from the previous week.
Following the FOMC (Federal Open Market Committee) meeting announcement reaffirming the Fed's easy-money policies, the Dow Industrials and the S&P 500 recorded new record closing highs.
Markets reversed themselves on Thursday as a surge in yields sent technology and other high-growth stocks lower. During the session, the 10-year Treasury yield moved above 1.75% (the highest in 14 months), and the 30-year Treasury breached 2.5% for the first time since August 2019.
Stocks closed out the week mixed as technology reclaimed some of the previous day's losses.
The Fed Stands Pat
The Fed restated its commitment to no interest rate hikes through 2023. As expected, the FOMC also voted to continue its monthly bond purchases of at least $120 billion.
FOMC members projected that the economy would grow 6.5% this year, a sharp improvement over its previous estimate of a 4.2% gain. The forecast for the unemployment rate by year-end is 4.5%, down from the current rate of 6.2%. While Fed Chair Powell said that he anticipates inflation rising this year, he expects price increases to be temporary, with inflation staying within the Fed’s 2% target for the next several years.
FINANCIAL STRATEGY OF THE WEEK
Couples Who Work Together, Tax Together
As more households decide to start a business, many couples find themselves learning about the tax responsibilities related to that business. There are some things to consider when working together.
Here are a few items to consider:
You should first establish whether you have a partnership business (where both spouses have an equal say in the affairs, services, and capital of the business) or an employee/employer relationship (one spouse substantially controls management decisions). These relationships face different tax situations.
If there is an employee/employer relationship, the second spouse (employee) may be subject to income tax, Social Security, and Medicare.
If there is a partnership relationship, you may need to report the business income on Form 1065, US Return of Partnership Income.
We suggest 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.
Have a great week!