By: Sean Schmid, Chief Operating Officer – Penn Investment Advisors
Weekly Update – June 1, 2021
Optimism over the economic reopening and renewed enthusiasm for technology and other high-growth companies powered the stock market higher last week.
The Dow Jones Industrial Average rose 0.94%, while the Standard & Poor’s 500 climbed 1.16%. The Nasdaq Composite index led, picking up 2.06%. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.46%.1,2,3
Solid Gains
Stocks rallied on renewed confidence in the economic recovery, lower inflation worries, and rising comfort with Fed officials talking about the potential for easing of its monthly bond purchases. Technology, communication services, and reopening stocks were among the market leaders.
Investor sentiment was buoyed late in the week by an encouraging jobless claims number and the unveiling of a Republican infrastructure proposal. A somewhat hotter-than-expected inflation indicator on Friday did nothing to dampen optimism as stocks added to their gains ahead of the three-day Memorial Day weekend.4,5
Jobless Claims Reach Pandemic Lows
In a sign of further recovery in the labor market, the number of initial jobless claims fell to a pandemic low, continuing the downward trend in worker layoffs. New jobless claims totaled 406,000 for the week, well below the pandemic high of nearly 1.5 million, though still above the 2019 weekly average of 218,000.5
Final Thoughts
The history of Memorial Day extends back to the Civil War when it was referred to as Decoration Day. We join all Americans in honoring those who died in the performance of their military service to protect the freedoms we enjoy today. These were remarkably brave men and women whose sacrifice will never be forgotten.
This Week: Key Economic Data
Tuesday: Institute for Supply Management (ISM) Manufacturing Index.
Wednesday: Automated Data Processing (ADP) Employment Report.
Thursday: Jobless Claims. Institute for Supply Management (ISM) Services Index.
Friday: Employment Situation. Factory Orders.
Source: Econoday, May 28, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: Zoom Video Communications, Inc. (ZM).
Wednesday: Splunk (SPLK).
Thursday: Lululemon Athletica (LULU), Broadcom (AVGO), Docusign, Inc. (DOCU), CrowdStrike Holdings (CRWD).
Source: Zacks, May 28, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Quote of the Week
“Part of being a champ is acting like a champ. You have to learn how to win and not run away when you lose.”
– Nancy Kerrigan
Tax Tips
Plan Ahead for Vacation Home Rentals
With summer just around the corner, many homeowners who own vacation rentals are preparing for the busy season. There’s a lot to consider when looking at the tax situation of vacation home rentals.
If you receive money for the use of your primary residence, you may have to report this rental income on your tax return. This means that the “vacation home rental” classification can apply to you, even if you don’t own multiple short-term rental properties. If the property is used as a home, the rental expense deduction is limited. In the case of a property used as a home, the rental expenses can’t be more than the rent received on the property itself. If the home is rented out for less than 15 days during the year, the rental income may not need to be reported.
A vacation home is a house, apartment, condominium or other dwelling that you use to generate income, but you can also use as a residence during the year. For tax purposes, it’s critical to divide the expenses of a property into personal and business purposes.
To report rental income and rental expenses, use Schedule E. In addition, rental income may also be subject to Net Investment Income Tax.
* 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.gov6
Have investment questions? Call us at 1.800.626.1027 or email us at invest@pennadvisors.com.
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Footnotes, disclosures and sources:
Investment advisory services are provided through Penn Investment Advisors, Inc. (PIA), a Registered Investment Adviser. PIA is a wholly-owned subsidiary of Penn Community Bank (Bank). Investment products, securities and services offered by PIA are not a deposit of, or obligation of, or guaranteed by the Bank, or an affiliate of the Bank, are not insured by the FDIC or any agency of the United States, the Bank, or any affiliate of the bank and involve investment risk, including the possibility of loss of principal. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Penn Investment Advisors, Inc., and other listed sources. This should not be construed as investment advice. Penn Investment Advisors, Inc., does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
- The Wall Street Journal, May 28, 2021
- The Wall Street Journal, May 28, 2021
- The Wall Street Journal, May 28, 2021
- CNBC.com, May 28, 2021
- The Wall Street Journal, May 27, 2021
- IRS.gov, September 25, 2020
7. Mhanational.org, 2021