CPI/PPI “Center Stage”

As of last Friday, 92% of S&P 500 companies reported earnings with 78% reporting positive earnings surprises, and 59% positive sales surprises.  Certainly, good news for the stock markets.

Now, short-term market movements may be driven by this week’s Consumer Price Index (CPI) and the Producer Price Index (PPI) reports.  It’s no secret these monthly reports have been coming in hotter than many anticipated, causing a brief stock pullback in April and an increase in “market” interest rates.  Most of the pullback has been reversed in the first week and one-half in May.

Recently we heard reports on lower job creation numbers in April and an increase in first time unemployment claims last week.  Some are starting to think this may be the beginning of the slowdown that has been anticipated for months. 

The PPI and CPI reports, Tuesday and Wednesday respectively we be highly anticipated and debated.    The S&P 500 is again close to its high and the 10-year treasury is looking for direction.  We may have that direction determined this week, at least for the short-term.

Last week, the Dow Jones was the leader, moving higher by 2.11%.  The S&P 500 rose 1.69%, the Nasdaq 1.11% and the Russell 2000 1.01%.

Over the pond, foreign stocks moved higher 1.74% and emerging markets nudged up .05%.

Bond yields dropped slightly as the 10-year US Treasury finished last Friday with a yield of 4.50%.  What’s your guess where the 10-year will end after this week’s inflation reports?

Is the tide changing, meaning, are Value stocks now taking leadership away from Growth stocks?  Over the last month, that appears to be the direction, with Utilities and Consumer Staples leading the charge.  Over the last month, the Utilities sector has climbed 9.7%, Consumer Staples 4.53%.  Technology moved higher 1.03% during the same time period. This is something to keep our thumbs on the pulse!!

It is infrequent that both spouses retire at the same time.  I recently read an article that suggested its under 25%. There are occasions when one spouse simply wants to continue with their career and other times, when one just wants to stay active and connected, so they work part-time.

Often forgotten is the tax benefit of making IRA contributions.  If one spouse is working part-time and the other retired, the working spouse may be able to make an IRA contribution for themselves and their non-working spouse. 

For example, if the working spouse is going to earn $1,500/month working part-time, they can make an IRA contribution with the limit of $7000 per person and an additional $1,000, if aged 50 or older, for a total of $8,000.  The law says the working spouse can also make a contribution for the non-working spouse.  If both spouses are aged 50 or older, they can make a $16K contribution.  If the working spouse’s earned income was less than the $16K, only a partial contribution can be made up to the total of that earned income.

The contribution can either be a deductible contribution to a Traditional IRA or an after-tax contribution to a Roth IRA.  To qualify for a full Roth IRA contribution, your income must be below $146K if filing single, and $230K married filing jointly for a full contribution.  Please make sure to speak with your advisor to check your specific qualifications.

To view the limits for all IRA accounts for 2024, please click here.

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