Comments from Federal Reserve Chair Powell Monday indicated he is now willing to move interest rates higher in 1/2 point increments to fight inflation. This bit of unexpected hawkishness created some downward pressure on markets yesterday. Today's opening featured a bounce back as volatility continues. The situation in Ukraine and oil prices will continue to dominate headlines.
Last week as the Fed embarked on a new course of monetary tightening amid continued fighting in Ukraine, stocks managed a powerful, broad-based rally.
The Dow Jones Industrial Average jumped 5.49%, while the Standard & Poor’s 500 gained 6.16%. The Nasdaq Composite Index soared 8.18% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 5.17%.1,2,3
After surrendering gains on Monday, stocks surged higher for four consecutive days. The rally was propelled by strong economic data, the outcome of last week’s Federal Open Market Committee (FOMC) meeting, and reports that Russia made interest payments on its sovereign debt, avoiding technical default.
The uptrend began with a drop in oil prices and a lighter-than-expected wholesale inflation report. Stock prices initially buckled following Wednesday’s hawkish FOMC announcement, but turned higher as investors interpreted the Fed’s news as a welcome plan to combat inflation. Stocks extended their gains into the final two trading sessions, cementing their best weekly performance since November 2020.4
The Fed’s Plan
For the first time since 2018, the Federal Reserve hiked the federal funds rate, increasing it by 0.25% and signaling that it expected to raise rates at a faster pace than originally outlined in December. Based on its projections of future fed fund rates, the Fed may implement seven quarter-point rate hikes this year and another three to four next year.5
In a statement following the FOMC meeting, Fed officials expressed rising concerns over inflationary pressures made more acute by the war in Ukraine. Members also indicated that they would soon announce a plan to reduce the Fed’s $9 trillion balance sheet.6
This Week: Key Economic Data
Wednesday: New Home Sales.
Thursday: Jobless Claims. Durable Goods Orders. Purchasing Managers’ Index (PMI) Composite Flash.
Friday: Consumer Sentiment.
Source: Econoday, March 18, 2022
This Week: Companies Reporting Earnings
Monday: Nike, Inc. (NKE).
Tuesday: Adobe, Inc. (ADBE).
Wednesday: General Mills, Inc. (GIS).
Source: Zacks, March 18, 2022
"Everything must be taken into account. If the fact will not fit the theory — let the theory go."
– Agatha Christie
Do You Have to Pay Taxes on Your Hobby?
Whether you picked up embroidering, dog grooming, or making your jewelry, a side hobby may or may not require paying taxes. Here are some things to consider when determining whether your activity is a hobby or business:
If you receive income from your hobby with no intention of making a profit, you may have to report the income to the IRS.
* 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.gov7
How Well Do You Know Your SPF?
We all know that protecting your skin from the sun is important, but did you know that not all sunscreens are made equal? Dermatologists have some specific recommendations when it comes to your SPF. Here are some tips:
These tips will help you choose the best sunscreen to protect your skin for years to come.
Tip adapted from American Academy of Dermatology8
Two lawyers sit at opposite ends of a large conference table. Nothing is in between them but the table, yet they don’t see each other. How is this possible?
Last week’s riddle: You are at sea, it is mid-July, and your ship has reached a unique spot on earth. If you sail north, it will be summer; if you sail south, it will be winter. If you sail east, it will be Friday, but if you sail west, it will be Saturday. Precisely where in the world are you? (Hint: your ship is in the Pacific Ocean, near the island nation of Kiribati.) Answer: You are at the intersection of the International Date Line and the Equator.
Berchtesgadener National Park Berchtesgadener Land, Upper Bavaria, German Alps.
Footnotes and Sources
2. The Wall Street Journal, March 18, 2022
3. The Wall Street Journal, March 18, 2022
4. CNBC, March 18, 2022
5. The Wall Street Journal, March 16, 2022
6. The Wall Street Journal, March 16, 2022
7. IRS.gov, June 30, 2021
8. AAD.org, September 30, 2021
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Weekly Market Insights: Stocks Rally in Changing Landscape
March 21, 2022