THE WEEK ON WALL STREET
Stocks fell for a third straight week, as Fed Chair Jerome Powell's mixed but upbeat message could not offset the anxiety caused by the Middle East conflict.
FACT OF THE WEEK
With the world anxiously watching, Apollo 13, a U.S. lunar spacecraft that suffered a severe malfunction on its journey to the moon, safely returned to Earth on April 17, 1970.
On April 11, the third manned lunar landing mission was launched from Florida, carrying astronauts James A. Lovell, John L. Swigert, and Fred W. Haise. The mission was headed for a landing on the Fra Mauro highlands of the moon. However, two days into the mission, disaster struck 200,000 miles from Earth when oxygen tank No. 2 blew up in the spacecraft. Swigert reported to mission control on Earth, “Houston, we’ve had a problem here,” and it was discovered that the normal supply of oxygen, electricity, light, and water had been disrupted.
The landing mission was aborted, and the astronauts and controllers on Earth scrambled to come up with emergency procedures. The crippled spacecraft continued to the moon, looped around it, and began a long, cold journey back to Earth.
The astronauts and mission control were faced with enormous logistical problems in stabilizing the spacecraft and its oxygen supply, as well as running on batteries due to the loss of the fuel cells to allow successful reentry into Earth’s atmosphere. Navigation was another problem, and Apollo 13‘s course was repeatedly corrected with dramatic and untested maneuvers. On April 17, tragedy turned to triumph as the Apollo 13 astronauts touched down safely in the Pacific Ocean.
MARKET MINUTE
Stocks Retreat
Markets began the week rattled by further escalation in the Middle East over the weekend. A bit of good news punctuated an otherwise sour Monday, as a stronger-than-expected retail sales report showed consumers were spending despite rising inflation.
On Tuesday, remarks from Fed Chair Jerome Powell indicated a shift in thinking—from being confident to not-so-confident about interest rate cuts in 2024. He said rates might need to stay higher until the Fed meets their 2% inflation target. On Friday, the markets saw further declines, but investors were somewhat reassured by the perception that Thursday's retaliatory actions in the Middle East were restricted in scope.
Silver Linings
When stocks are in a downtrend, it’s important to keep perspective and realize that markets move in cycles. Here are a couple of bright spots from last week and perhaps some good news that may influence trading in the week ahead:
While Chair Powell said last week that the Fed may keep rates higher for longer, he also said the Fed does not intend to raise rates for now. Despite inflation concerns, individuals were in a spending mood in March. Retail sales increased 0.7% for the month, more than twice the consensus forecast. “Earning season” picks up during the next four weeks. For the week ending April 26, more than 800 companies will give updates on business conditions in Q1.
FINANCIAL STRATEGY OF THE WEEK
Three Key Questions to Answer Before Taking Social Security
Social Security is a critical component of the retirement financial strategy for many Americans, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.
When to Start?
You have the choice of 1) starting benefits at age 62, 2) claiming them at your full retirement age, or 3) delaying payments until age 70. If you claim early, you can expect to receive a monthly benefit that will be lower than what you would have earned at full retirement. If you wait until age 70, you can expect to receive an even higher monthly benefit than you would have received if you had begun taking payments at your full retirement age. The decision of when to begin taking benefits may hinge on whether you need the income now or can wait and whether you think your lifespan will be shorter or longer than the average American.
Should I Continue to Work?
Work provides income and personal satisfaction, and may increase your Social Security benefits. However, if you begin taking benefits prior to your full retirement age and continue to work, your benefits will be reduced by $1 for every $2 in earnings above the prevailing annual limit ($22,320 in 2024). If you work during the year in which you attain full retirement age, your benefits will be reduced by $1 for every $3 in earnings over a different annual limit ($59,520 in 2024) until the month you reach full retirement age. After you attain your full retirement age, earned income no longer reduces benefit payments.
How Can I Maximize My Benefit?
The easiest way to maximize your monthly Social Security benefit is to simply wait until you turn age 70 before receiving payments.