Good morning investors! The stock market closed higher yesterday after a September rate cut became more likely.

Today we cover:

• Jobs data revised (no good news?)

• A rate cut now highly likely in September.

• Retail earnings are here.

📊 Economy and News 

New job data numbers come lower than expected

New data released Wednesday reveals that U.S. job growth over the past year was significantly weaker than initially reported. The Bureau of Labor Statistics’ (BLS) preliminary annual benchmark review indicates that by March of this year, there were 818,000 fewer jobs than previously estimated.

The revision implies an average monthly job growth of around 164,000 rather than the 209,000 the August 2, 2024, BLS jobs release claimed.

Each year, the BLS revises its monthly payroll survey data and aligns the March employment levels with those measured by the Quarterly Census of Employment and Wages program. This year's preliminary revision represents the largest downward adjustment since 2009, suggesting that the labor market was not as robust as earlier believed. Despite this, job growth remained historically strong.

When the revised data is spread across the prior year, the average monthly job gain from April 2023 to March 2024 stands at 173,500, down from the nearly 242,000 initially reported, according to an analysis of BLS data.

These figures are preliminary and won't be finalized until February 2025. However, remember that the revisions don't impact the jobless rate because that's calculated using a different survey.

Federal Reserve Chair Jerome Powell is set to speak Friday at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming. Economists and analysts believe these revisions could increase pressure on the Fed to consider loosening its monetary policy.

Global hits:

• China to probe European dairy imports as trade dispute escalates.

• US judge strikes down Biden administration ban on worker 'noncompete' agreements.

• Europe markets close higher with Fed in focus; UK net borrowing higher than expected.

Reminder: During their July meeting, Federal Reserve officials came closer to implementing a much-anticipated interest rate reduction, though they refrained from doing so at that time. However, the minutes released on Wednesday revealed that a rate cut in September had become increasingly likely.

According to the meeting summary, "a substantial majority" of participants noted that if economic data remained in line with expectations, it would likely be appropriate to ease monetary policy at the next meeting.

Markets are now fully anticipating a September rate cut, which would mark the first reduction since the emergency measures taken during the initial stages of the Covid crisis.

📈 Stocks

S&P 500 5,620.85 (+0.42%)
DJIA 40,890.49 (+0.14%)
NASDAQ 17,918.99 (+0.57%)
BRENT CRUDE 76.14 (-1.37%)
* Prices as of Mar 3rd, 12:20 AM UTC

Retail earnings are here

Some major retailed announced earnings yesterday:

• Macy’s posted a mixed quarter, as it topped Wall Street’s earnings expectations but missed on revenue. Macy’s said it now anticipates net sales of between $22.1 billion and $22.4 billion, which is lower than the $22.3 billion to $22.9 billion range it had previously anticipated. That also would be a year-over-year decline from the $23.09 billion it reported for fiscal 2023. The company is trying to turn around its business as it closes about 150 namesake stores. Moreover, it is opening new, smaller Macy’s stores in suburban strip malls and adding locations of its better-performing brands, Bloomingdale’s and Bluemercury. Beauty brand Bluemercury was once again Macy’s best-performing segment.

• Target beat Wall Street’s earnings and revenue expectations, as shoppers made more visits to Target’s stores and website, and bought more discretionary items like clothing. Target said it expects comparable sales for the full year to range from flat to up 2%, but said it now expects the increase will likely be in the lower half of the range. Target raised its profit guidance, however, saying it expects adjusted earnings per share to range from $9 to $9.70, up from the previous range of $8.60 and $9.60. The stock went up +12% during the day after the report.

• TJX Cos. beat Wall Street’s expectations on the top and bottom lines as it raised its full-year guidance. The retailer behind HomeGoods, TJ Maxx and Marshall has been taking market share from competitors like Target and Macy’s and has become a haven for price-sensitive consumers. The company has been looking to continue its growth and announced it’s taken a stake in a Dubai-based discounter.

Surprising: Ford delays new EV plant, cancels electric three-row SUV as it shifts strategy.

💵 Personal Finance

How to use health savings accounts to pay insurance premiums

Health savings accounts (HSAs) come with several tax advantages. Most people use them to cover medical emergencies, but they are best used to cover insurance premiums.

Let’s dig more:

What’s included?

According to the IRS, costs that generally qualify for the medical and dental expenses tax deduction are included such as:

• Costs to receive artificial limbs

• Birth control pills

• Lead-based paint removal

• Fees for attending medical conferences

But, insurance premiums do not quality. 😔 

So, why are we asking you to use health savings accounts to pay insurance premiums? Because it is possible thanks to some exceptions:

Medicare premiums

Medicare premiums for people age 65 and older do qualify, including:

• Premiums for hospital insurance

• Premiums for medical insurance

• Premiums for drug coverage

However, premiums for Medicare supplemental health policies are not included.

Surprise: You do not have to pay your premiums directly with an HSA to enjoy the benefit. You will have the option to use other means to pay and then reimburse yourself with your HSA later. You will, however, need to keep all records.

Reminder: Medicare premiums for a spouse or a dependent only qualify if the HSA owner is 65 or older.

Health-care continuation coverage premiums

Premiums for health-care continuation coverage such as COBRA do qualify.

COBRA is for people who have no health benefits due to situations such as job loss or divorce. It offers good benefits but at a very high price.

How high? COBRA requires individuals to cover the full premium, which goes up to 102% of the cost of the plan.

Premiums when unemployed

You can use HSAs to pay health premiums if you are unemployed. Examples include health plans purchased over an Affordable Care Act marketplace or COBRA.

Long-term health premiums

Individuals who require long-term care can use HSAs to cover relevant insurance premiums. There, however, are some limitations based on age:

• Age 40 or under — up to $450

• Age 41 to 50 — $850

• Age 51 to 60 — $1,690

• Age 61 to 70 — $4,510

• Age 71 or over—$5,640

These figures are updated every year, check the official website for the latest amounts.

Still not sure about HSAs? Check this video:

💰 Be a Better Investor

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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