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Stock prices fell last week in response to the Fed’s plan to combat inflation, which staked out a more aggressive stance than investors had anticipated. The Dow Jones Industrial Average slipped 0.28%, while the Standard & Poor’s 500 fell 1.27%. The Nasdaq Composite index dropped 3.86% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slid 2.05%.1,2,3
Fed Roils Markets
After a positive start to the week, stock prices turned lower on a more hawkish tone from Fed officials. On Tuesday, investors were surprised by comments from Fed governor Lael Brainard, one of the Fed’s more dovish members, who suggested the Fed could take a more aggressive approach with interest rates.
The unease extended into Wednesday when minutes of the last Federal Open Market Committee (FOMC) meeting were released, signaling a potentially faster pace in both interest rate hikes and the wind-down of the Fed’s balance sheet. Yields climbed steadily throughout the week as the bond market digested this new information. Particularly hard hit were high valuation stocks, as reflected in the 4% drop in the Nasdaq.
After raising the federal funds rate by 0.25% last month, the minutes from the March FOMC meeting made it clear the Fed is serious about fighting inflation with higher interest rates.
Fed officials indicated they might have hiked rates by a half percentage point in March had it not been for the uncertainty created by the invasion of Ukraine. Multiple Fed officials suggested that future rate hikes may reach 0.5%. Fed officials also discussed allowing up to a $95 billion monthly run off the Fed’s balance sheet, a faster pace than the market expected.4
This Week: Key Economic Data
Tuesday: Consumer Price Index (CPI).
Wednesday: Producer Price Index (PPI).
Thursday: Jobless Claims. Retail Sales. Consumer Sentiment.
Friday: Industrial Production.
Source: Econoday, April 8, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: CarMax, Inc. (KMX), Albertsons Companies, Inc. (ACI).
Wednesday: JPMorgan Chase & Co. (JPM), Delta Air Lines, Inc. (DAL), BlackRock, Inc. (BLK).
Thursday: UnitedHealth Group (UNH), The Goldman Sachs Group, Inc. (GS), Wells Fargo & Co. (WFC), Morgan Stanley (MS), The PNC Financial Services Group, Inc. (PNC).
Source: Zacks, April 8, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Important Information Regarding Qualified Charitable Distributions for 2022
If you are age 72 or older, IRS rules require you to take required minimum distributions (RMDs) each year from your tax-deferred retirement accounts.
Many of our clients have inquired about satisfying their RMDs through a Qualified Charitable Distribution, so we have provided some insights and instructions below.
A Qualified Charitable Distribution is a direct transfer of funds from your IRA, payable directly to a qualified charity (as described in the QCD provision in the Internal Revenue Code). Amounts distributed as a QCD can be counted towards satisfying your RMD for the year, up to $100,000, and the QCD is excluded from your taxable income. This is not the case with a regular withdrawal from an IRA, even if you use the funds to make a charitable contribution later on.
To eliminate or reduce the impact of RMD income, charitably inclined investors may want to consider making a qualified charitable distribution.
If this sounds like a strategy that could work for you, here are some things that you need to know:
Each individual may donate the full amount of his or her RMD, up to $100,000 annually.
Funds must be transferred directly from your IRA at Fidelity to the qualified charity. This is accomplished by reaching out to your SFG Service Team and requesting a check to be issued payable to the charity.
Not every organization or cause qualifies for a QCD. Certain charities are not eligible to receive QCDs, including donor-advised funds, private foundations, and supporting organizations. You are not allowed to receive any benefit in return for your charitable donation. For example, if your donation covers your cost of playing in a charitable golf tournament, your gift would not qualify as a QCD. The charity must be a 501(c)(3) organization, and you should check directly with the charity to confirm.
A QCD is reported by Fidelity as a normal distribution on IRS Form 1099-R. You need to keep an acknowledgement of the donation from the charity for your tax records. Please be sure to inform your tax preparer that you have completed a QCD and that it is correctly listed on your tax return.
For a QCD to count towards your minimum annual RMD, it must meet the same deadline as a normal distribution.
In order for us to have sufficient time to process your QCD request, you must verify that your charity qualifies for a QCD, and give us the following information 60 days before your scheduled RMD distribution date
Name of charity & Tax ID Number
Address of charity
Dollar amount to be contributed to charity
If you have any questions or would like to discuss this in further detail, please reach out to us.
There’s no doubt that market volatility has been on nearly every retiree’s mind lately. The question is: Are you prepared for it?
Join us at our upcoming events to find out.
If you, or someone you know, wants to ensure that your portfolio is properly organized to withstand times of market volatility, give us a call at 301-345-1635 to schedule a time to connect!
“It has always seemed strange to me that in our endless discussions about education so little stress is laid on the pleasure of becoming an educated person, the enormous interest it adds to life.”
Beware of Phishing Scams
A phishing scam is when someone pretends to be a trusted source, such as a bank, tax preparer, or credit card company, to access your personal information.
To avoid falling victim to a phishing scam, here are some recommendations from the IRS:
- Never open an email from a sender that you don’t recognize.
- Never disclose personal information, including your passwords, bank account number, credit card number, or Social Security number, to anyone online. The IRS will never ask for this information via email.
- When possible, use two-factor authentication to protect your accounts. Two-factor authentication requires a secondary form of identification (such as a phone number) to access your account.
* 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.gov5
What’s the Deal With Downward Dog?
Even if you’ve never set foot on a yoga mat, you’ve probably heard of one of the most popular poses called Downward Dog.
The pose is so popular because it has many benefits, such as increased flexibility and spinal strength. In yoga, it’s a resting posture to let your muscles lengthen and straighten. It can help stretch your back, neck, hamstrings, and calves. You can sit in the pose without moving (a static hold) or “walk the dog,” which includes pushing your heels toward the ground to stretch out your calves.
If you’re new to downward dog, practice proper form by bending your knees and focusing on lengthening your back and arms. Ideally, your body should be in an inverted “V” shape. Eventually, you may be able to straighten your legs and have your heels touch the floor!
Tip adapted from Do You6
When you take away the whole from this, you still have some leftover. What is it?
Last week’s riddle: What do a shark, a zipper, and a comb all have in common? Answer: They all have teeth.
Share the Wealth of Knowledge. We love being introduced!
The Wall Street Journal, April 8, 2022
The Wall Street Journal, April 8, 2022
The Wall Street Journal, April 8, 2022
CNBC, April 6, 2022
IRS.gov, August 26, 2021
- DoYou.com, September 30, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with Stuart Financial Group, J.W. Cole Advisors, Inc., nor state or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Copyright 2021 FMG Suite.