Stocks prices were whipsawed last week, dragged initially lower by financial contagion worries and later lifted by a supportive Fed policy statement.
The Dow Jones Industrial Average gained 0.62%, while the Standard & Poor’s 500 advanced 0.51%. The Nasdaq Composite index was flat (+0.02%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, ticked higher by 0.20%.1,2,3
A Wild Week
Last week began with a sharp sell-off on contagion concerns that the financial difficulties of a large, debt-laden Chinese property developer could spread to other parts of the global financial system. This added to an existing list of worries that included Delta variant infections, slowing economic activity, debt ceiling brinkmanship in Washington, and Fed tapering uncertainty.
By mid-week stocks bounced back strongly on news that downgraded the risk coming from China and a Fed announcement that its bond purchases would continue, though it did anticipate a moderation in such purchases coming soon. When the dust settled, a week that had appeared set for losses ended in small gains.
The Federal Reserve concluded its FOMC (Federal Open Market Committee) meeting last week, announcing that it may start tapering its monthly bond purchases soon, perhaps as early as November, and could raise rates sometime next year.4
Fed Chair Jerome Powell provided further detail in a subsequent press conference, saying that bond purchases may end entirely by the middle of 2022. The support for hiking interest rates also increased, with half of the 18 Fed officials expecting interest rates to be higher by the close of next year, up from just seven who thought similarly in June. The Fed also cut its GDP growth projection to 5.9%, compared with its June estimate of 7%, while raising its inflation forecast from 3% to 3.7%.5,6
Call me if you have any questions
It is natural to worry during such volatile times. What strategies you should be adopting, should you stay in the market or get out? Call me, Paul Kalra, and let's discuss.
This Week: Key Economic Data
Monday: Durable Goods Orders.
Tuesday: Consumer Confidence.
Thursday: Jobless Claims. Gross Domestic Product (GDP).
Friday: ISM (Institute for Supply Management) Manufacturing Index.
Source: Econoday, September 24, 2021
This Week: Companies Reporting Earnings
Tuesday: Micron Technologies, Inc. (MU).
Wednesday: Cintas Corporation (CTAS).
Thursday: McCormick & Company (MKC), CarMax, Inc. (KMX).
Source: Zacks, September 24, 2021
“Spread love everywhere you go. Let no one ever come to you without leaving happier.”
– Mother Teresa
Gig Economy Tax Tips
There are some important tips to remember if you work as a gig worker:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
What Are Essential Oils?
You've likely heard about the many potential benefits of essential oils, but what exactly are essential oils?
Essential oils are compounds extracted from plants. They can be obtained through distillation or cold pressing. The best essential oils are pure and no other chemicals are added. In addition to using essential oils in a diffuser as aromatherapy, you can also apply them topically. Inhaling the aromas from essential oils may stimulate areas of your limbic system, which is a part of your brain that plays a role in emotions, behaviors, sense of smell, and long-term memory.
Tip adapted from Healthline8
What can you hold in your right hand, but never in your left hand?
Last week’s riddle: What are the next three letters in this combination? OTTFFSS Answer: E N T. Each letter represents the first letter of written numbers (one, two, three, four, five, six, and seven).
Eagle in flight along the Susquehanna River, Dauphin, Pennsylvania.
Footnotes and Sources
2. The Wall Street Journal, September 24, 2021
3. The Wall Street Journal, September 24, 2021
4. The Wall Street Journal, September 22, 2021
5. The Wall Street Journal, September 22, 2021
6. CNBC, September 22, 2021
7. IRS.gov, September 19, 2020
8. Healthline.com, 2020
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Weekly Market Insights: Wild Week of Contagion Concerns
September 27, 2021