Good morning and welcome to the stock market today! With a busy week ahead, what do investors need to know? And what will the stock market do today? Dive in with InvestorPlace.
To start, take a look at the top movers. AMC Entertainment (NYSE:AMC) is gaining on stimulus check hopes. Lordstown Motors (NASDAQ:RIDE) is coming back from a Friday plunge thanks to its response to short-seller Hindenburg Research. And lastly, a handful of crypto names are moving after a volatile weekend.
So what else will the stock market do today? Take a look at these top three stories.
What Will the Stock Market Do Today? Talk About Taxes.
Last week President Joe Biden signed the $1.9 trillion American Rescue Plan to boost the economy.
Now, investors are wondering what will come next. Infrastructure is the talk of the town, with speculation around the package that could come in between $2 trillion and $4 trillion. We already know that such a proposal is divisive along party lines. Democrats are thinking big spending and big focus on clean energy. Biden promised during his campaign to invest $2 trillion in things like an expanded electric vehicle charging network. Republicans would prefer to rein in the spending and focus on more traditional infrastructure tasks like rebuilding bridges and roads. Both focuses could help fuel the economy and put Americans to work.
But where will that money come from? And what will it mean for Wall Street?
As Nancy Cook and Laura Davison wrote for Bloomberg, it sounds like Biden is eyeing a tax hike, and perhaps the first large-scale tax increase since 1993. This comes with a general sense that the country needs to use more than government debt to fund economic recovery. It also follows up on campaign promises from Biden to address tax policy in the U.S.
Right now, Cook and Davison wrote that a variety of proposals on the table. A hike in the corporate tax rate from 21% to 28%, as well as raising the income tax rate on individuals earning more than $400,000 are options. Additionally, we could see a further-reaching estate tax and higher capital gains taxes on individuals who earn more than $1 million each year. Treasury Secretary Janet Yellen has similarly voiced support for higher company taxes and potentially for higher capital gains tax rates.
Keep an eye on this news, and on what the next recovery package will look like. Expect investors to be watching the infrastructure space closely.
The Technoking Has Spoken
Bitcoin (CCC:BTC) hit a new all-time high above $61,000 on the back of a recovery rally and hopes for stimulus-fueled buying frenzy. Interest in the crypto space had continued to improve thanks to easing bond yields and the promise of $1.9 trillion.
Then, BTC took a big hit. It fell below $55,000 this morning on concerns of fading momentum and a cryptocurrency trading ban in India. According to a report from Reuters, Indian lawmakers will propose a law banning cryptocurrencies. Such legislation would criminalize possession, mining and transferring crypto assets. It comes as the country continues to pursue building a national digital currency of its own.
Does this mean it is time to panic and sell out of cryptocurrencies? Our new Technoking does not seem to think so.
Besides declaring himself the Technoking of Tesla (NASDAQ:TSLA), Elon Musk continues to fuel bullish interest in cryptocurrencies. Over the weekend he shared several messages of support for Dogecoin (CCC:DOGE), including an announcement he would adopt a Shiba Inu. He also said he thought Coinbase should enable DOGE on its platform in response to another tweet.
I’m getting a Shiba Inu #resistanceisfutile
— Elon Musk (@elonmusk) March 14, 2021
Importantly, his cryptic crypto support seemed to go beyond the speculative DOGE. Musk commented that BTC and his The Boring Company were an anagram, and that they both “do mining & use blocks and chains.” The Boring Company works on digging tunnels for fast transportation, such as the Loop and Hyperloop.
Musk is also not alone. Many longtime crypto bulls continue to see further price gains in BTC, with bullish price predictions as high as $600,000.
SPAC Attack Meets Short Attack?
Special purpose acquisition companies continue to attract investors, and many on Wall Street are betting that the trend will continue for years to come. In fact, Goldman Sachs says the SPAC market is now worth $700 billion. This comes as high-profile deals like the merger of Churchill Capital IV (NYSE:CCIV) and Lucid Motors drum up investor attention. And with more deals (like one for ride-hailing startup Grab) on the table, we could see this continue.
It also makes sense, as the team at Morning Brew writes. The pandemic fueled retail investor participation in the markets, largely thanks to direct stimulus payments. Robinhood and r/WallStreetBets are symbols of that, as is the GameStop (NYSE:GME) frenzy. Economists believe bored retail investors were simply looking for a form of entertainment. The speculative nature of SPACs and other assets like non-fungible tokens have emerged as a way to scratch that itch.
What comes next? Potentially a short-selling attack to the SPAC space. The value of SPACs shares shorted as tripled so far in 2021, now coming in at $2.7 billion.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
