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Stocks Flat
U.S. stocks slipped to start the week amid the imposition of tariffs and subsequent trade negotiations involving the United States, Canada, Mexico, and China. But stock indexes regained some of that ground, ending up with fractional declines for the week after some of the tariffs were temporarily rolled back.
January’s gain of 143,000 jobs came in short of analysts’ expectations and marked a slowdown from the previous month’s figure. However, there were plenty of positives in the report; initial jobs growth estimates for November and December were revised upward by a combined 100,000 and the unemployment rate slipped from 4.1% to 4.0%.
More than halfway through earnings season, fourth-quarter results continued to exceed analysts’ expectations. As of Friday, earnings were expected to rise 16.4% compared with the year-ago quarter, based on S&P 500 companies that have already reported plus projections for those that hadn’t yet released results. Prior to earnings season, analysts had forecast an 11.8% growth rate, according to FactSet.
A monthly gauge of U.S. consumer sentiment fell to its lowest level in seven months as survey participants expressed concerns that tariffs could fuel short-term inflation. February’s preliminary reading from the University of Michigan’s sentiment index fell 3.3 points to 67.8, well below economists’ consensus expectations.
The yield of the 10-year U.S. Treasury note fell for the third week out of the past four as investors reassessed the outlook on inflation and U.S. Federal Reserve policy. Friday’s closing yield was around 4.49%, down from a recent high of 4.80% on January 13.
A Consumer Price Index report scheduled for release on Wednesday will show whether a recent trend of slightly hotter-than-expected inflation extended into January. The most recent CPI report showed an annual core inflation rate of 3.2% in December, excluding volatile energy and food prices. That result extended the recently uneven progress in bringing inflation closer to the U.S. Federal Reserve’s 2.0% long-term target.
Source: John Hancock Investment Management
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Market reactions to tariff announcements often prove more dramatic than their actual economic impact. During Trump’s first term, markets generated healthy returns despite fears of trade wars. The trade disputes of 2018 and 2019 did not result in the severe global consequences many anticipated. Tariffs during this time were used as a negotiating tool, resulting in the United States-Mexico-Canada Agreement (USMCA) and a trade deal with China.
In the chart above, tariffs fall under the “Other” category and contribute only 1% to 2% of total government revenue, highlighting how insignificant they are relative to taxes. That said, many politicians and economists would like to see the trade balance improve. This could potentially strengthen domestic manufacturing, increase employment in export-oriented industries, and reduce reliance on foreign borrowing.
On the other hand, the trade deficit also reflects the underlying strength of the U.S. economy and consumer purchasing power. When Americans have more disposable income, they can afford to buy more imported goods, naturally leading to a larger trade deficit. Furthermore, the deficit is partially offset by significant capital inflows into U.S. markets, as foreign investors seek the stability and opportunities available in American assets. This investment helps fund innovation, business expansion, and job creation domestically.
The bottom line? While trade and tariffs are important for the global economy, history shows that their effects on financial markets are often overstated. Investors should continue to focus on their long-run financial goals and not overreact to short-term headlines.
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What Are the Top Places to Retire in 2025 | |
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According to Adam McCann of WalletHub, the top three states for retirement (based on 46 factors that include tax rates, cost of living, quality of medical care, and entertainment) are:
1. Florida ranks first overall, and second for affordability. The cost of living in the state has risen over the past few years driven by housing and insurance costs, though. The average homeowners’ insurance premium rose by almost 60 percent from 2019 to 2023, reported Michelle Conlin and Matt Tracy of Reuters.
2. Minnesota ranks second overall, and first for healthcare. The state has some of the best healthcare in the country. The state boasts “the most health care facilities, the second-most nursing homes, and the third-most home health care aids per capita. Its geriatrics hospitals also rank as the fifth best in the nation. Due to the great health care conditions within the state, Minnesota has the third-lowest percentage of seniors with a disability, the fourth-lowest percentage with poor mental health, and the fifth-highest percentage who are in good physical health.”
3. Colorado ranks third overall. It is a tax-friendly state with no estate or inheritance taxes. “In addition, it has the seventh-lowest poverty rate for residents ages 65+… plenty to keep seniors active and engaged. For example, it has the sixth-most volunteer opportunities, the ninth-most scenic byways and the 11th-most theaters per capita.”
About two-thirds of Americans say that saving for retirement is a financial priority, and that their happiness in retirement depends on achieving their retirement savings goals. If you would like to learn more about saving for retirement, get in touch. We can help.
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AJ Advisors
www.ajadvice.com
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Phone: (615) 709-8709
Fax: (615) 505-3306
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John Stauffer, CFP®
Partner
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Andrew Quinn, CFP®
Partner
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