Weekly Market Insights: Cases Rise, Stocks Retreat

Stocks retreated last week on rising COVID-19 infections and slow progress on an economic relief bill.

The Dow Jones Industrial Average dipped 0.57%, while the Standard & Poor’s 500 dropped 0.96%. The Nasdaq Composite index fell 0.69% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 0.05%.^1,2,3

Stimulus Stalls, Stocks Stumble

The market grappled all week with worries over rising COVID-19 cases and the economic restrictions that followed. Nevertheless, there were moments of optimism— such as the starting of vaccinations in the U.K.— that drove markets to record highs.⁴

But gains could not be sustained as an agreement on a fiscal stimulus bill remained elusive and daily news regarding COVID-19 cases undermined investor sentiment.

Markets were also challenged by having to absorb a number of new and secondary stock offerings last week, including two high-profile technology IPOs. The Energy sector continued its strong run, while small and mid-cap stocks posted another week of positive performance.⁵

A “No-Deal” Brexit More Likely

The prospects of an agreement to manage Britain’s exit from the European Union by year end dimmed as the two parties failed to narrow their differences in a meeting held last week.⁶

Though primarily a European issue, a no-deal Brexit may hold consequences for U.S. businesses and investors. The failure to reach an agreement has the potential to disrupt an already fragile supply chain and cause issues in the financial markets. A supply chain disruption may weaken European economies (e.g., Germany) that are important to American companies. Another consequence may be a stronger U.S. dollar, which would make American exports more expensive and less competitive.

Little time remains in striking an agreement since the prevailing framework ends December 31, 2020.

This Week: Key Economic Data

Tuesday: Industrial Production.

Wednesday: Retail Sales, Federal Open Market Committee (FOMC) Announcement.

Thursday: Housing Starts, Jobless Claims.

Friday: Index of Leading Economic Indicators.

^{Source: Econoday, December 11, 2020
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

Thursday: General Mills (GIS)

Friday: Darden Restaurants (DRI)

^{Source: Zacks, December 11, 2020
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.}

“You’re born an original. Don’t die a copy.”

– John Mason

Year-End Tax Tips

2020 is almost over, which means it’s time to start wrapping up those taxes for the year! There are lots of things to do to prepare for 2021. Here are some year-end tax tips to consider:

• If you think you will be in the same or a lower tax bracket next year, it may be beneficial to defer income until 2021. This could include self-employment income or year-end bonuses.
• You may be able to take some last-minute tax deductions, such as controlling when you contribute to charity. 
  

The end of the year is the perfect time to talk with your tax professional on how to position yourself for 2021. 

* 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 Turbo Tax⁷ 

Ways to Give Back This Season

The holiday season is a time to give back to our community. There are many service opportunities available, whether you seek out ones in your community or give back on your own. Here are some ideas:

• Bake cookies or casseroles and pass them out at the local fire departments, police stations, hospitals, or to elderly neighbors or those in need.
• Pack stockings for homeless people in your community. Include helpful goodies like water bottles, granola bars, hand sanitizer, toothpaste and a toothbrush, or warm gloves.
• Clean out the toy box with your child or grandchildren and donate some toys or games that they don’t play with anymore. This is a great learning lesson for little ones!
• “Adopt a family” during the holiday season and help them out with gifts or necessities. Churches and other local organizations often have a program where you can find families in need and help them out.
• Donate to a food bank. You can either shop for nonperishables or donate your time!
  

Tip adapted from US News and World Report⁸

At a class reunion, everyone shakes hands exactly once with every person present. That results in a total of 28 handshakes. In total, how many people are at the reunion?

Last week’s riddle: I have keys that will open no locks. I have a space and a lock that’s a key. You can enter but you can’t leave, and yet - you can escape. What am I?  Answer: A keyboard.

Moraine Lake, Banff National Park, Alberta, Canada.

Footnotes and Sources

^{1. The Wall Street Journal, December 11, 2020}

^{2. The Wall Street Journal, December 11, 2020}

^{3. The Wall Street Journal, December 11, 2020}

^{4. USAToday.com, December 8, 2020}

^{5. CNBC.com, December 10, 2020}

^{6. CNBC.com, December 9, 2020}

^{7. Turbotax.intuit.com, December 11, 2020}

^{8. Money.usnews.com, December 11, 2020}

^{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 the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, 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 2020 FMG Suite.}