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The Weekly Wealth Report

July 12, 2021

The Week on Wall Street

Stocks managed small gains as investors wrestled with concerns over economic growth prospects and a rise in COVID-19 infections.

The Dow Jones Industrial Average picked up 0.24%, while the S&P 500 gained 0.40%. The Nasdaq Composite index added 0.43%. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.78%.


If you feel extra lucky on July 17th, it might be because it’s National Lottery Day.  Lotteries date back to the 15th century. While early lotteries funded village needs by feeding and clothing the poor, they also strengthened defenses. According to Random Riches author, Manfred Zollinger, one of the oldest lotteries dates back to 1441 in Bruges, Belgium.

In early lotteries, merchants paid for the chance to win money prizes. Often, the grand prizes included the tax farm on the wijnscrooderschap (wine transporters). These early Renaissance lotteries granted one grand prize winner the opportunity to own the tax farm. Their winnings also included quality control of the wine. There’s no question, merchants gained a lucrative position if they won this lottery.

In the United States, early lotteries paid for cannons during the American Revolution. Lottery money also paved roads up and down the East Coast. Today, states own and operate the lotteries. The funds they gather support government programs and the communities they serve. The day encourages local and state lotteries to offer special promotions on July 17th.



A Choppy Week

In a truncated week of trading, stock market action was turbulent and indecisive. A mixed start saw cyclical stocks sell off amid concerns of slowing economic growth, while growth stocks advanced in response to falling yields.

After strengthening mid-week with the release of the FOMC meeting minutes, stocks skidded when reopening fears resurfaced Thursday on a new wave of global COVID-19 infections and Japan’s emergency declaration that reintroduced lockdown protocols. This led to a broad-based sell-off, with financials, home builders, and technology hit hard. A drop in bond yields added to the deteriorating sentiment.

Bond yields rebounded on Friday, setting the stage for a strong comeback for stocks, with the three major indices closing at new all-time highs.

Attention Turns to Bonds

Since reaching a 2021 high of 1.74% in March, the 10-year Treasury yield has been in a slow, steady decline, closing at 1.37% on Friday.

One explanation may be that reopening sentiment has turned more cautious as the Delta variant of COVID-19 spreads globally. Another view is that overseas investors are buying Treasuries, effectively lowering yields.

Perhaps it's abating inflation concerns, or simply excess liquidity finding its way into bonds. Whatever the message, the yield narrative has changed from just a few months ago when it was believed that the 10-year treasury was heading to two percent.


When Was the Last Time You Checked Your Withholding Status?

Most people check their withholding status at the end of the year or as filing season arrives, but the middle of the year is just as good of a time as any to double-check your withholding status and make sure it's accurate. The IRS has a handy tool called the Tax Withholding Estimator, which can help you avoid having too much or too little tax withheld from your wages.

The tool can also help you determine if you need to fill out a new W-4 to submit to your employer, complete a new W-4P, or make additional payments to the IRS. It does this by estimating your annual income, how many children you are claiming for the child tax credit and earned income tax credit, and other items that may affect your taxes for the year.

Before using the Tax Withholding Estimator, gather all necessary documents. This includes your W-2 from your employer, any 1099 forms you have from banks and other payers, and any other forms you need. Gathering as much information as possible will help because the estimator will only be as accurate as the information you enter.

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!