US Stock Market Volatility and Tax-Loss Harvesting

The US stock market is a volatile one, but there are some factors that should help investors make the most of their investments. One of the most important factors is tax-loss harvesting, which is when you purchase stocks that are selling for less than the price you paid for them.

Dow Jones Industrial Average dips more than 400 points amid renewed fears that a recession looms

The Dow Jones Industrial Average dipped more than 400 points on Friday amid renewed fears that a recession could be on the horizon. Fed Chair Jerome Powell’s press conference added to investor uncertainty about the direction of the economy.

After falling more than 20% from its peak in September, the Dow is now on track to end the year with a decline of 8.6%. That’s on par with the worst half of the year since 1970, and the worst drop since the depths of the financial crisis in 2008.

Meanwhile, the S&P 500, Nasdaq, and the FTSE 100 are on track to close out the month with losses of more than 2.6%, on pace for their first two-month quarterly declines in more than a decade. This puts them on track to end the year in bear market territory.

Tax-loss harvesting is a great time to focus on stocks

Tax-loss harvesting is a great way to offset gains. It can help you reduce your tax bill or even put some cash in your pocket. But it’s important to understand the rules.

The best time to harvest your losses is during a down market. If the market dips, you can use your losses to help offset some of the gains. There are several ways to do this. You can sell some investments at a loss, and then reinvest the proceeds in a new security. However, you’ll want to deploy the proceeds carefully.

For example, you might decide to sell a stock at a loss to help offset some of the profits it made last year. However, this strategy will only work if you have a substantial investment in a taxable brokerage account.

NYSE completes second-straight year of record new listings

The New York Stock Exchange (NYSE) recently completed its second year of record new listings. In 2021, NYSE’s community of listed companies grew to 2,400, with four of the five largest IPOs of the year being NYSE-listed.

Companies that choose to list on the NYSE must meet certain standards. These include a minimum price, minimum distribution, and average monthly trading volume. If a company fails to meet these requirements, it may be subject to delisting.

Listed companies must also maintain certain financial standards and corporate governance. For instance, a company must have a minimum of three years of operating history and two years of shareholders’ equity. Similarly, a listed company must have a designated market maker. Designated market makers conduct physical auctions and provide quotes on par with floor traders.

Fed policymakers set to raise funds rate by 75 basis points on Nov. 2

Fed policymakers are expected to raise the funds rate by 75 basis points for the fourth time in six months on Nov 2. The Federal Open Market Committee (FOMC) is a panel of Fed officials who are responsible for monetary policy.

The fed funds rate determines the rate of overnight loans. In recent years, the Fed has made aggressive rate hikes in order to curb inflation. However, a strong increase in rates can lead to higher unemployment, as well as a reduction in consumer demand.

As a result, the economy has cooled. During the second quarter, investment in business fixed assets appeared to decline. This was a relief to the market as it led to hopes for the Fed to cap its rate-hiking cycle.

Inflation remains the No. 1 driver of the markets throughout the year

Inflation has weighed heavily on stocks. The S&P 500 has declined 23% through the first three quarters of this year. A rebound has helped, but the market remains precarious.

Inflation is a broad-based increase in prices. Rising energy prices have been a significant driver. Adding to the inflation pressure are supply-chain disruptions. These are typically caused by global economic forces.

The Labor Department reported that consumer prices increased 0.1% in August. That’s below the 0.3% expected by economists surveyed by Dow Jones. However, it’s still above the Fed’s target.

Core CPI, which excludes volatile energy and food costs, also exceeded expectations. This indicates that underlying inflation is accelerating.