Stock Market Today: Strong July Jobs Report Has a Dark Side

Wall Street got the July jobs report it was hoping for, but the market didn't do much with it.

The Labor Department on Friday reported that the unemployment rate dropped to 10.2% last month, from 11.1% in June, as the U.S. added nearly 1.8 million jobs. That total was better than economists' estimates, though far lower than the 4.8 million jobs tacked on in June.

SEE MORE 10 Best Cloud Stocks to Buy for Rapid Growth

But investors didn't reap many gains in blue-chip stocks. While the small-cap Russell 2000 soared 1.6% to 1,569, the Dow Jones Industrial Average finished the day with a modest 0.2% improvement, and the S&P 500 inched ahead by a mere 2 points to 3,351.

The Nasdaq Composite fared much worse, declining by 0.9% to 11,010 as hot-running components such as Apple (AAPL, -2.3%), Microsoft (MSFT, -1.8%) and Amazon.com (AMZN, -1.8%) stalled out Friday.

"While the U.S. economy added more jobs and the unemployment rate fell (both better than expectations), the July increase in non-farm payrolls confirms that the rise in new virus cases did slow the economic recovery to some extent," writes Gene Goldman, chief investment officer at Cetera Investment Management, a broker-dealer network encompassing more than 8,000 advisors and $250 billion in assets. 

"One worry about today's report is that it puts less pressure on Washington to pass a much-needed, new fiscal stimulus package."

And, indeed, Congress appears to be at an impasse, with Republicans standing by their $1 trillion plan, and Democrats refusing to approve anything less than $2 trillion.

The Bright Side to Friday's Action

But some of the market's more troubled sectors of 2020 made a decent showing. Industrial stocks, for instance, finished with solid gains as UPS (UPS, +7.9%) continued its torrid run. Income-friendly real estate investment trusts (REITs) and utility stocks also picked up some slack.

SEE MORE 65 Best Dividend Stocks You Can Count On in 2020

Sitting somewhere in the middle, as it has throughout a good-but-not-great 2020, was the health care sector. While COVID-19 has hurt certain area

Read more: https://www.kiplinger.com/investing/stocks/601194/stock-market-today-080720-july-jobs-report-aapl-biib

Drawing Down Retirement Savings in a Pandemic

As the coronavirus shut down the economy last spring, many consumers had their budgets cut by default. Trips and shows were canceled, nonessential medical procedures were postponed and restaurants closed.

SEE MORE 24 Dividend Cuts and Suspensions Chalked Up to the Coronavirus

For retirees living on portfolios—or those forced into retirement unexpectedly due to the virus—the forced spending slowdown may have helped cushion the financial blow as they watched their investment account values plummet. Then, stocks lurched ahead and have since been volatile, leaving many retirees to wonder if they should adjust their game plan for retirement income as the economy opens up.

“The first quarter of this year represented the very definition of sequence risk,” notes Patrick Nolan, a BlackRock portfolio strategist. “Early in retirement, it’s the most challenging situation for a retiree who has begun to take cash flow from retirement accounts. You’re selling assets, locking in losses and impairing the future value of the portfolio.” 

To be sure, drawing down the right percentage amount from a portfolio each year is complex business. There are tax implications, so drawing from the right accounts at the right time matters. But knowing how much a retiree can spend each year without running out of savings in old age is even more important.

Plenty of tax and financial pros like to argue over the most tax-efficient ways of drawing down a portfolio once retirement has begun. Far fewer enjoy talking frankly about overall spending levels. Who wants to wade into the weeds of telling couples that trip to the Galapagos is off the table?

But let’s go there, because the economic fallout from the pandemic is challenging old assumptions about withdrawal strategies, leaving some retirees cash-strapped and in a bind while others aren’t forced to cut back at all. Here’s a look at some of the most common methods financial planners use to figure out how much people can safely spend from a retirement portfolio each year, and how sudden market shifts (like the one we saw in the spring) can affect them. The results may surprise you.

4% Revisited

Consider someone who retired this year and decided to use the withdrawal method popularized by William Bengen,

Read more: https://www.kiplinger.com/retirement/601191/drawing-down-retirement-savings-in-a-pandemic

6 Best Biotech ETFs to Buy for Cutting-Edge Growth

Biotech ETFs are, in a word, hot.

The biotechnology industry, if it were a sector, would be the second-best performing one in 2020. Biotech stocks collectively have generated 21% total returns (price plus dividends) on average, lagging only technology, which is up 26% year-to-date. That's no surprise given the rush of investors into stocks developing treatments and vaccines for COVID-19.

But biotech ETFs are no flash in the pan. If you go back over the past decade, it has returned 524%. That beats every last sector, it beats the broader health care sector by 200 percentage points, and it's nearly double the S&P 500's total return in that same time frame.

There's clearly money to be made in the discovery of new treatments for anything, from COVID-19 to cancer, from rare diseases to everyday ailments such as asthma or eczema.

Biotech stocks carry substantial risks, of course, especially when it comes to smaller companies that might have just one or two revenue streams, or even no marketed products. While positive data from a drug trial could send their stocks soaring, a setback or failure can crush their returns, making them difficult buy-and-hold investments.

Biotech ETFs offer an answer. Instead of betting on individual drugs or companies, they allow you to buy the whole industry, spreading out risk across dozens or even hundreds of firms at a time.

Here are six biotech ETFs to buy. Some provide well-rounded access to the space, while others acutely focus on certain aspects of the space, such as cancer treatments or drugs to battle infectious diseases.

SEE MORE 19 of the Best Stocks You've Never Heard Of Data is as of Aug. 6. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Read more: https://www.kiplinger.com/investing/etfs/601190/best-biotech-etfs-to-buy

How to Avoid a Charity Scam

Whether you open your wallet throughout the year or when disaster strikes, scammers stand ready to take advantage of your charitable impulses. However, you can donate to relief efforts or any other cause that’s dear to your heart without getting duped. You just have to do your homework. 

SEE MORE Money-Smart Strategies for Charitable Giving

Vet the charity. Check reviews on watchdog websites, such as Charity Navigator and the Better Business Bureau’s Wise Giving Alliance. You can also check out GuideStar, which presents a snapshot, including balance-sheet data, program descriptions and links to financial documents. On GuideStar, charities are asked to answer five questions to assess their potential impact and five questions about board oversight and performance.

But it helps to keep some perspective on the reviewers, too. Don’t rely solely on one review to make a judgment, and you needn't immediately dismiss an organization that with low ratings or that isn’t profiled without doing more research on your own in the news, on the charity’s own website or through other review sites.

BBB also has a scam tracker system. Type in “charity” in the keyword search bar and you’ll see an index of the most recently reported scams via zip code. 

Other checks. If you see a contact number listed on a solicitation, check if it matches what’s on the charity’s website. And, in the age of social media and crowdfunding campaigns, be extra vigilant. Websites such as GoFundMe guarantees that funds will go to the beneficiary, not the campaign organizer, and will refund up to $1,000 to donors if there is evidence of misuse. However, the cause itself could be fake, so always cross check the information across various platforms.

Donating Later and Taxes. If you’re unsure of how you want to deploy your funds right at this moment, you can set up a donor-advised fund (DAF) with money-management firms such as Charles Schwab and Fidelity. With a DAF, you make one large contribution to the fund (cash or assets) and can disperse the funds at a later time. 

Remember to keep receipts of your donations to charities are tax deductible. When charities confirm your gift, they should indicate how much of it is tax deductible. (Note that donations to GoFu

Read more: https://www.kiplinger.com/personal-finance/601189/how-to-avoid-a-charity-scam

Tax-Free Weekend Savings from August 7 to 9

Whether your kids will be learning from home or in the classroom this fall, you'll have to do some back-to-school shopping to prepare for the new school year. And, as every parent knows, the bill for new clothes, shoes, backpacks, computers, and other schools supplies can get very high, very quickly.

Fortunately, a number of states cut you a break on back-to-school shopping by holding a sales tax holiday before school starts. As the name suggests, if you purchase qualifying items during one of these holidays, the store won't tack on sales tax at the register. However, these aren't cookie cutter tax exemptions – the dates, duration, and qualifying items vary widely from state to state. So, if you live in (or near) a state with one of these "tax-free weekends," make sure you familiarize yourself with the timing and scope of the available sales tax exemption before you head out for your back-to-school shopping.

SEE MORE 5 States With No State Sales Tax

To get you up to speed, we've identified the 10 states with a sales tax holiday for back-to-school shopping running through (or starting) this weekend (August 7 to 9, 2020). We also provide an overview of the sales tax exemption and provide links to additional information (unless otherwise noted, the exemptions cover both state and local sales taxes). If you're interested in other 2020 sales tax holidays, see Sales Tax Holidays in 2020.

Sales tax rates and averaged combined state and local sales tax rates are from the Tax Foundation as of July 1, 2020.

Read more: https://www.kiplinger.com/taxes/state-tax/601174/tax-free-weekend-savings-from-august-7-to-9

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