Market Performance: May 9, 2024.

US stocks lost some steam on Friday after consumer sentiment hit a six-month low.

The Dow Jones Industrial Average (^DJI), which is eyeing its eighth straight win, clung to gains of roughly 0.2%, with the benchmark S&P 500 (^GSPC) hovering above the flatline on the heels of closing above 5,200 for the first time in a month.

The tech-heavy Nasdaq Composite (^IXIC) declined around 0.1% after initially opening higher to start the trading day. The latest University of Michigan consumer sentiment survey released Friday revealed a 13% drop in overall sentiment during the month of May. The index reading for the month came in at 67.4, its lowest level in six months, and well below economist expectations of 76.2.

The drop in sentiment comes as investors debate the future of interest rate cuts amid recent signs of a cooling labor market.

Best Money-Saving Tips I Have for Retirees

Many Americans of all ages want to save more money this year. A recent Bank of America survey found that among those who made financial resolutions for 2024 (81% of all Americans), increasing savings was the most popular resolution (45%). For retirees on a fixed income, the resolution to save money may be even more necessary.

GOBankingRates spoke with Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, to get her best money-saving tips for retirees.

Create and Stick To a Budget

“Saving enough in retirement is especially important because it ensures you have enough money to enjoy a comfortable standard of living,” Sabbia said. “Start with a realistic budget that changes with your priorities.” Once you establish a budget, reassess it regularly. “I recommend looking at and reevaluating your spending on a monthly basis,” Sabbia said.

Invest in Your 401(k) Plan

“Even before you approach retirement age, take a look at your 401(k) retirement plan and contribute at least the minimum to receive the employer match and begin growing your funds,” Sabbia said. “The more you invest and the earlier you start, the more your retirement savings have time to grow.” It’s OK to start small, too. “Remember, you don’t need to have a lump sum of money to begin your investing journey — a few hundred dollars is plenty to get you started,” she said.

Seek Out Guidance From Trusted Resources

“Leverage any digital tools available through your employer to track progress toward your near-term and long-term goals,” Sabbia said. “There are also free resources like BetterMoneyHabits.com, which can be helpful in identifying how much you might need in retirement and how much you should try to be saving monthly.

Contribute to an HSA and an Investment Fund

“Balance current and long-term healthcare expenses by contributing to a health savings account (HSA) and investing funds,” Sabbia said. “You can use an HSA to cover current charges while also saving for future expenses by investing your savings. Those eligible for an HSA should start utilizing their HSA as early as possible, given the potentially advantageous tax incentives and the account’s ability to fund a portion of long-term retirement healthcare expenses.

Short selling a stock: The basics for new investors

Short selling involves borrowing securities, such as stocks, and then aiming to profit from a decrease — rather than an increase — in the price. It’s a potentially costly, risky investment strategy. Short selling is a potentially costly, high-risk investment gamble. Short selling is the opposite of the traditional strategy of “buy and hold” investing.

What is short selling?

Short selling refers to selling securities, such as stocks, that you’ve borrowed but don’t actually own. When an investor “shorts” a stock or other security, they’re speculating that its value will go down. If that happens, they can purchase the stock at a reduced price and generate a profit. But if the price goes up and the investor later purchases the security at a higher price, they’ll lose money.

How short selling works

To carry out a short sale, an investor must set up a margin account at an investment brokerage, in which to keep collateral such as cash, mutual fund shares or stock. The brokerage firm may charge interest on the value of the securities being borrowed until the investor returns the securities to the firm.

The risks of short selling

Short selling comes with a number of risks. They include:

Racking up a big loss

If you buy and own shares of stock or another security (known as taking a “long” position), the most you can conceivably lose if the stock price falls is the full amount of cash that you invested. However, if you short a security, its price might go up instead of going down. Therefore, you potentially face a big financial hit when it comes time to return the borrowed shares.

Being charged more interest

The cost to borrow the shares you’ve shorted in the form of the interest rate can increase without warning. If confronted with this, you might determine that the risk of a short sale outweighs the benefit.

Losing out on dividends

When you’re a short-sale investor, you can’t keep any dividends from the shares because you don’t own them. Worse yet, the value of dividends will be subtracted from your account and sent to the owner of the shares.

Can you lose money short selling?

Yes, you can lose money short selling, particularly in what’s called a short squeeze.

How do short sellers make money?

Short sellers make money by making a calculated bet that the price of a stock or another security will fall. A short-sale investor borrows the security and sells it. They then seek to generate a profit by buying back the stock at a lower price and scooping up the difference after paying back their short-sale loan.

Alternative Investing