The Week on Wall Street
Overcoming a COVID-related economic growth scare, stocks moved higher amid a week of strong corporate earnings reports.
The Dow Jones Industrial Average rose 1.08%, while the S&P's 500 gained 1.96%. The Nasdaq Composite index soared 2.84% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 0.20%.
FACT OF THE WEEK
On July 31, 1964, Ranger 7, an unmanned U.S. lunar probe, takes the first close-up images of the moon - 4,308 in total - before it impacts with the lunar surface northwest of the Sea of Clouds. The images were 1,000 times as clear as anything ever seen through earth-bound telescopes.
The National Aeronautics and Space Administration (NASA) had attempted a similar mission earlier in the year - Ranger 6 - but the probe’s cameras had failed as it descended to the lunar surface. Ranger 7, launched from Earth on July 28, successfully activated its cameras 17 minutes, or 1,300 miles, before impact and began beaming the images back to NASA’s receiving station in California. The pictures showed that the lunar surface was not excessively dusty or otherwise treacherous to a potential spacecraft landing, thus lending encouragement to the NASA plan to send astronauts to the moon.
In July 1969, two Americans walked on the moon in the first Apollo Program lunar landing mission.
Delta Variant Head Fake
Stocks staged a broad retreat on Monday as traders worried about the adverse economic implications of growing Delta variant infections. Economically sensitive sectors, such as energy, financials, industrials, and materials, absorbed the brunt of Monday’s sell-off.
But the markets did a quick about face, posting four-consecutive days of gains and leaving the three major averages with fresh record highs.
The sharp reversal may be attributable to a “buy on the dip” investor mentality, the absence of investment alternatives to stocks in this low interest rate environment, and massive financial liquidity. Stocks were also lifted by a healthy kick-off to the second quarter earnings season.
The earnings season moved into full swing last week, and the results exceeded the market’s high expectations.
Of the 120 companies in the S&P 500 index that have reported as of Friday, July 23, 89% of them beat the Street’s earnings-per-share estimates by, on average, 20.6%. Financials and Consumer Discretionary sectors provided the biggest earnings surprises (+28.9% and +24.5%, respectively), while Materials and Utilities delivered the smallest positive surprises (+5.3% and +2.5%, respectively).
These earnings beats are leading Wall Street analysts to raise earnings estimates for 3Q 2021 through 1Q 2022.
FINANCIAL STRATEGY OF THE WEEK
Who Can Deduct Car Expenses on Their Tax Returns?
Wondering if you can deduct expenses such as gas, depreciation, and lease payments on your tax returns? If you are a business owner or self-employed individual, you may be able to. If you use your car for both business and personal purposes, the expenses may be split and the deductions will be based on a portion of the mileage used for business.
There are two ways to calculate the car expenses you may be able to deduct. The first method is to calculate and deduct the actual expenses, including depreciation, lease payments, gas and oil, tires, repairs and tune-ups, insurance, and registration fees.
The second is to use the standard mileage rate, which is a rate calculated to represent gas and some of the above factors. In 2021, the standard mileage rate is 56 cents per mile. Taxpayers who want to use the standard mileage rate for a car they own must choose to use this method in the first year the car is available for use in their business.
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!