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Weekly Market Insights: Mixed Results As Interest Rate Concerns Grow

Weekly Market Insights: Mixed Results As Interest Rate Concerns Grow

February 20, 2023
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The S&P 500 index fell 0.28% last week amid worries that further monetary tightening might be needed to keep inflation in check after January producer prices came in higher than expected.

The market benchmark ended Friday's session at 4,079.09, down from last week's closing level of 4,090.46. The index is almost flat for the month with a February-to-date gain of almost 0.1%. It's up 6.24% for the year to date.

Rate Concerns Weigh on Stocks

The slim movement for the week came as data showed the producer price index rose 0.7% last month, surpassing the consensus estimate according to Econoday for a 0.4% increase. On an annual basis, the PPI advanced 6%, which was higher than analysts' consensus estimate for 5.5% growth, but down from December's 6.5% pace.

The higher-than-expected producer prices were unwelcome news for investors who've been hoping for inflation to ease enough for the Federal Reserve's policy-setting committee to slow down its rate increases. Adding to the concerns, Cleveland Fed President Loretta Mester said last week that the risks of inflation accelerating are still tilted to the upside and will require further monetary policy tightening.

The impact of the rate increases was evident in January housing data released last week as housing starts fell more than expected in January amid elevated mortgage rates.

The energy sector -- which had been the only gainer last week -- led last week's decliners with a 6.9% drop. Other decliners included real estate, down 1.4%, and materials, down 1.1%. The healthcaretechnology, and financial sectors also fell slightly.

The gainers were led by consumer discretionary, which rose 1.6%, followed by gains of 0.9% each in utilities and consumer staples. Other gainers included industrials and communication services.

This Week: Key Economic Data

The market will be closed on Monday for the Presidents Day holiday in the US. Economic reports expected in the rest of the week include January existing and new home sales, Q4 gross domestic product, January consumer spending, and January personal consumption expenditures.

This Week: Companies Reporting Earnings

Next week's earnings calendar will feature retailers, including Walmart (WMT), Home Depot (HD), and TJX (TJX) as well as other companies such as Medtronic (MDT), NVIDIA (NVDA), and Intuit (INTU).

"Women, we naturally want to be the best…And I can’t be mad at the next girl for wanting to be the best! Why would I get mad at you for saying you the baddest? Why can’t we both agree that we bad, and that just be that?"

– Megan Thee Stallion (Megan Jovon Ruth Pete)

How Qualified Charitable Distributions Can Help Reduce Your Tax Burden

Generally, distributions from a traditional Individual Retirement Account are taxable in the year the account owner receives them. But, a qualified charitable distribution (QCD) is one exception to this rule. 

A QCD is a nontaxable distribution made directly by the trustee of an IRA to organizations that are eligible to receive tax-deductible contributions. Of course, the main benefit of giving to a charitable organization is making a difference. Yet some tax benefits reward the philanthropic. Making a QCD can help you reduce your taxable income while supporting qualifying charitable organizations. 

*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

What are Polyphenols?

If you’ve researched whole foods much, you’ve likely come across the term “polyphenols.” But what are polyphenols, and why are they important?  

Polyphenols are a category of plant compounds that act as antioxidants, which can neutralize harmful free radicals. Because of this, polyphenols may offer various health benefits, from boosting brain health and digestion to protecting against heart disease, type 2 diabetes, and even some cancers.

There are many sources of polyphenols, such as:

  • Dark chocolate
  • Tea
  • Dark berries
  • Apples
  • Onions
  • Red cabbage
  • Whole grains
  • Chili peppers
  • Oats
  • Turmeric
  • Flax seeds
  • Sesame seeds

There are several categories of polyphenols, including flavonoids, phenolic acids, and polyphenolic amides.

Tip adapted from WebMD7

Four grown men decided to play on the sidewalk for three hours. No one chided them for childish or immature behavior; many appreciated the noise they made. They even went home a bit richer. What were these men doing?

Last week’s riddle: They have no bodies, but you could say they have tails and heads. What are they? Answer: Coins.

 Breaching Humpback whales, Monterey, California 

Footnotes and Sources

1. The Wall Street Journal, February 17, 2023

2. The Wall Street Journal, February 17, 2023

3. The Wall Street Journal, February 17, 2023

4. The Wall Street Journal, February 14, 2023

5. CNBC, February 16, 2023

6., 2023

7., November 23, 2022

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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.

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