Financial Insights

While last week didn’t have the blockbuster appeal of headline-grabbing economic news, it may have provided even more valuable context to the current market environment. It was a choppy week for the major stocks, with the S&P 500 finishing the week with a small gain of 0.39%. Within the large cap equity index, the rally in the consumer discretionary and technology sectors continued (1.17% and 2.00%) with additional participation from communications services (1.16%). The biggest laggard among sectors came from the energy space with a loss of -6.80%. Other trailing parts of U.S. large caps included the cyclical sectors of materials and real estate (-1.29% and -1.32%). When expanding beyond the domain of broad domestic large cap stocks, other equity subclasses had similar choppiness. The NASDAQ benefitted from its tech-heavy composition and ended the week with a 2.18% return. U.S. small cap stocks joined in on the rally and outperformed their large cap counterparts (1.96%).   International and emerging market equities ended the week on separate sides of the gain/loss columns; with developed markets down on the week (-0.23%) and emerging markets notching a gain (0.97%). Driving the up and down week for equities was a volatile week in the bond market, which saw bond yields end the week higher and the core bond index closing Friday with a weekly loss of -1.04%.  

While no investor would like to see down markets, they are unfortunately an unavoidable part of the ­­market cycle. In periods of prolonged down markets, it is easy to focus on your declining portfolio balance rather than seeking opportunities in other areas of your encompassing financial plan. A weak market like we have experienced year-to-date can create opportunit­­ies for several tax strategies such as tax-loss harvesting and Roth conversions. We want to discuss how individuals like you can reap the most benefit from completing ‘discounted’ Roth conversions.

Following a year of economic instability, it appears that many of us are turning our attention to something that’s been around for decades, but has recently piqued national interest – inflation. In fact, a recent study found that people are Googling the word “inflation” at a rapid rate, with a peak not seen since 2008.