Do you still believe the Fed is cutting rates in March?
Last Friday’s January job report came in much hotter than expected, as the United States created 353,000 jobs. The numbers for the prior 2 months were revised higher by 120,000.
Fed Chair Powell stated at his press conference a rate reduction in March is not likely.
The answer to March, is no rate reduction, unless something significant materializes that is negative.
Investors will now turn to the following Fed meeting on May 1st to speculate about rate reductions.
The Markets
Even the Fed could not hold the market down last week. After stocks fell immediately during the Fed press conference, the following 2 days, stocks moved higher.
Earnings from Meta and Amazon did the trick as the S&P 500 finished the week up 1.38%. The Dow moved higher by 1.43%, and the Nasdaq 1.12%.
Small caps continue in the red, dropping (.79%). Foreign stocks were range bound moving higher by .13% and emerging markets down (.62%).
Bonds also remain range bound for now, as the 10-year US Treasury yield finished the week @ 4.024%.
Profit reports will continue this week as we’ll hear from McDonald’s, Catepillar, Ford, Eli Lilly, PepsiCo, Costco, Hilton, Simon Property Group, Walt Disney and more.
With the Fed not yet cooperating by reducing rates, corporate profitability will be paramount for the stock market to continue moving higher.
Internal Revenue Service
A couple points about income taxation:
- More taxpayers are getting hit with the Net Investment Income Tax. This 3.8% tax which is added to regular income tax, is due on the smaller of your net investment income or the excess of your adjusted gross income over the thresholds of 200K for a single filer and 250K for joint filers. Even as incomes have risen, the thresholds for this tax are not adjusted for inflation. So much for increasing taxes for “just those making over 400K”.
- This year all 1040 and 1040-SR filers will need to complete a question on digital assets. You’ll be asked whether you have received, sold, exchanged or otherwise disposed of a digital asset or a financial interest in a digital asset.
- RMD Penalty Relief: Did you miss your Required Minimum Distribution for 2023? The “Secure Act” reduced the penalty from 50% to 25%. The penalty falls to 10% if it’s corrected within two years. To correct the penalty, physically take the missed RMD from your retirement accounts, file IRS form 5329 and write a letter of explanation. Most reasonable explanation can have the penalty completely waived the 1st time you miss your RMD requirement.
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