Forefront Market Notes: January 13th

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Stocks fell for the second consecutive week as a round of fresh economic data stoked inflationary fears among investors.

The Standard & Poor’s 500 Index declined 1.94 percent, while the Nasdaq Composite Index dropped 2.34 percent. The Dow Jones Industrial Average lost 1.86 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 0.49 percent.^1,2

Inflation Stymies Markets

Stocks rallied broadly to start the week, but two economic reports on Tuesday—job openings and the prices-paid index among service companies—raised fresh inflation concerns. Higher Treasury yields also put pressure on stocks.^3,4

Stocks flattened out on Wednesday. Investors reacted to news that most Federal Open Market Committee members agreed inflation risks had increased, per minutes from the Fed’s December meeting.^5,6

U.S. stock markets were closed Thursday in observance of President Jimmy Carter’s funeral.

On Friday, a warmer-than-expected December jobs report caused investors to question whether the Fed will adjust rates in 2025. News that consumer sentiment ticked down also pushed stocks lower.⁷

^{Source: YCharts.com, January 11, 2025. Weekly performance is measured from Friday, January 3, to Friday, January 10. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.}

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When Good Becomes Bad News

The economy added 256,000 jobs in December—100,000 more than economists expected. That’s the second-highest monthly job gain for 2024. Unemployment ticked down to 4.1 percent, which was also better than anticipated.

Job growth and lower unemployment signals good news for the economy but bad news for the markets. A stronger jobs market puts less pressure on the Fed to adjust rates, especially with inflation top-of-mind among investors.^8,9

Self-Employed Tax Obligations

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There are a few tax considerations to consider when you work for yourself. Generally, you’re required to file and pay estimated taxes during the year.

• Make quarterly payments if you’ve determined you need to use Form 11040-ES.
• Filing annually: If you’re filing annually, you must use Schedule C to report income or loss. To file your Social Security and Medicare taxes, you should file Schedule SE Form 1040.
• Deductions: If you’re using part of your home for business, you may be able to make certain deductions, such as for your office or a portion of your home’s square footage used for business purposes.

*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 IRS¹⁰

Footnotes and Sources

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Stock market calendar this week: