Forefront’s Market Notes: December 26th, 2023
Investor optimism and fears of missing out on future gains propelled stocks higher in the last full week of trading before year-end.
The Dow Jones Industrial Average added 0.22%, while the Standard & Poor’s 500 gained 0.75%. The Nasdaq Composite index advanced 1.21% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.51%.1,2,3
Stocks Build on Gains
The current market narrative of declining inflation, easing interest rates, and better earnings ahead continued to fuel stock market gains, with some of the year’s laggards, such as smaller cap stocks and energy names, leading the way.
While the stock market has repeatedly seen gains gather steam in the final trading hours, a late-day sell-off on Wednesday unnerved investors. While it’s difficult to know precisely why, the sharp decline may have resulted from profit-taking and low trading volumes, which can result in unexpected volatility or other technical reasons. Whatever the case, stocks rebounded nicely the following day and Friday.
Housing Revival?
The housing market struggled this year amid higher mortgage rates and rising home prices. Last week, several housing reports suggested the housing market may be improving.
New home construction rose 14.8% in November, reaching levels not seen since May, while existing home sales rebounded 0.8%, reversing five straight months of declines. Existing home sales have been hurt by low inventory since many homeowners with low-rate mortgages are hesitant to move and take on a higher-rate mortgage. This logjam may loosen as 30-year mortgage rates fell from 7.79% at the end of October to 6.95% in mid-November.4, 5
New home sales disappointed, however, falling 12.2%, though they came in 1.4% higher from November a year ago.6
Tax Tips for Those in the Military
The Internal Revenue Service has certain special tax breaks and programs for members of the U.S. Armed Forces.
- If you get nontaxable combat pay, you may include it in your taxable income. Having it may boost your earned income tax credit, meaning you may owe less tax and could get a larger refund.
- As a rule, both spouses typically must sign a joint income tax return. If your spouse is absent due to military duty, you may be able to sign for your spouse. Remember, however, that you may need a power of attorney to file a joint return.
- If you leave the military and look for work, you may be able to deduct some job search expenses. You can include travel costs, resume preparation, and job placement agency fees.
*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 22, 2023 2. The Wall Street Journal, December 22, 2023 3. The Wall Street Journal, December 22, 2023 4. MarketWatch, December 19, 2023 5. Fox Business, December 20, 2023 6. U.S. Census Bureau, December 22, 2023. 7. IRS.gov, October 23, 2023
Stock market calendar this week:
| TIME (ET) | REPORT |
| MONDAY, DEC. 25 | |
| Christmas holiday | |
| TUESDAY, DEC. 26 | |
| 9:00 AM | S&P Case-Shiller home price index (20 cities) |
| WEDNESDAY, DEC. 27 | |
| None scheduled | |
| THURSDAY, DEC. 28 | |
| 8:30 AM | Initial jobless claims |
| 8:30 AM | Advanced U.S. trade balance in goods |
| 8:30 AM | Advanced retail inventories |
| 8:30 AM | Advanced wholesale inventories |
| 10:00 AM | Pending home sales |
| FRIDAY, DEC. 29 | |
| 9:45 AM | Chicago Business Barometer |
| Bond market closes early |
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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.