THE WEEK ON WALL STREET
Stocks were mixed last week despite a powerful Friday rally sparked by Federal Reserve Chair Jerome Powell, who opened the door to adjusting short-term interest rates. The S&P 500 Index picked up 0.27 percent while the Nasdaq Composite Index lost 0.58 percent. The Dow Jones Industrial Average rose 1.53 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 0.80 percent.
FACT OF THE WEEK
On August 25, 1835, the first in a series of six articles announcing the supposed discovery of life on the moon appears in the New York Sun newspaper.
Known collectively as “The Great Moon Hoax,” the articles were supposedly reprinted from the Edinburgh Journal of Science. The byline was Dr. Andrew Grant, described as a colleague of Sir John Herschel, a famous astronomer of the day. Herschel had in fact traveled to Capetown, South Africa, in January 1834 to set up an observatory with a powerful new telescope. As Grant described it, Herschel had found evidence of life forms on the moon, including such fantastic animals as unicorns, two-legged beavers and furry, winged humanoids resembling bats. The articles also offered vivid description of the moon’s geography, complete with massive craters, enormous amethyst crystals, rushing rivers and lush vegetation.
On September 16, 1835, the Sun admitted the articles had been a hoax. People were generally amused by the whole thing, and sales of the paper didn’t suffer. The Sun continued operation until 1950, when it merged with the New York World-Telegram. The merger folded in 1967. A new New York Sun newspaper was founded in 2002, but it had no relation to the original.
MARKET MINUTE
All Eyes on Powell
Stocks traded in a narrow band to start the week as investors awaited fresh economic data and comments from Fed officials at their annual symposium in Jackson Hole, Wyoming. After a big retailer reported quarterly results on Tuesday and gave encouraging guidance, stocks pushed higher. But markets took a breather later in the day as pressure on megacap tech and chipmakers led the Nasdaq and the broader market lower.
The S&P 500 and Nasdaq fell after minutes from the Federal Reserve's July meeting were published; they revealed that most Federal Open Market Committee (FOMC) members were more concerned about inflation than the job market. On Friday, markets rebounded after Fed Chair Powell opened the door to a rate move at the Fed’s September meeting. The day’s gain was strong enough to regain the week’s lost ground for the S&P and nearly all of it for the Nasdaq—and put the Dow solidly ahead for the week.
Watch the Rotation
Investors appeared to rotate out of megacap tech as some expressed concern about valuations and the durability of the AI-driven rally. Two facts helped support this observation: the S&P fared better than the tech-heavy Nasdaq for the week, and the Russell 2000 Index of small-cap stocks (+3.25 percent) beat all three major stock averages.
The Federal Reserve also rotated a bit. In contrast to the Fed’s July meeting—where inflation was the bigger concern for most Committee members—Fed Chair Powell’s Friday morning speech at Jackson Hole revealed the FOMC was now more concerned with the jobs market.
FINANCIAL STRATEGY OF THE WEEK
If you have teenagers in your life, you’re likely very in touch with the adage, “One day you’re changing diapers, and the next you’re sending them off to college.” One of the results of that compressed passage of time is the bracing reality that your college-bound teen will need countless check-list items… Don’t forget the need for insurance.
Let’s start with their health: Most US colleges require their students to have health insurance. Thanks to the Affordable Care Act, your college student can remain on your health insurance plan until age 26. If, however, your insurance doesn’t cover your teen or doesn’t meet the college’s requirements, you’ll want to explore other options, including the college’s healthcare plan (which is sometimes pricey).
What are other insurances might you consider for your college student while they’re away from home? Should an accident or some other unforeseen event occurs, you can help relieve some of their (or your) financial stress if you also have coverage with these other insurance types:
1. Car insurance: Likely, your college-age student can remain on your policy while in college. However, be sure to contact your insurance professional regarding where your student is attending, as a different location may increase your rates. Also, many insurance companies offer student discounts for students who maintain a B average or above, so be sure to ask about special rates and discounts and keep in touch with your student about their grades.
2. Renter’s insurance: If your child is going to live on campus, your homeowner’s insurance may (or may not) cover them. Each insurance company has its requirements regarding insuring possessions outside of the physical property. Contact your insurance professional to determine if your student is covered or if you need to purchase renter’s insurance, even if they live in the dorm.
If your student lives off-campus, renter’s insurance is essential. Look for a policy that will also cover temporary living expenses, in case the off-campus location has a fire, flood, or other damage (thus requiring repairs that could result in having to pay for alternate housing for a while).
3. Electronics insurance: Often, electronics are covered by your homeowner's or renter's insurance but may have a high deductible to replace them. Therefore, you may want to purchase a protection plan that covers the gadget against theft, damage, or loss up to the replacement value. Also, check if the electronics are covered while living in the dorm or used at other campus locations.
4. Identity theft insurance: College students are often the target of identity theft for the following reasons:
- They live in close contact with others without secure environments to store personal items
- They unknowingly share personal information through social media, such as phone numbers, addresses, etc.
- They forget to shred confidential documents
- They fail to choose secure passwords or may share them with others
- Identity theft plans often include credit monitoring and recovery and may include covering legal costs. This type of insurance is vital to helping your student cover the financial loss they may experience if their identity or other personal information is stolen. Ask your insurance professional if an identity theft rider can be added to your homeowner’s policy or if you should consider purchasing an individual policy for your college student.
5. Personal liability insurance: Often, personal liability insurance is included in the parent's homeowner or renter insurance policy. Still, it’s a good idea to ensure it will cover your student while they’re away at college. For example, personal liability insurance covers legal expenses if your student harms someone and gets sued, if your student damages someone’s property and needs to replace it or causes bodily injury and has to pay their medical bills.
Before purchasing any of these types of insurance, consult your insurance professional to determine if you can add them to your own insurance policy or not. Remember that your student is living independently for the first time in their lives, and having extra protection in place can provide peace of mind for the both of you.
Give our office a call if you need clarification on any of this info, want to discuss college funding solutions, or have questions about your investment plans. We’re here to help.