THE WEEK ON WALL STREET
Stocks moved higher last week after the Federal Reserve’s half-point rate cut, bolstered by multiple data points supporting a cooling but still strong economy and decelerating inflation.
The S & P’s 500 Index gained 1.36 percent, while the Nasdaq Composite rose 1.49 percent. The Dow Jones Industrial Average moved ahead by 1.62 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, inched up 0.42 percent.
Fed Cuts Rate 0.5 Percent
Stocks traded in a narrow range for the first half of the week as anxious investors awaited the outcome of the Federal Open Market Committee’s (FOMC) September meeting.
Shortly after 2 pm ET Wednesday, the Fed announced it was cutting rates by a half percentage point—a more significant cut than some investors anticipated. Stocks initially rose in response and then fell. Some market watchers attributed the decline to concern that the Fed might be concerned about economic growth.
But after sleeping on it, stocks rallied Thursday, with the Nasdaq, S&P, and Dow climbing 2.5 percent, 1.7 percent, and 1.3 percent, respectively. The Dow topped 42,000 for the first time, while the S&P crossed the 5,700 mark.
FACT OF THE WEEK
It started with an offhand remark made by Bob Dylan during his performance at Live Aid, the massive fundraising concert held at Wembley Stadium, London, and JFK Stadium, Philadelphia, in the early summer of 1985. As television viewers around the world phoned in donations in support of African famine relief, Dylan said from the stage, “I hope that some of the money…maybe they can just take a little bit of it, maybe…one or two million, maybe…and use it, say, to pay the mortgages on some of the farms and, the farmers here, owe to the banks.” Dylan would come under harsh criticism from Live Aid organizer Bob Geldof for his remarks (“It was a crass, stupid and nationalistic thing to say,” Geldof would later write), but he planted a seed with several fellow musicians who shared his concern over the state of the American family farm. Less than one month later, Willie Nelson, Neil Young, and John Mellencamp announced plans for “Farm Aid,” a benefit concert for America’s farmers held in Champaign, Illinois, on September 22, 1985.
MARKET MINUTE
Fed’s Move
The half-point cut was the first change in the Fed Funds Rate in 14 months and the first reduction in 4½ years, bringing its target range to 4.75-5.0 percent. Fed Chair Powell said the decision reflected the Committee’s “greater confidence that inflation is moving sustainably toward 2 percent” and that the “risks to achieving its employment and inflation goals are roughly in balance.”
FINANCIAL STRATEGY OF THE WEEK
September is National Life Insurance Awareness Month
This is a great reminder to review your current plans or explore options if you don’t have life insurance. Be sure to consider these potential factors when determining your need for life insurance:
- You have a spouse or partner and/or children.
- You have an aging parent or disabled relative who depends on you for support.
- Your household depends heavily on your income.
- Your retirement savings or pension won’t be enough for your spouse or partner to live on should you pass away.
- You own a business, either solely or with partners.
- You have a substantial joint financial obligation, such as a personal loan for which another person could be legally responsible after your death.
Life insurance is intended to help your loved ones financially after you die. If you’re unsure if life insurance is right for you (or you have coverage but recent life changes have you wondering if you need to update it), contact our office. We are happy to assist you in evaluating your options or answer any other questions you may have regarding your financial plans. Wishing you a happy transition into fall!