THE WEEK ON WALL STREET
Stocks posted modest losses last week as tariff deals, January jobs data, and Q4 corporate reports injected volatility into markets. The S&P 500 Index slipped 0.24 percent, while the Nasdaq Composite Index lost 0.53 percent. The Dow Jones Industrial Average fell 0.54 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, edged ahead 0.17 percent.
FACT OF THE WEEK
On February 10, 1996, after three hours, world chess champion Garry Kasparov loses the first game of a six-game match against Deep Blue, an IBM computer capable of evaluating 200 million moves per second. Man was ultimately victorious over machine, however, as Kasparov bested Deep Blue in the match with three wins and two ties and took home the $400,000 prize. An estimated 6 million people worldwide followed the action online.
Kasparov had previously defeated Deep Thought, the prototype for Deep Blue developed by IBM researchers in 1989, but he and other chess grandmasters had, on occasion, lost to computers in games that lasted an hour or less. The February 1996 contest was significant in that it represented the first time a human and a computer had duked it out in a regulation, six-game match, in which each player had two hours to make 40 moves, two hours to finish the next 20 moves and then another 60 minutes to wrap up the game.
In 1997, a rematch took place between Kasparov and an enhanced Deep Blue. Kasparov won the first game, the computer the second, with the next three games a draw. On May 11, 1997, Deep Blue came out on top with a surprising sixth game win–and the $700,000 match prize.
In 2003, Kasparov battled another computer program, “Deep Junior.” The match ended in a tie. Kasparov retired from professional chess in 2005.
MARKET MINUTE
Tariffs, Q4 Reports, and Jobs
On Monday, stocks opened lower on news that tariffs on Mexico, Canada, and China went into effect over the weekend. However, markets rebounded midmorning following news of a U.S.-Mexico deal that delayed new trade rules. News of a similar last-minute agreement with Canada followed. Stocks continued their rally midweek, led by technology stocks from companies that provided upbeat Q4 corporate reports. The S&P 500 and Nasdaq rose for the third consecutive day on Thursday, while the Dow experienced a slight fall as investors digested more corporate earnings reports. The week closed on a down note as a mixed jobs report and a cautionary inflation outlook disappointed investors.
Mixed Signals on the Labor Market
As has happened several times in recent years, two job reports told conflicting stories about the state of the jobs market. On Friday, the Bureau of Labor Statistics reported that 143,000 jobs had been added for the month–a four-year low. Earlier in the week, the ADP report showed the economy added 188,000 new jobs, ahead of the 150,000 economists expected. Why do the reports tell different stories? Economists point to various factors, including how January can be challenging to measure accurately, typically due to the more significant number of laid-off seasonal workers.
FINANCIAL STRATEGY OF THE WEEK
Understanding the Basics of Medigap Policies
Medicare coverage can be a critical component for living a healthy life in retirement, as well as for maintaining your financial independence during these years. Yet, as important as it is, Medicare does not cover the full range of healthcare expenses you may experience in your golden years.
To fill the holes that exist in Medicare, Medigap insurance can be purchased by individuals over 65 to supplement Medicare.
A Medigap policy is designed to cover expenses such as copayments, coinsurance, and even deductibles—the so-called gaps in Medicare. Coinsurance is only covered after you have paid the deductible unless you select a Medigap policy that also covers the deductible.
From A to N
Medigap is private health insurance that must follow federal and state laws designed to protect you. In most states, you can only purchase standardized coverage packages, or Plans, each of which is identified by the letters A through N. These standardized packages must offer the same basic benefits regardless of which insurance company is offering it. Cost is usually the only difference between Medigap policies with the same letter.
All insurance companies are required to offer the Plan A standardized package. Each Medigap plan option (A-N) will differ on the benefits offered and the percentage of coverage for these Medicare gaps. To get a better understanding of what each of these plans offer, go to www.medicare.gov and click on “Health & Drug Plans” at the top of the page. Then click on “Medicare health plans.”
An Early Start at 65
You must have Medicare Parts A and B to buy a Medigap policy, and the best time to buy Medigap insurance is within the first six months you are both 65 or older and enrolled in Medicare Part B. By doing this, you will not need to undergo a medical underwriting. For those with existing health conditions, this enables them to buy a policy at the same price that is charged for people in good health. A separate Medigap policy must be purchased for each spouse.
If you are nearing retirement or have already discovered that these Medicare gaps can be expensive, it may be time to determine if a Medigap policy is right for you.