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The Week on Wall Street
Stock prices notched solid gains last week, looking past an increase in COVID-19 cases and any potential economic concerns raised by the trend.

The Dow Jones Industrial Average increased by 0.96%, while the Standard & Poor’s 500 climbed 1.76%. The Nasdaq Composite Index bounded 4.01% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained just 0.07%.[1][2][3]

Virus Concerns
Stocks experienced a volatile week as investors negotiated the crosswinds of encouraging overseas economic data with an accelerating number of COVID-19 cases in several states. Ongoing support of the financial markets by the Federal Reserve appeared to offset any concerns about an economic rebound.

The big technology companies continued to shine, leading the Nasdaq Composite to multiple new record highs. News of positive trial results for a potential COVID-19 treatment boosted stocks on the final trading day, closing the week on an encouraging note.

On the Record
Regional Federal Reserve presidents had several speaking engagements last week, and the message was a consistent one: expect the economic recovery to remain bumpy.

Cleveland Fed President Loretta Mester said that the economy in her region is slowing due to rising COVID-19 cases. She linked gains in combating the virus with further economic progress. She also echoed earlier comments by Fed Chairman Powell that more fiscal support is necessary.[4]

Meanwhile, San Francisco Fed President Mary Daly observed that it was unlikely many companies would be rehiring all their employees. Thomas Barkin, president of Richmond Federal Reserve, reiterated the challenges of a labor recovery, but also spoke of the strain on local and state governments.[5][6]

[1] The Wall Street Journal, July 10, 2020
[2] The Wall Street Journal, July 10, 2020
[3] The Wall Street Journal, July 10, 2020
[4] CNBC, July 7, 2020
[5] MarketWatch, July 7, 2020
[6] MarketWatch, July 7, 2020

Due to the COVID-19 pandemic, the deadlines to file and pay federal income taxes were extended to July 15, 2020, which is just around the corner! If you haven’t yet, make sure to get your taxes in order or file for an extension. This also includes individuals, including sole proprietors, who should make estimated tax payments throughout the year.

*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[11]
[11] IRS.gov, May 29, 2020

The Week on Wall Street
In a holiday-shortened week, stock prices turned higher as encouraging economic data outweighed an increase in COVID-19 cases and a rollback in economic re-openings.

The Dow Jones Industrial Average rose 3.25%, while the Standard & Poor’s 500 increased by 4.02%. The Nasdaq Composite Index gained 4.62% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, picked up 0.22%.[1][2][3]

The Quarter in Brief
As a new quarter begins, we look back on an eventful second quarter for households and investors alike – a quarter in which the economy took a mighty hit, while the stock market soared. Complying with stay-at-home orders, Americans abruptly cut back on discretionary spending, traveling, and commuting, resulting in a dire scenario for some industries. Unemployment rose as business revenue declined. Fundamental economic indicators saw big swings, and on one trading day, oil prices actually collapsed into negative territory. Homes became easier to finance; though, transactions declined. The Federal Reserve made proactive moves to try and foster a bit more economic stability. While Main Street quieted, Wall Street rallied, sensing that an economic rebound might be starting. The Standard & Poor’s 500 gained 19.95% for the quarter.[4]

What’s to Come
The rally that started in late March continued in the second quarter. Traders were encouraged by better-than-expected earnings in certain industries, positive news about potential COVID-19 treatments and vaccines, and the commitment of the Federal Reserve to address turbulence in the economy and the markets.

All three of the big Wall Street benchmarks recorded their best quarters of the century. The Nasdaq Composite closed at 10,020.35 on June 10, reaching a new milestone. The Nasdaq ended Q2 at 10,058.77; the S&P, at 3,100.29; the Dow Jones Industrial Average, at 25,812.88.[5][6]

As this quarter starts, investors are wondering… is the worst of this recession now behind us? A quick answer may prove elusive. The third quarter may bring more signals that Main Street is bouncing back, but it could also bring a reversal of economic momentum if states continue to halt or reverse phases of opening. For the market to climb higher off of its Q2 melt-up, earnings and economic indicators have to keep showing improvement or least stability. The same goes for COVID-19 case counts. If they keep rising this summer, the bulls could easily be held back.

Jobs, Jobs, Jobs
The ultimate measure of economic recovery is jobs for Americans, and last week, Wall Street got an update from three different perspectives.

First, the ADP (Automatic Data Processing) National Employment Report, which reported private-sector employers added 2.37 million jobs in June. Next, an update on jobless claims, which showed 1.43 million claims, slightly higher than estimates. And finally, the June employment report from the Bureau of Labor Statistics, which showed 4.8 million jobs added, and the unemployment rate falling to 11.1%.Both numbers were better than expected.[7][8][9]

While the employment numbers painted a mostly positive picture, it’s important to remember that the June wave of rehiring was prior to the increase in COVID-19 cases, which has caused some states to revisit their re-opening plans.

[1] The Wall Street Journal, July 2, 2020
[2] The Wall Street Journal, July 2, 2020
[3] The Wall Street Journal, July 2, 2020
[4] CNBC.com, June 30, 2020
[5] CNBC.com, June 30, 2020
[6] The Wall Street Journal, June 30, 2020
[7] MarketWatch, July 1, 2020
[8] CNBC, July 2, 2020
[9] The Wall Street Journal, July 2, 2020

With the COVID-19 pandemic changing the way nearly everyone works in 2020, many people have found themselves working from home. While it is true that some home office expenses can be tax deductible, there’s a specific distinction that taxpayers should be aware of.

As a result of the Tax Cuts and Jobs Act of 2017, for the tax years 2018-2025, you may not be able to deduct home office expenses if you are an employee. This is different than working from home and being self-employed or an independent contractor. These types of workers may still be able to write off some of their home office expenses.

* 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 Forbes.com[8]
[8] Forbes.com, March 23, 2020

The Week on Wall Street
A jump in COVID-19 cases dampened investor enthusiasm last week, sending stock prices lower on worries that rising infections could derail the economic recovery.

The Dow Jones Industrial Average slumped 3.31%, while the Standard & Poor’s 500 retreated 2.86%. The Nasdaq Composite Index lost 1.90% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, declined 1.28%.[1][2][3]

A Rocky Week for Stocks
Investors began the week overlooking a jump in COVID-19 cases in some early reopening states, sending stocks higher and powering the Nasdaq Composite to close above 10,000 and establish a new record high on successive days. But the market quickly reversed course as investors reacted to data showing a troubling spike in nationwide COVID-19 cases.[4]

In Thursday’s trading, stocks opened lower but then rallied late in the day on no apparent news. Stocks resumed their decline on Friday, falling on news that Texas and Florida were rolling back some reopening plans amid rising COVID-19 infections.[5]

COVID-19 Cases
Investor expectations for an economic rebound took a hit last week, following reports of an increase in nationwide COVID-19 cases. The pace of infections had picked up in 33 states, with the seven-day average of new cases higher than the average over the last two weeks.[6]

While traders understood that reopening and increased testing would lead to an uptick in reported cases, the numbers were a bit unsettling. The week’s action reminded investors that the market remains tightly tethered to COVID-19 developments.

[1] The Wall Street Journal, June 26, 2020
[2] The Wall Street Journal, June 26, 2020
[3] The Wall Street Journal, June 26, 2020
[4] Marketwatch.com, June 23, 2020
[5] FoxBusiness.com, June 26, 2020
[6] The Wall Street Journal, June 25, 2020

The tax preparer you choose to help you file taxes can have different representation or “practice” rights. These rights may affect how they can represent you before the IRS. As you manage your tax details within your financial life, remember these tips.

How Will You Be Represented?

• Unlimited: This category enables your tax preparer to represent you before the IRS on any tax item. The credentialed tax professional can be an Enrolled Agent, Certified Public Account (CPA), or attorney.
• Limited: This category means that only the person who prepared and signed your tax return can represent you before the IRS. However, they cannot represent you on appeals or collection matters. Your tax preparer can represent you in front of revenue agents, customer service representatives, and similar IRS employees.

As you manage your taxes each year, be sure to familiarize yourself with the tax preparer’s representation rights.

* 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.Treasury.gov, June 19, 2020

The Week on Wall Street
Stocks moved higher last week on news of more Federal Reserve market support and diminished concerns that new COVID-19 cases might lead to another economic shutdown.

The Dow Jones Industrial Average rose 1.04%, while the Standard & Poor’s 500 gained 1.86%. The Nasdaq Composite Index jumped 3.73% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 1.88%.[1][2][3]

Investor Sentiment
News on Monday that the Fed would be expanding its bond-buying program to include the debt of individual companies sparked a sharp jump in stocks. The momentum gained through the week as investors focused on positive economic signals, especially with retail sales. A midweek report of an effective COVID-19 treatment for critically ill patients boosted investor optimism.

Market sentiment also was helped by talk of more fiscal stimulus and a report that China would be moving ahead with agricultural purchases to comply with phase one of the trade deal, easing concerns over growing friction in the U.S.-China relationship.

Mixed Economic Data
Last week’s economic data illustrated the uneven nature of the nation’s nascent economic recovery.

Retail sales, which were up by 17.7% in May, reflected a strong, encouraging rebound in the U.S. consumer. Consumer spending was particularly strong in clothing, furniture, sporting goods, and autos.[4][5]

But industrial production (up by only 1.4%) and new housing starts (ahead by just 4.3%) showed tepid rebounds, indicating that recovery has yet to reach all corners of the American economy. Jobless claims posted their best number since mid-March (1.5 million), but remained high by historical standards.[6][7][8]

Final Thoughts
Last week saw the flare-up of border tensions in two geopolitical hotspots: North Korea and the disputed border region between China and India. The hope, of course, is that escalation can be avoided through diplomacy, but any heightening in tensions may become a concern for global markets.

[1] The Wall Street Journal, June 19, 2020
[2] The Wall Street Journal, June 19, 2020
[3] The Wall Street Journal, June 19, 2020
[4] The Wall Street Journal, June 16, 2020
[5] The Wall Street Journal, June 16, 2020
[6] MarketWatch, June 16, 2020
[7] CNBC, June 17, 2020
[8] The Wall Street Journal, June 18, 2020

Sometimes taxpayers owe more money in taxes than they can afford to pay to the IRS. When this happens, you have the option to file an Offer in Compromise, which allows you to pay less than you owe. If you opt to pursue this route, here are some specific details you should know.

Affording the full debt amount. If you can afford to pay your full debt, you will, most likely, not qualify for an Offer in Compromise. Instead, you should pursue other options, such as setting up a payment plan with the IRS.

Filing all required tax materials. In order to apply for an Offer in Compromise, you must have filed all necessary tax paperwork with the IRS.

Making an initial payment toward your debt. The IRS may require you to pay an amount toward your owed taxes when you apply for Offer in Compromise. Any payments will apply to your debt.

You can find out if you qualify by using the IRS Offer in Compromise Pre-Qualifier Tool.

* 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, June 12, 2020

The Week on Wall Street
Investor sentiment turned negative last week, amid an increasing number of COVID-19 cases in states where reopening has been underway as well as a subdued economic forecast from the Federal Reserve.

The Dow Jones Industrial Average dropped 5.55%, while the Standard & Poor’s 500 lost 4.78%. The Nasdaq Composite Index slipped 2.30% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, fell 3.10%.[1][2][3]

Reality Bites
The optimism that drove stock prices higher these past several weeks slipped away on reports of a jump in COVID-19 cases, which sparked worries of a second wave slowing the economic recovery. A sober forecast for the economy by the Federal Reserve further dampened investor sentiment.

The week started upbeat with “reopening” stocks, e.g., financials, transportation, retailers, travel and leisure, and industrials, leading the way higher. But the momentum was soon lost as stocks turned mixed on Tuesday and Wednesday and then moved decidedly downward, with the S&P 500 losing 5.9% on Thursday.[4]

Amid a volatile week, big technology companies resumed their market leadership, with the NASDAQ Composite closing above 10,000 for the first time. Stocks pared their losses on Friday, but it wasn’t enough.[5]

Fed Forecasts Economic Growth and Interest Rates
On Wednesday, the Federal Reserve said that it would keep the federal funds rate near zero and maintain its monthly purchases of Treasury bonds and mortgage-backed securities.

The Fed also issued its forecasts for 2020-2022, indicating that it saw its benchmark federal funds rate remaining at zero, with inflation at 0.8% for 2020, increasing to 1.6% in 2021, then to 1.7% in 2022. Fed officials also expect the economy to shrink by 6.5% this year, with Gross Domestic Product growing 5% and 3.5% in 2021 and 2022, respectively. Their forecast for unemployment predicts a steady decline over the next 2½ years, from 9.3% by the end of 2020 to 5.5% in 2022.[6]

[1] The Wall Street Journal, June 12, 2020
[2] The Wall Street Journal, June 12, 2020
[3] The Wall Street Journal, June 12, 2020
[4] The Wall Street Journal, June 11, 2020
[5] CNBC, June 12, 2020
[6] CNBC, June 10, 2020

Are you a teacher? Are you looking to put money directly back in your pocket after the semester? You’re in luck! Educators may be able to deduct unreimbursed expenses on their tax returns. Here are some things to know about this deduction:

• Educators can deduct up to $250 of trade or business expenses that were not reimbursed. As teachers prepare for the next school year, they should remember to keep receipts after making any purchase to support claiming this deduction.
• Qualified expenses should be in the amounts the taxpayer paid for the expenses in the same tax year.
• Professional development course fees, books, supplies, or computer equipment are all valid deductions.
• To be considered eligible, you must be a teacher, instructor, counselor, principal, or aide.

*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, June 5, 2020