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The Week on Wall Street
Stock prices drifted higher in an otherwise quiet news week, as a slowdown in new COVID-19 cases outweighed a Congressional impasse on a new fiscal-spending measure.

The Dow Jones Industrial Average gained 1.81%, while the Standard & Poor’s 500 rose by 0.64%. The Nasdaq Composite Index inched 0.08% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, advanced 3.11%.[1][2][3]

S&P 500 Nears All-Time High
Stocks prices were supported by a falling rate of COVID-19 cases nationwide and optimism that – despite a lack of progress on a fiscal-aid bill – Congress would eventually come to a spending agreement.[4]

The industrial and financial sectors saw solid gains, while technology stocks, after slipping earlier in the week, found some footing as the week came to a close.

The S&P 500 Index flirted all week with setting a new record high. At one point on Thursday, it traded above its February 2020 record close before closing slightly lower. Stocks treaded water into Friday, as Congress recessed for the summer.[5]

Consumer Prices Jump
On Wednesday, the Labor Department said that the Consumer Price Index rose 0.6% in July, matching the 0.6% increase in June. The increase was double the consensus estimate of 0.3%. The general view is that the acceleration in consumer prices is more indicative of a healing economy than the beginning of a cycle of higher inflation.[6][7]

The Fed does not appear concerned about these recent monthly price jumps. It remains more worried about disinflation. However, if inflation continues to pick up, the Fed may be forced to reconsider its COVID-19 monetary policy.[8]

[1] The Wall Street Journal, August 14, 2020
[2] The Wall Street Journal, August 14, 2020
[3] The Wall Street Journal, August 14, 2020
[4] CNBC, August 12, 2020
[5] CNBC, August 13, 2020
[6] The Wall Street Journal, August 12, 2020
[7] The Wall Street Journal, August 12, 2020
[8] CNBC, August 12, 2020

IRS Free File, a tool from the IRS, helps some taxpayers file for free. This may include military members and their families. The tool is designed for individuals or families whose adjusted gross income was $69,000 or less last year, but there may also be a special offer for members of the military and their families. Using Free File, users have access to guides on how to get started, online software, fillable forms, and more. There may be 10 software partners offering their services.

In addition, active duty military stationed in combat zones may also have more time to file their tax returns.

* 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.gov[12]
[12] IRS.gov, January 21, 2020

The Week on Wall Street
Overlooking stalled efforts by Congress to pass a new fiscal stimulus bill, stocks marched higher last week with the Dow Jones Industrials leading the way and the NASDAQ Composite setting multiple fresh record highs.

The Dow Jones Industrial Average gained 3.80%, while the Standard & Poor’s 500 rose by 2.45%. The Nasdaq Composite index climbed 2.47% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.31%.[1][2][3]

Earnings Season Winds Down
A string of encouraging news reports, including a decline in new COVID-19 cases nationwide, pushed stock prices higher throughout the week. Stocks also rallied on signs of a pick-up in manufacturing activity, factory orders that came in well above estimates, and a better-than-expected new jobless claims number.[4][5]

Congress wasn’t able to come to an agreement on a stimulus package, which disappointed some investors. But it wasn’t enough to slow the daily climb in the equity markets, with the NASDAQ Composite index closing above 11,000 for the first time, while the S&P 500 index closed in on its record high set in February of this year.[6]

Stocks drifted on Friday even though the employment report showed that employers added 1.8 million jobs in July, lowering the unemployment rate to 10.2%.[7]

One Eye on Bonds, Gold
The continued rally in stock prices appears to suggest that the U.S. economy may maintain its recovery through the second half of the year and into 2021. But the bond market and gold prices suggest a different outlook.

Last week the yield on 10-year Treasuries touched their lowest level since early March, signaling that bond investors may be less convinced about economic prospects.[8]

Meanwhile, gold traded over $2,000 per ounce. While the rise in gold prices this year has been largely propelled by historically low interest rates, its reputation as a store of value has attracted investors worried about stock market volatility and a potential uptick in inflation.[9]

Final Thoughts
It was reported last week that the U.S. and China agreed to meet by videoconference on August 15 to discuss compliance with the terms of the Phase One trade deal.[10]

With tensions running high between the two nations, expect Wall Street to keep a close eye on any developments that may appear connected to the virtual meeting.

[1] The Wall Street Journal, August 7, 2020
[2] The Wall Street Journal, August 7, 2020
[3] The Wall Street Journal, August 7, 2020
[4] MarketWatch.com, August 4, 2020
[5] The Wall Street Journal, August 6, 2020
[6] CNBC, August 6, 2020
[7] The Wall Street Journal, August 7, 2020
[8] MarketWatch, August 4, 2020
[9] The Wall Street Journal, August 5, 2020
[10] CNBC.com, August 4, 2020

The IRS has established a Taxpayer Bill of Rights to protect all taxpayers. You have the right to:

• Receive prompt, courteous, and professional service from the IRS
• Easily understand what the IRS is saying
• Receive clear and easy-to-understand communication from the IRS
• Speak to a supervisor if you receive inadequate service
• Have your questions answered promptly, accurately, and thoroughly
• Objective advice

Head over to the Taxpayer Bill of Rights on IRS.gov to understand what you’re entitled to.

* 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.gov[10]
[10] IRS.gov, July 31, 2020

The Week on Wall Street
Stocks were mixed last week amid a busy week of earnings, some troubling economic data, and seemingly little progress on a new fiscal stimulus package.

The Dow Jones Industrial Average slipped 0.16%, while the Standard & Poor’s 500 increased by 1.73%. The Nasdaq Composite Index surged 3.69% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, dipped 0.75%.[1][2][3]

Stocks Buffeted by Crosswinds
Stocks rode a roller coaster last week, reacting to a conflicting stream of corporate events and economic data.

Investors were optimistic on Monday about the ability of mega-cap technology companies to thrive in an uncertain economy, but worried on Tuesday about pending Congressional testimony involving the CEOs of these firms.

On the economic front, a strong June durable goods orders report on Monday bolstered investor sentiment. But the optimism faded on a disappointing jobless claims number and a troubling second-quarter GDP number that-while anticipated-was a bit unsettling.[4][5][6]

Following some exceptional earnings results from the mega-cap technology companies, stocks managed to rally in the final hour of trading on Friday.

U.S. Dollar Continues Its Decline
Since peaking in mid-March, the U.S. dollar has dropped nearly 9%. Some of the potential beneficiaries of a weak dollar are global American businesses whose products and services become less expensive in overseas markets.[7]

Conversely, international companies may suffer lower sales in the U.S. as their products become more expensive. It’s a mixed bag of potential outcomes, but Wall Street has become more and more focused on the dollar’s trajectory.

Final Thoughts
August has historically been a particularly volatile month. For instance, in 2019, the S&P 500 posted moves of more than one percent in 22 trading days.[8]

One of the possible reasons is that many traders are away on vacation, resulting in light volume, which may amplify market volatility. But this year, it’s uncertain whether traders will be away on vacation due to the pandemic. Should markets become volatile in the weeks ahead, investors may want to remind themselves of the seasonal trends that may be at work.

[1] The Wall Street Journal, July 31, 2020
[2] The Wall Street Journal, July 31, 2020
[3] The Wall Street Journal, July 31, 2020
[4] CNBC.com, July 27, 2020
[5] CNBC.com, July 30, 2020
[6] BEA.gov, July 30, 2020
[7] Reuters.com, July 28, 2020
[8] CNBC.com, August 31, 2019

Bonds are sometimes used as an investment vehicle, but as with any investment, there are tax considerations as well. The interest you receive from corporate bonds may be taxable, which means that those taxes impact a portion of your earnings. In addition, savings bonds and government-issued Treasury bonds may be exempt from state and local taxes, but they may be taxable on the federal level. On the other hand, municipal bonds may be tax-exempt on the federal level, but they may be taxed at the state and local level.

With this being said, it’s always important to understand the tax implications of your investments. After all, it’s not about what you make – it’s about what you make after taxes!

* 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.gov[9]
[9] IRS.gov, July 23, 2020

The Week on Wall Street
Stocks slipped in the final days of trading last week on higher jobless claims and rising tensions in the U.S.-China relationship.

The Dow Jones Industrial Average lost 0.76%, while the Standard & Poor’s 500 dipped 0.28%. The Nasdaq Composite Index dropped 1.33% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, rose 1.24%.[1][2][3]

Stocks Lose Momentum
Stocks marched higher to begin the week on progress with a COVID-19 vaccine and a string of upbeat corporate quarterly reports. Firming oil prices and the passage of a fiscal stimulus bill by the European Union also helped buoy investors’ spirits.

Market sentiment, however, turned negative after Thursday morning’s report of an uptick in new unemployment claims, which suggested a possible slowdown in hiring. The market was led lower by the technology sector ahead of quarterly reports from some of the sector’s biggest names.[4]

U.S.-China Tensions Escalate
Tensions escalated last week as the U.S. ordered China to close its consulate in Houston, which the White House claimed was stealing American information. A day earlier, the U.S. had accused China of attempting to steal COVID-19 research data. China responded by ordering the U.S. to close its consulate in the city of Chengdu.[5][6]

The markets appear more focused on the apparent deteriorating relations between the two nations, worried about a repeat of the trade battle in 2018. Whether the rancor is managed is likely to remain a top concern for investors in the weeks ahead.

Final Thoughts
The mega-cap technology companies’ market dominance is a concern to some. Last week it was reported that six of these mega-cap stocks represent 41% of the Nasdaq market capitalization.Five mega-cap names included in the S&P 500 Index account for 22% of that index’s market capitalization.[7]

Investors have embraced these firms because they appear to be able to show solid financial performance in the midst of an economy coping with COVID-19.

[1] The Wall Street Journal, July 24, 2020
[2] The Wall Street Journal, July 24, 2020
[3] The Wall Street Journal, July 24, 2020
[4] NYTimes.com, July 23, 2020
[5] CBSnews.com, July 22, 2020
[6] APNews.com, July 24, 2020
[7] CNBC, July 22, 2020

Whether you’re donating to a local animal shelter, a soup kitchen, or an arts program, it feels great to give back. There are many different types of organizations to support. Let’s look at two of the most common:

• 501(c)(3) organizations are nonprofit organizations that are dedicated to religious, charitable, or educational purposes. Donations to 501(c)(3) organizations may be tax deductible. These organizations may not attempt to influence legislation or participate in any campaign activity for or against political candidates.
• 501(c)(4) organizations are social welfare groups that can engage in more lobbying and advocacy. Contributions to 501(c)(4) organizations may not be tax deductible.

It’s important to know what kind of organization you are donating to if you want to know if your contributions can be tax deductible.

* 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.gov[9]
[9] IRS.gov, May 27, 2020

The Week on Wall Street
Stocks were mixed last week as investors reacted to positive economic data, progress on a COVID-19 vaccine, and the continued nationwide increase in COVID-19 cases.

The Dow Jones Industrial Average gained 2.29%, while the Standard & Poor’s 500 rose by 1.25%. But the Nasdaq Composite Index dropped 1.08% for the week. The mega-cap technology companies saw some profit-taking last week, sending the Nasdaq Composite to its first loss in three weeks. The MSCI EAFE Index, which tracks developed stock markets overseas, ended 2.19% higher.[1][2][3]

Stocks Find a Way Higher
After a Monday rally melted away on news that California was rolling back its reopening plans amid rising infections, a new earnings season began on a hopeful note. Stocks posted back-to-back daily gains on the strength of positive earnings surprises from a few money center banks and encouraging news about progress in the development of a COVID-19 vaccine.[4]

Despite a strong retail sales number, new jobless claims and rising U.S.-China tensions reminded investors that global economic recovery remains fragile, leading stocks to pare some of the week’s earlier gains.[5][6]

Earnings Season Begins
While investors long ago accepted the idea that this earnings season would be ugly, reflecting the impact of the economic shock due to COVID-19, it didn’t mean that there weren’t important insights to be gained from this quarter’s earnings reports.

Three money center banks last week kicked off the earnings season, reporting substantial declines in profits and an additional cumulative $28 billion set aside for loan-loss reserves.[7]

Banks are an important economic bellwether since they touch every part of the U.S. economy. Although their earnings were significantly lower, they actually beat consensus Wall Street estimates, which encouraged investors and set the stage for stocks to move higher. The story on this quarter’s earnings season, however, is far from finished as investors await the stream of companies releasing their quarterly results in the days and weeks ahead.

[1] The Wall Street Journal, July 17, 2020
[2] The Wall Street Journal, July 17, 2020
[3] The Wall Street Journal, July 17, 2020
[4] CNBC.com, July 14, 2020
[5] WSJ.com, July 16, 2020
[6] CNBC.com, July 16, 2020
[7] The New York Times, July 15, 2020

More and more couples are starting to do business together. There are some considerations to working together, though, and they’re not just who’s going to drive the car to work that day.

In terms of taxes, there are a few considerations to be aware of.

• You should first establish if you have a partnership business (where both spouses have an equal say in the affairs, services, and capital of the business) or an employee-employer relationship (where one spouse substantially controls management decisions). These relationships face different tax situations.
• If there is an employee-employer relationship, the “employee” spouse may be subject to income tax, Social Security, and Medicare.
• If there is a partnership relationship, your business income may need to be reported on Form 1065, U.S. Return of Partnership Income.

*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.gov[8]
[8] IRS.gov, May 27, 2020