A hot inflation print and the growing concern of a Russian invasion of Ukraine sent stocks tumbling late in the week, leaving major indices lower for the five-trading days.
The Dow Jones Industrial Average skidded 1.00%, while the Standard & Poor’s 500 retreated 1.82%. The Nasdaq Composite index slumped 2.18%. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.26%.1,2,3
A Double Whammy
Mid-week, a fresh batch of positive corporate earnings surprises lifted investor sentiment, helping stocks claw back losses with technology stocks posting some of the sharpest gains. But January’s inflation report, set for release on Thursday morning, remained investors’ biggest concern.
When the report hit, it showed accelerating inflation, and stocks dropped and bond yields bounded higher. Stocks managed to recover from the initial reaction to the unexpectedly high inflation number. But when the President of the Federal Reserve Bank of St. Louis commented that the Fed may consider a more aggressive move against inflation, stocks resumed their slide lower. The stock skid accelerated into Friday on White House reports that an invasion of Ukraine by Russian forces may be imminent.4
Prices of consumer goods accelerated in January, rising 0.6% from the previous month and 7.5% year-over-year. This annual inflation rate was the highest since 1982. Core inflation, which excludes the more volatile food and energy prices, was 6.0% higher from last January.5
Many economists and market analysts had expected inflation to moderate, but driven by a surge in prices of used cars, gasoline, and energy, inflation remained at elevated levels. The persistence of inflation at these heights has fueled investor concerns that the Fed might consider a more aggressive 50-basis points increase in short term interest rate.
This Week: Key Economic Data
Tuesday: Producer Price Index (PPI).
Wednesday: Retail Sales. Industrial Production. FOMC Minutes.
Thursday: Housing Starts. Jobless Claims.
Friday: Existing Home Sales. Index of Leading Economic Indicators.
Source: Econoday, February 11, 2022
This Week: Companies Reporting Earnings
Tuesday: Zoetis, Inc.(ZTS), Devon Energy Corporation (DVN), Marriott International, Inc. (MAR), ViacomCBS, Inc. (VIAC).
Wednesday: Nvidia Corporation (NVDA), Cisco Systems, Inc. (CSCO), Applied Materials, Inc. (AMAT), Shopify, Inc. (SHOP), DoorDash (DASH).
Thursday: Roku, Inc. (ROKU), Walmart, Inc. (WMT), The Southern Company (SO).
Friday: Deere & Company (DE).
Source: Zacks, February 11, 2022
How to Verify Your Identity When Calling the IRS
When calling the IRS, you can expect them to verify your identity before delving into personal information. Here’s what you’ll need to verify your identity:
Having all this information handy before you call the IRS will make the process faster because IRS phone operators will only speak with the taxpayer or a legally designated representative.
* 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 questions about this update or want to know more? Contact us today!
Footnotes and Sources
1. The Wall Street Journal, February 11, 2022
2. The Wall Street Journal, February 11, 2022
3. The Wall Street Journal, February 11, 2022
4. CNBC, February 10, 2022
5. CNBC, February 10, 2022
6. IRS.gov, September 1, 2021
7. OrganizingMoms.com, September 30, 2020
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