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Weekly Commentary — September 9th, 2019

The Week on Wall Street

Stocks rose last week, with help from two developments: the announcement of further U.S.-China trade talks as well as August hiring and manufacturing numbers that seemed to bolster the argument for a rate cut by the Federal Reserve.

The broad U.S. equity market, as represented by the S&P 500, added 1.79% during a 4-day trading week. The Dow Jones Industrial Average improved 1.49%; the Nasdaq Composite, 1.76%. Foreign shares tracked by the MSCI EAFE index gained 1.69%.[1],[2],[3]

Trade Talks Poised to Restart

Trade representatives from the U.S. and China are planning to head back to the negotiating table early next month. This news came Thursday from China’s ministry of commerce, which confirmed a verbal agreement among Secretary of the Treasury Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He.

Formal trade discussions between the U.S. and China last happened in July. China has said that it wants punitive U.S. tariffs on its products removed in the event of a deal.[4]

Weaker Hiring & Manufacturing Data

Payrolls expanded with just 130,000 net new jobs in August, according to the Department of Labor; 25,000 were temp jobs linked to the federal government’s 2020 Census. The main jobless rate stayed at 3.7%. The U-6 rate, which measures both unemployment and underemployment, rose 0.2% to 7.2%.

A key gauge of U.S. factory activity, the Institute for Supply Management’s manufacturing purchasing manager index, fell to 49.1 in August. A number below 50 indicates factory sector contraction. Some investors took these hiring and manufacturing reports as hints of a slowing economy, one which the Federal Reserve could potentially try to stimulate with an interest rate cut.[5],[6]

What’s Ahead

August inflation data arrives this week, and if looks especially mild, it may amount to another suggestion that the Fed should ease. The European Central Bank concludes a meeting on Thursday, and Fed officials will certainly pay attention to its latest policy statement.[7]

 

THE WEEK AHEAD: KEY ECONOMIC DATA

Thursday: A new Consumer Price Index, tracking both monthly and yearly inflation.

Friday: The August retail sales report from the Census Bureau.

Source: Econoday / MarketWatch Calendar, September 6, 2019

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Thursday: Broadcom (AVGO), Kroger (KR)

Source: Zacks, September 6, 2019

 

 

 “Education is the key to unlocking the world, a passport to freedom.”

– Oprah Winfrey

 

Tax Incentives Can Help You Further Your Education 

All this back-to-school season excitement might make you want to consider furthering your own education, and the IRS might be able to help. Tax credits, deductions, and savings plans can help taxpayers with their expenses for higher education.

  • Tax credits help with the cost of higher education by reducing the amount of income tax you may have to pay. The two tax credits available are the American Opportunity Tax Credit andd the Lifetime Learning Credit.
  • Some education savings plans allow your earnings to grow, tax free, until the money is taken out; some allow the deduction to be tax free; some do both.
  • You may be able to deduct higher-education costs, such as tuition, student loan interest, and qualified education expenses, from your tax return.

If you’ve always dreamt about going back to school, whether to further your career or just learn something new, knowing your potential tax benefits may be able to save you money.

* 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.gov[8]

 

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If you have any questions or would like to learn more about developing strategies to pursue a prosperous and safe future, contact me today at Derek.Merkler@Parsonex.com! You can also visit my website to learn about how I help our service members and veterans plan for and achieve financial independence.

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[1]https://www.wsj.com/market-data

[2]https://www.wsj.com/market-data

[3]https://quotes.wsj.com/index/XX/990300/historical-prices

[4]https://www.cbsnews.com/news/u-s-china-trade-talks-scheduled-for-october-beijing-says-2019-09-05/

[5]https://www.bloomberg.com/news/articles/2019-09-06/u-s-payrolls-rise-130-000-boosted-by-25-000-for-census-count

[6]https://tradingeconomics.com/united-states/business-confidence

[7]https://www.cnbc.com/2019/09/06/stocks-look-to-reclaim-their-all-time-highs-in-the-week-ahead.html

[8]https://www.irs.gov/newsroom/tax-benefits-for-education-information-center

 

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