Stocks retreated last week as bond yields increased following the Treasury's announcement indicating “a larger-than-expected funding need” and a downgrade in the federal government’s debt rating.
The Dow Jones Industrial Average dropped 1.11%, while the Standard & Poor’s 500 shed 2.27%. The Nasdaq Composite index lost 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tumbled 3.27%.1,2,3
Stocks struggled as investor sentiment turned cautious amid rising bond yields. Markets were rattled initially by news that the Treasury raised its borrowing requirement for the third quarter by more than a quarter of a trillion dollars and on news that the Bank of Japan announced it would allow bond yields to rise after years of capping them.
Rising yields continued to pressure stocks in the wake of a surprise rating downgrade of U.S. government debt by a major credit rating agency due to its belief in expected fiscal deterioration over the next three years.
Stocks rebounded Friday morning, rising on modest employment data only to reverse and add to the week’s losses.
Mixed Signals from the Labor Market
Fresh employment data last week gave some conflicting signals about the labor market. A new JOLTS (Job Openings and Turnover Survey) report showed a small decline in job openings and layoffs in June, leaving 1.6 job openings for each available worker.4
Automated Data Processing’s (ADP) employment report reflected strong private sector hiring with a 324,000 increase in jobs, exceeding the consensus forecast of a 175,000 gain.5
The government’s monthly employment report saw a cooling in hiring as employers added 187,000 jobs in July. This was slower than seen in the first six months but enough to shave the unemployment rate from 3.6% to 3.5%.6
This Week: Key Economic Data
Thursday: Consumer Price Index (CPI). Jobless Claims
Friday: Producer Price Index (PPI). Consumer Sentiment
Source: Econoday, August 4, 2023
This Week: Companies Reporting Earnings
Monday: Skyworks Solutions, Inc. (SWKS)
Tuesday: Eli Lilly and Company (LLY), Duke Energy Corporation (DUK), United Parcel Service, Inc. (UPS), ONEOK, Inc. (OKE)
Wednesday: The Walt Disney Company (DIS)
Source: Zacks, August 4, 2023
Add Social Security Numbers of Your Dependents on Your Return
On your tax return, add the Social Security Numbers for your children and other dependents. Otherwise, the Internal Revenue Service (IRS) might deny any dependent credits you might be due, including the Child Tax Credit.
If you don’t have the number you need by the tax filing deadline, the IRS suggests filing for an extension rather than sending in a return without a Social Security number.
*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
What has three feet yet cannot run or walk?
Last week’s riddle: This word signifies a gap between hills or mountain ranges. Yet remove just one letter, and it signifies a gap between buildings. What is this six-letter word? Answer: The word valley, which becomes alley with a letter subtracted.
Footnotes and Sources
2. The Wall Street Journal, August 4, 2023
3. The Wall Street Journal, August 4, 2023
4. CNBC, August 1, 2023
5. CNBC, August 2, 2023
6. The Wall Street Journal, August 4, 2023
7. IRS.gov, October 7, 2022
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