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Stocks Rise
Each of the major U.S. indexes rose around 2% for the week, although the gains weren’t quite enough to fully recover ground lost the prior week. Recent results have left the S&P 500, the NASDAQ, and the Dow little changed on a year-to-date basis, despite the market downturn from late February to early April.
After a volatile and mostly negative April, the major U.S. stock indexes generated strongly positive results in May. The NASDAQ finished about 9.6% higher for the month while the S&P 500 gained 6.2% and the Dow added 3.9%. Information technology stocks led the broader market, with the S&P 500’s tech sector up more than 10%.
Tariff-related news appeared to drive financial markets in an otherwise calm trading week. Stocks posted their biggest gain of a holiday-shortened week on Tuesday following an update on U.S.-European Union trade talks. Later in the week, investors assessed developments in a legal challenge to the Trump administration’s authority to impose reciprocal tariffs.
The yield of the 30-year U.S. Treasury bond fell back below the 5.00% threshold a week after it climbed to the highest level since 2023 amid concerns about the long-term outlook for U.S. government debt. The 30-year yield ended the week around 4.91%, down from a recent peak of 5.09% on May 21. Shorter-dated Treasury yields also retreated, with the 10-year yield finishing at 4.39%.
One measure of inflation remained above the U.S. Federal Reserve’s 2.0% long-term target in April but fell slightly from the previous month, despite concerns about the potentially inflationary impact of higher tariffs. Friday’s reading from the Personal Consumption Expenditures Index showed that core inflation excluding food and energy prices rose at an annual rate of 2.5%, down from 2.7% the previous month.
A monthly survey that measures U.S. consumer confidence recorded a modest increase relative to an earlier preliminary reading, although it remained near the lowest level in almost three years following recently weak results. The University of Michigan’s Index of Consumer Sentiment rose to 52.2 from a preliminary figure of 50.8 released a couple weeks earlier. May’s final figure was identical to April’s closing number.
Companies in the S&P 500 posted an average earnings gain of 12.9% over the same quarter a year earlier, according to FactSet data from the recently concluded first-quarter earnings season. That result marked the second consecutive quarter of double-digit growth but was a modest slowdown from the previous quarter’s 17.8% year-over-year growth rate. Healthcare posted a 43.0% earnings gain in the latest quarter, the highest among all 11 sectors.
A monthly labor market report due out on Friday will show whether a recent trend of moderate but better-than-expected jobs growth extended into May. In April, the economy generated 177,000 jobs, above consensus expectations for around 130,000. March’s jobs gain also came in better than forecast with an adjusted figure of 185,000.
Source: John Hancock Investment Management
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The cost of healthcare continues to climb with no signs of slowing down, making it one of the most significant expenses in retirement. A 65-year-old retiring today could spend approximately $165,000 on healthcare throughout retirement, according to recent estimates – and that figure nearly doubles for couples.
In 2023, healthcare spending reached $4.9 trillion nationally – approximately $12,297 per person each year, and nearly 18% of GDP. This marks a dramatic increase from just 5% of GDP in 1962. As Americans live longer, preparing for these expenses becomes an essential component of any comprehensive financial plan.
Multiple factors drive this persistent growth, including an aging population, rising prevalence of chronic conditions, advances in medical technology, broader insurance coverage, and overall healthcare cost inflation.
There are various approaches to addressing future healthcare costs including tax-advantaged savings accounts, Medicare supplemental insurance policies, long-term care insurance, and strategic retirement income planning. Each approach offers unique advantages depending on an individual's health status, financial situation, and retirement timeline. Taking a multi-faceted approach that combines several of these strategies often provides the most comprehensive protection against escalating healthcare expenses.
So, what financial planning strategies are available? This should be considered across three areas:
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Tax planning: Identifying strategies to fund healthcare expenses in a tax-advantaged manner, such as HSAs, and deciding whether to let these accounts grow in a tax-friendly way.
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Retirement planning: Understanding your future healthcare needs and determining the best funding vehicles. Again, HSAs can play an important role.
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Estate planning: In the event you don’t utilize your healthcare allocation, assessing how different vehicles like HSAs will be treated becomes a worthy consideration.
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For centuries, maps were essential navigation tools. In recent years, travelers have come to rely on global positioning systems (GPS) that require them to follow directions rather than read a map. While GPS may seem simpler, it has occasionally led both real and fictional people astray. In a memorable episode of The Office, Michael Scott argues, “Maybe it's a shortcut, Dwight. It said go to the right…The machine knows!” before driving into a lake.
Now, a new app wants people to navigate using words instead of latitude and longitude. The inspiration for the new approach was a numerical miscommunication.
“[The app’s co-founder] was running a business providing the music for events such as weddings in venues such as pretty, rural villas. But the problem with pretty, rural villas is that they tend to be quite hard to find. Street numbers work only if there are streets. Postcodes cover vast areas of the countryside. And in much of the world there is no formal address system at all. [The co-founder] took to giving directions in latitude and longitude. Then at an event in Italy, a lorry drove to n 42.804509, e 12.683829 rather than n 41.804509, e 12.683829. The difference in numbers was tiny: a single digit. The difference to [the co-founder] was vast: his sound system was two hours north, rather than somewhere east of Rome,” reported The Economist.
To improve users’ ability to find locations, the new app divided the world into trillions of three-meter squares and assigned each one a unique combination of three words. Users click on a square to find the three-word address. For example,
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The Hollywood sign in Los Angeles is located at “incomes.amount.formed”,
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Yellowstone National Park can be found at “flashed.faded.eggshells”,
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The Statue of Liberty is “planet.inches.most”,
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Graceland is “part.coin.soil”, and
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The Gateway Arch is “roses.bonus.model”.
The company says three-word addresses make precise locations easier to communicate, so it’s easier to meet up with friends, find a destination, or get help in an emergency. However, choosing words to identify locations was not simple or straightforward. The company “employs linguists who manually go through each country’s dictionary, removing rude words lest they offend (“bottom” appears in the English version but not “bum”) and homophones lest they confuse (English loses “sun” and “son”). Complicated words are not removed entirely but do tend to be exiled to less populous places (“dodecahedron”…often ends up in the ocean).”
The new approach to navigation gives a whole new meaning to Mark Twain’s observation: The difference between the almost right word and the right word is really a large matter.
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AJ Advisors
www.ajadvice.com
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Phone: (615) 709-8709
Fax: (615) 709-8709
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John Stauffer, CFP®
Partner
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Andrew Quinn, CFP®
Partner
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