Forefront’s Market Notes: December 18th, 2023
Markets reacted positively last week to cooler inflation and the idea of potential rate cuts next year, adding to the gains of the market’s year-end rally.
The Dow Jones Industrial Average rose 2.92%, while the Standard & Poor’s 500 gained 2.50%. The Nasdaq Composite index picked up 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.75%.1,2,3
Rally Continues
Stocks gathered momentum last week after upbeat news from two key inflation reports. But the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday powered the week’s advance. The combination of the FOMC signaling three rate cuts in 2024 and dovish comments by Fed Chair Powell led to a sharp drop in bond yields and a spike in stock prices, with the Dow Industrials closing above 37,000 and setting an all-time high.4
The rally continued the following day as beneficiaries of lower rates, such as smaller capitalization stocks and real estate, rallied. A solid retail sales number, which reflected a strong consumer and supported the soft landing thesis, also boosted enthusiasm.
Inflation Eases
The anxiously awaited read on November inflation came close to market expectations, with a 0.1% increase over October and a year-over-year increase of 3.1%. Core inflation, which excludes energy and food prices, came in a bit hotter, rising 0.3% month-over-month and 4.0% from a year ago. A 2.3% decline in energy costs helped offset a 2.9% jump in food prices. Shelter prices remained stubbornly high, rising 0.4% from October and 6.5% from last November.5
The inflation news was better on wholesale prices, tracked by the Producer Price Index (PPI). Producer prices were unchanged in November and higher by just 0.9% year-over-year. Excluding energy and food, the monthly increase was also unchanged.6
Tax Benefit and Credits: FAQs for Retirees
Lots of questions can come up about income taxes after one has retired. Some common types of taxable income include military retirement pay, all or part of pensions and annuities, all or part of individual retirement accounts (IRA), unemployment compensation, gambling income, bonuses and awards for outstanding work, and alimony or prizes. A few examples of non-taxable income are veteran’s benefits, disability pay for certain military or government-related incidents, worker’s compensation, and cash rebates from a dealer or manufacturer of an item you purchased.
*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
Footnotes and Sources
1. The Wall Street Journal, December 15, 2023 2. The Wall Street Journal, December 15, 2023 3. The Wall Street Journal, December 15, 2023 4. CNBC, December 13, 2023 5. CNBC, December 12, 2023 6. CNBC, December 13, 2023 7. IRS.gov, December 11, 2023
Stock market calendar this week:
| TIME (ET) | REPORT |
| MONDAY, DEC. 18 | |
| 10:00 AM | Home builder confidence index |
| TUESDAY, DEC. 19 | |
| 8:30 AM | Housing starts |
| 8:30 AM | Building permits |
| WEDNESDAY, DEC. 20 | |
| 8:30 AM | U.S. current account |
| 10:00 AM | Existing home sales |
| THURSDAY, DEC. 21 | |
| 8:30 AM | Initial jobless claims |
| 8:30 AM | GDP (revision) |
| 8:30 AM | Philadelphia Fed manufacturing survey |
| 10:00 AM | U.S. leading economic indicators |
| FRIDAY, DEC. 22 | |
| 8:30 AM | Durable-goods orders |
| 8:30 AM | Durable-goods minus transportation |
| 8:30 AM | Personal income |
| 8:30 AM | Personal spending |
| 8:30 AM | PCE index |
| 8:30 AM | Core PCE index |
| 8:30 AM | PCE (year-over-year) |
| 8:30 AM | Core PCE (year-over-year) |
| 10:00 AM | New home sales |
| 10:00 AM | Consumer sentiment (final) |
Most anticipated earnings for this week:
Did you miss our blast blog?
A Taxing Story: Capital Gains and Losses
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.