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Anticipation of a new fiscal stimulus and improved vaccine distribution
powered stocks to fresh record highs last week with technology stocks
leading the way.
The Dow Jones Industrial Average gained 0.59%, while the Standard &
Poor’s 500 picked up 1.94%. The Nasdaq Composite index led, gaining
4.19% for the week. The MSCI EAFE index, which tracks developed
overseas stock markets, rose by 1.15%.1,2,3
Stocks Scale New Heights
In a holiday-shortened week, stocks rallied as investors welcomed
testimony from incoming Treasury Secretary Janet Yellen to the Senate
Finance Committee that suggested lawmakers needed to “act big” on
fiscal stimulus, raising hopes for a new round of federal spending.
An orderly presidential transition and the anticipation of a more effective
vaccine distribution plan contributed to stocks touching multiple new highs
last week. Investor enthusiasm was further supported by a strong start to
the fourth-quarter earnings season.
Mega-cap technology companies resumed their market leadership ahead
of a full calendar of big tech earnings reports this week. Market
momentum stalled a bit into the close on concerns that any stimulus
spending bill might come in lower than expected.
Earnings Beating Expectations
One of the concerns of market watchers has been the valuations of
stocks. Stocks are currently trading at about 23 times 2021 earnings,
above the historical range of 15 to 17 times forward earnings.4
Today’s valuations may be explained by expectations of a strong economic
rebound and a concomitant rise in corporate profits. So far, this earnings
season appears to vindicate the optimism; With 41 of S&P 500 companies
reporting through last Thursday, 91% of them have exceeded estimates by
an average of 18.5%.5
Investors are expected to continue to watch company earnings in the
weeks ahead to see whether these consensus-beating results continue.
This Week: Key Economic Data
Tuesday: Consumer Confidence.
Wednesday: Durable Goods Orders. FOMC (Federal Open Market
Thursday: Gross Domestic Product (GDP). Jobless Claims. New Home
Source: Econoday, January 22, 2021
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
Monday: KimberlyClark (KMB).
Tuesday: Microsoft (MSFT), General Electric (GE), Advanced Micro
Devices (AMD), Verizon (VZ), Johnson & Johnson (JNJ), Lockheed
Martin (LMT), Starbucks (SBUX), 3M Company (MMM), Texas Instruments
(TXN), Novartis (NVS), D.R. Horton (DHI).
Wednesday: Apple (AAPL), Facebook (FB), AT&T (T), Boeing (BA),
Abbott Laboratories (ABT), ServiceNow, Inc. (NOW), General Dynamics
(GD), Norfolk Southern (NSC).
Thursday: McDonalds (MCD), Comcast Corp. (CMCSA), Southwest
Friday: Caterpillar (CAT), Chevron (CVX), Eli Lilly (LLY), Honeywell
International (HON), Charter Communications (CHTR).
Source: Zacks, January 22, 2021
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.
SFG News and Events
Mark Your Calendars & Please Join Us for one of upcoming seminars.
“In the depth of winter, I finally learned that there was in me an invincible
Know and Understand Your Correct Filing Status
Taxpayers need to know their correct filing status and be familiar with
When preparing and filing a tax return, the filing status affects:
- If the taxpayer is required to file a federal tax return
- If they should file a return in order to receive a refund
- Their standard deduction amount
- If they can claim certain credits
- The amount of tax they should pay
Here are the five filing statuses:
Single: Normally, this status is for taxpayers who are unmarried, divorced,
or legally separated under a divorce or separate maintenance decree
governed by the state law.
Married filing jointly: If a taxpayer is married, they can file a joint tax
return with their spouse. When a spouse passes away, the widowed
spouse can usually file a joint return for that year.
Married filing separately: Married couples can choose to file separate
tax returns, when doing so results in less tax owed than filing a joint tax
Head of household: Unmarried taxpayers may be able to file using this
status, but special rules apply. For example, the taxpayer must have paid
more than half the cost of keeping up a home for themself and a qualifying
person living in the home for half of the year.
Qualifying widow(er) with dependent child: This status may apply to a
taxpayer if their spouse died during one of the previous two years and
they have a dependent child. Other conditions also apply.
* 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.gov6
Keeping Your Heart Rate Up (When Temperatures
Colder weather can steal our motivation to leave the warmth of our homes
unless we have to. But your workouts don’t need to stop during the winter.
Here are a few ways you can feel the burn indoors, while Mother Nature
keeps it cool outside.
Hop to it with a rebounder (a mini trampoline) or a jump rope. If you have
neither, fake it by keeping your hands to your sides and rotate them as
you mimic the rest of the exercise sans equipment.
Find a YouTube video or other streaming guided workout. Can’t squeeze
in a full half hour at once? Pause it and return when you’re ready.
If you can afford it, invest in a piece of workout equipment you know you’ll
use. If you run or hike, consider a treadmill with an adjustable incline. Like
to ride your bike? Consider getting a stationary one.
There are lots of ways to stay fit while winter rages on outside. But don’t
forget to always make sure to discuss any medical concerns with your
health care provider before beginning any fitness routine; the information
provided is not a substitute for medical advice.
Tip adapted from Real Simple7
A man claims he was 88 years old two days ago, and yet he also tells you
that he will turn 91 next year. How can this be?
Last week’s riddle: Four cars approach an intersection with four-way
stop signs simultaneously, each car coming from a different direction.
After stopping, the drivers all accelerate at the same time. However,
there is no accident. How is this possible? Answer: All four cars made
Lake Crescent, Olympic National Park, Washington State.
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896. The 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 stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia. The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. 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. By clicking on these links, you will leave our server, as the links are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
1. The Wall Street Journal, January 22, 2021
2. The Wall Street Journal, January 22, 2021
3. The Wall Street Journal, January 22, 2021
4. CNBC, January 21, 2021
5. Earnings Scout, January 21, 2021
6. IRS.gov, October 1, 2020
7. RealSimple.com, December 12, 2018