Forefront Market Notes: July 22nd

Stocks were under pressure last week as investors appeared to rotate out of mega-cap tech stocks and into areas that may benefit from lower interest rates.

The Standard & Poor’s 500 Index fell 1.97 percent, while Nasdaq Composite Index declined 3.65 percent. The Dow Jones Industrial Average bucked the downward trend, up 0.72 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 1.48 percent for the week through Thursday’s close.¹

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Dow Leads Again

The week began very differently than it ended.

All three averages rallied over the first couple of days this week, with the Dow leading on both days. Fed Chair Powell indicated the Fed may not wait for inflation to reach its 2 percent target before considering a rate move, buoying the markets.^2,3

Then, markets hit a speed bump as investors appeared to take profits and rotated away from mega-cap tech names. The selling broadened beyond tech-related names on Thursday as all but one of the S&P 500’s 11 sectors fell.

Early Friday morning, a global tech outage caused disruptions for businesses, governments, and financial institutions, contributing to the weekly decline. Despite its losses in the second part of the week, the Dow finished in the green.^4,5,6

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^{Source: YCharts.com, July 20, 2024. Weekly performance is measured from Monday, July 15, to Friday, July 19.
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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Upbeat Economic Data

Although stocks were under pressure, some investors saw “green shoots” in a few economic reports. Housing starts rose 3 percent in June. Building permits also ticked higher during the month. Retail sales were unchanged in June, which was better than expected. Investors were encouraged that consumers were still spending despite ongoing inflation.^7,8

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Protect Your Tax Data

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The Internal Revenue Service (IRS) shared guidelines that tax pros should follow to protect taxpayer data, but these principles are sound for everyone to practice.

Anti-virus software: This software scans computer files for malicious software or malware on the device. Anti-virus vendors find new issues and update malware daily. Always install the latest software updates on your computer.

Two-factor authentication: Two-factor authentication adds an extra layer of protection beyond just a password. Not only do you enter your username and password, but you also enter a security code that the service provider can send to another device for extra protection.

Drive encryption: Drive encryption transforms sensitive data into unreadable code that unauthorized people cannot decipher easily, so only the authorized person can access the data.

*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.gov⁹

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Footnotes and Sources

<sup>1. The Wall Street Journal, July 19, 2024
2. CNBC.com, July 15, 2024
3. CNBC.com, July 16, 2024
4. MarketWatch.com, July 17, 2024
5. CNBC.com, July 18, 2024
6. The Wall Street Journal, July 19, 2024
7. KPMG.com, July 17, 2024
8. AP.com, July 16, 2024
9. IRS.gov, May 8, 2024</sup>