Broker Check

The Weekly Wealth Report

April 19, 2021

The Week on Wall Street

Stocks reached record highs last week, riding the tailwind of improving economic data and a strong start to the earnings season.

The Dow Jones Industrial Average rose 1.18%, while the S&P 500 gained 1.37%. The Nasdaq Composite index added 1.09%. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.00%.

FACT OF THE WEEK

Each year on April 22, National Earth Day campaigns around the globe promote ways to save the Earth.

In 1969, the concept of Earth Day was established at a UNESCO Conference in San Francisco. On March 21, 1970, a sanctioned Proclamation was signed by Secretary General U Thant at the United Nations. A month later, on April 22, 1970, U.S. Senator Gaylord Nelson founded Earth Day.

The observance became a global event in 1990.

MARKET MINUTE

Earnings, Economic Data

Stocks rallied early in the week on strong retail sales, a sharp drop in initial jobless claims, and a retreat in bond yields. Stocks then climbed to fresh record highs on Thursday, with the Dow Jones Industrial Average rising above 34,000 for the first time and the S&P 500 approaching 4,200.

The market overcame some initial jitters arising from health authorities recommending a pause on a COVID-19 vaccine. Stocks also looked past an increase in the Consumer Price Index and a Federal Reserve report that indicated businesses were raising prices.

A surge in housing starts helped the rally, with stock prices moving higher to close out the week.

The Economic Pulse

Last week provided insight into the economic recovery, and the numbers vindicated the optimism that has driven markets higher.

An acceleration in inflation was expected, but came in at a rate (+2.6%) that didn’t appear to rattle the markets. It was, however, retail sales (an increase of 9.8%), new jobless claims (576,000--the lowest level since March 14, 2020), continuing unemployment claims (the lowest four-week moving average since March 28, 2020), and housing starts (+19.4%) that emboldened investors.

Confirmation of this recovery came with the start of the new earnings season, which kicked off with strong earnings that, in some cases, exceeded Wall Street consensus expectations.

FINANCIAL STRATEGY OF THE WEEK

While it’s natural to look ahead to a leisurely retirement, it’s prudent to prepare for expenses that catch many retirees by surprise. In a recent survey, nearly one-third of retirees reported they faced at least four unforeseen expenses during retirement. Some of the most common include:

Inflation: Inflation rates have been low since the 2008-2009 recession. But even subtle increases can add up over time. For example, $100 in June 2009 had the same buying power as $119.52 in June 2020. Unless that $100 was invested, it effectively lost 20 percent of its value in just 11 years. And there is no guarantee inflation will remain low. It’s important to invest in assets that can compound through multiple market environments to protect your purchasing power.

Home Expenses: If the value of your home dramatically increases, so will your property taxes. On the flip side, if the value of your house declines dramatically, you may not be able to sell it without a loss. And there are repairs and maintenance to consider. Some financial professionals suggest setting aside 10 percent of your monthly payment, property taxes, and homeowner’s insurance for repairs and maintenance. Paying off your mortgage or downsizing can reduce monthly expenses and allow you to hold on to your home until reduced prices rebound.

Social Security and Other Taxes: If you’re like most recipients, you’ll pay income tax on your Social Security benefits. Individuals with a total gross income (including benefits) of $25,000 may pay taxes on up to 50 percent of their Social Security benefits. Up to 85 percent of benefits are taxable for individuals with a combined gross income of more than $34,000.

Retirement is something most of us look forward to. Ensure your plans aren’t derailed by these unexpected expenses and others. Make sure you’re on the right track. Contact our office for a review of your financial situation and an evaluation of your goals.

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!