The Week on Wall Street
Stocks staged a powerful rally last week, riding a wave of optimism over the prospect of the passage of a new fiscal stimulus bill.
FACT OF THE WEEK
The first recitation of the Pledge of Allegiance occurred on Columbus Day to celebrate the 400th anniversary of North America's discovery, the first national holiday declared on October 12, 1892.
MARKET MINUTE
The Dow Jones Industrial Average rose 3.27%, while the S&P 500 increased by 3.84%. The Nasdaq Composite Index gained 4.56% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, advanced 2.23%.
Stimulus Stalemate?
The anticipation of lawmakers passing a new round of economic stimulus was a decisive driver of market action all week. A mid-week Tweet by President Trump announcing that he was ending stimulus negotiations sent stocks lower.
Losses were intensified by sharp declines in some mega-cap technology companies as details emerged from a House Judiciary subcommittee report on its investigation into their competitive practices.
Stocks quickly reversed direction, climbing after the President Tweeted that he would sign a limited stimulus bill, but lawmakers appeared to reject a piecemeal approach. Stocks consolidated on Friday, helped by continuing stimulus talks and new election polls that suggested that the risk of a contested outcome appeared to be fading.
Small-Cap Rally
The outperformance of large-cap stocks relative to small-cap stocks has been both vast and persistent during the last ten years. Last week's action in small-cap stocks, as represented by the Russell 2000 Index, indicates that smaller companies may finally be making up some ground.
Last week, the Russell 2000 Index rose 6.33%, outperforming the S&P 500 by 2.4%. While this outperformance may be fleeting, a potential broadening of the stock market rally may be considered a healthy development.
Final Thoughts
This week begins the third-quarter earnings season, with companies from a variety of industry sectors reporting. Early earnings reports start predominantly with the central banks, whose earnings results may provide insight into American consumers' general health.
As is often the case, company guidance about future earnings may be of greater interest to investors than past results.
FINANCIAL STRATEGY OF THE WEEK
WHY YOU NEED TO GET DIGITALLY ORGANIZED
When you think about your financial clutter, the first thing that comes to mind is probably a pile of receipts and bills sitting in a drawer somewhere in your home.
But what about your digital clutter?
Have you ever forgotten a password because you have too many accounts? Or do you ever find yourself toggling between multiple websites and apps as you try to pay your mortgage or credit card bill? If so, then you may consider your current finances to be in slight digital disarray.
Digital clutter can slow down your productivity and hinder your ability to manage your money effectively. It could even cause you to miss out on opportunities to reach your financial goals: A study by the University of Utah found that people with multiple bank accounts spend 10 percent more money than those with just one account.
Here are a few more reasons why you should get your digital clutter under control:
Your finances will be more secure.
When you consolidate your accounts with one bank, you only have one username and password to remember. Not only is that a significant score for your sanity, but it also means that your financial data will be better protected.
After all, when your finances are all in one place, they're easier to monitor, which means you're more likely to spot suspicious activity quickly. And the quicker you spot a problem, the faster you can report it.
You can get a better understanding of your total financial picture.
It's challenging to solve a problem when you're not quite sure what the problem is in the first place. That especially applies to your finances: When you have multiple accounts scattered across various bank accounts, it can be tricky when trying to pinpoint how they're working—or not working—together. On the other hand, when your checking, savings, loans, and investment accounts are all in one dashboard, you can see exactly where your money is.
You could even save money.
In addition to giving you a better understanding of your overall financial picture and improving your security, consolidating your finances could even save you money. Many banks offer discounts when you bring all of your various accounts together.
In addition to giving you a better understanding of your overall financial picture and improving your security, consolidating your finances could even save you money. Some banks offer discounted loan rates for existing checking and savings customers, discounts for setting up automatic payments for existing accounts, and many more frequent offers.
A potential solution.
Cleaning up your digital finances can be easy. Start by reviewing the services your bank offers to make sure that it can see all your needs.
Does it provide a full range of financial services, from checking and savings to home and car loans?
Does it have a robust app that allows you to view and manage all of your financial accounts?
When you've found the bank you need, look into moving your accounts there. If you have a mortgage there, think about opening a checking account and setting up a direct deposit for your paycheck.
Suppose you want to take this a step further: streamlining your digital accounts to provide you with better awareness and overall picture of your finances. Eventually, you'll become more equipped to set your goals, track your spending, and layout a financial roadmap for your future.
As always, please contact my office with any questions or financial concerns you may have.