THE WEEK ON WALL STREET
U.S. stocks slipped over the shortened trading week as Q1 corporate reports started to roll in. The S&P 500 Index dropped 1.50 percent, while the Nasdaq Composite Index fell 2.62 percent. The Dow Jones Industrial Average lost 2.66 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 4.19 percent.
FACT OF THE WEEK
On April 21, 1895, Woodville Latham and his sons, Otway and Gray, demonstrated their “Panopticon,” the first movie projector developed in the United States. Although motion pictures had been shown in the United States for several years using Thomas Edison’s Kinetoscope, the films could only be viewed one at a time in a peep-show box, not projected to a large audience. Brothers Grey and Otway Latham, the founders of a company that produced and exhibited films of prize fights using the Kinetoscope, called on their father, Woodville, and W.K.L. Dickson, an assistant in the Edison Laboratory, to help them develop a device that would project life-sized images onto a screen in order to attract larger audiences.
MARKET MINUTE
U.S. Stocks Slide
Stocks started the four-day week with modest gains. Trade volatility subsided as several money center banks reported Q1 numbers at or above expectations.
Stocks trended lower midweek after Federal Reserve Chair Jerome Powell expressed concern that tariffs would likely “move us further away from our goals”—including keeping inflation in check.
Stocks were mixed on the week's last trading day as traders evaluated White House news that trade deals were progressing with Japan, China, and the European Union. The S&P 500 ended the day higher, but the Dow Industrials were under pressure after a large healthcare company gave a disappointing Q1 report.
The Fed’s Influence
Stocks were under pressure following comments from Fed Chair Powell, who expressed concern about the ability of the Fed to balance its inflation and employment goals given the current trade situation. He said, “Tariffs are highly likely to generate at least a temporary rise in inflation,” and “the inflationary effects could be more persistent.”
These are Powell's latest remarks about tariffs. The Fed Chair made similar comments earlier this month at an event in Alexandria, Virginia.
FINANCIAL STRATEGY OF THE WEEK
Your Emergency Fund: How Much Is Enough?
Have you ever had one of those months? The water heater stops heating, the dishwasher stops washing, and your family ends up on a first-name basis with the nurse at urgent care. Then, as you’re driving to work, you see smoke coming from under your hood.
Bad things happen to the best of us, and sometimes it seems like they come in waves. That’s when an emergency cash fund can come in handy.
One survey found that over two in three Americans are not confident that they have enough emergency savings to cover a month's worth of expenses. Another survey found that 43% of Americans said they wouldn’t be able to cover an unexpected $1,000 expense with money from their savings account.
How Much Money?
How large should an emergency fund be? There is no “one-size-fits-all” answer. The ideal amount may depend on your financial situation and lifestyle. For example, if you own a home or have dependents, you may be more likely to face financial emergencies. And if a job loss affects your income, you may need emergency funds for months.
Coming Up with Cash
If saving several months of income seems unreasonable, don’t despair. Start with a more modest goal, such as saving $1,000, and build your savings a bit at a time. Consider setting up automatic monthly transfers into the fund. Once your savings begin to build, you may be tempted to use the money in the account for something other than an emergency. Try to avoid that. Instead, budget and prepare separately for bigger expenses you know are coming.
Where Do I Put It?
Many people open traditional savings accounts to hold emergency funds. They typically offer modest rates of return. The Federal Deposit Insurance Corporation (FDIC) insures bank accounts for up to $250,000 per depositor, per institution, in principal and interest.
The only thing you can know about unexpected expenses is that they’re coming. Having an emergency fund may help to alleviate the stress and worry that can come with them. If you lack emergency savings now, consider taking steps to create a cushion for the future.