Weekly Market Review

Weekly Update: Stocks Post Small Weekly Gains- February 11, 2019

The Week on Wall Street

Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.

 The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.1,2

 Earnings Scorecard

As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections.3

 Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies.3 For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both.  

Tariff Tensions

March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.

 The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We don’t expect that to become clear until the deadline nears.

 State of the Service Sector

Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector.

The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.4

Final Thought

Over the next several weeks, we’re expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view. If you have any questions, don’t hesitate to contact us.

Economic Calendar:

Wednesday: January’s Consumer Price Index, which measures monthly and yearly inflation.

Thursday: December retail sales figures (a delayed release due to the government shutdown).

Friday: January’s preliminary University of Michigan consumer sentiment index, a gauge of consumer confidence levels.

 

Source: Econoday / MarketWatch Calendar, February 8, 2019, 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. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material

The Week Ahead- Companies Reporting Earnings:

 

Monday: Loews Corp (L)

Tuesday: Activision Blizzard (ATVI), HubSpot (HUBS), Occidental Petroleum (OXY)

Wednesday: Cisco (CSCO), Hilton Worldwide Holdings (HLT), Yelp (YELP)

Thursday: Applied Materials (AMAT), CBS (CBS), Coca-Cola (KO)

Friday: Deere & Co. (DE), PepsiCo (PEP)

 

Source: Morningstar.com, February 8, 2019, Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. 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.


QUOTE OF THE WEEK

“The greatest happiness of life is the conviction that we are loved; loved for ourselves, or rather, loved in spite of ourselves."

– Victor Hugo


Married Couples in Business

Under the provision of the Small Business and Work Opportunity Tax Act of 2007, a qualified joint venture by a married couple filing a joint return is not treated as a partnership for federal tax purposes. Income, gains, losses, deductions, and credits are divided between the spouses, depending on their interest in the business. Each spouse accounts for their share of these items as a sole proprietor.

A qualified joint venture involves the conduct of a trade or business if:

 

  1. The only members of the joint venture are a married couple who file a joint tax return
  2. Both spouses materially participate in the trade or business
  3. Both spouses elect to have the provision apply, and the business is co-owned by both spouses
  4. The business isn't held in the name of a state law entity, such as a partnership or limited liability company (LLC)

 If one spouse is employed by the other (as an employee – not an equal business partner), then you’ll probably need to pay Social Security and Medicare taxes for them.

 * 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[5] 


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Footnotes, disclosures and sources:

Investment advisory services are provided through Penn Investment Advisors, Inc. (PIA), a Registered Investment Adviser. PIA is a wholly-owned subsidiary of Penn Community Bank (Bank). Investment products, securities and services offered by PIA are not a deposit of, or obligation of, or guaranteed by the Bank, or an affiliate of the Bank, are not insured by the FDIC or any agency of the United States, the Bank, or any affiliate of the bank and involve investment risk, including the possibility of loss of principal.  

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 indexes from Europe, Australia and Southeast Asia.

The S&P U.S. Investment Grade Corporate Bond Index contains U.S.- and foreign-issued investment-grade corporate bonds denominated in U.S. dollars.

The SPUSCIG launched on April 09, 2013. All information for an index prior to its Launch Date is back-tested, based on the methodology that was in effect on the Launch Date. Back-tested performance, which is hypothetical and not actual performance, is subject to inherent limitations because it reflects application of an Index methodology and selection of index constituents in hindsight. No theoretical approach can take into account all of the factors in the markets in general and the impact of decisions that might have been made during the actual operation of an index. Actual returns may differ from, and be lower than, back-tested returns.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.

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. 

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. 

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.

These are the views of Penn Investment Advisors, Inc., and other listed sources. This should not be construed as investment advice. Penn Investment Advisors, Inc., does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they 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 https://markets.wsj.com/

2 https://quotes.wsj.com/index/XX/990300/historical-prices

 3 https://insight.factset.com/earnings-season-update-february-8-2019

 4 https://www.instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1

 [5] https://www.irs.gov/businesses/small-businesses-self-employed/married-couples-in-business