Well, it was another busy day on Wall Street, as investors prepared for a series of high-profile earnings releases and updated guidance from the Federal Reserve. So what all did the stock market do today?
- The S&P 500 closed lower by 0.02%
- The Dow Jones Industrial Average closed higher by 0.01%
- The Nasdaq Composite closed lower by 0.34%
So what else did the stock market do today? Here are the top three stories.
What Did the Stock Market Do Today? Talk Vaccines.
The Centers for Disease Control and Prevention announced today that fully vaccinated Americans do not need to wear masks outdoors unless they are in a crowd of strangers. As CDC Director Rochelle Walensky put it, this is another step on the return to normal. More specifically, the decision comes as Covid-19 cases continue to drop and vaccination levels rise. As of today, more than 140 million Americans have received at least one dose of the Covid-19 shots.
To President Joe Biden, the new CDC guidance is even more reason for Americans to opt to get the jab. Essentially, as he sees it, the promise of easing restrictions is an incentive to get vaccinated.
So where do things stand? Right now, many in the stock market are still moving full-speed ahead with reopening hopes. Just today, an earnings report from Starbucks (NASDAQ:SBUX) has been interpreted as a clear sign of economic recovery. This comes as the coffee giant shared a full sales recovery and commended its staff to navigating the pandemic with a series of pivots.
However, there is a reason for at least some concern. As the New York Times wrote yesterday, not everyone is going back for their second shot. In fact, nearly 8% of people who received one dose of the Pfizer (NYSE:PFE) or Moderna (NASDAQ:MRNA) vaccines are not showing up for their appointments. Why? Some are afraid of the side effects, and other Americans think one shot is enough. No matter what, this is posing a problem for state and national officials who are trying to push the U.S. to a sufficient herd immunity threshold.
It’s Really All About Taxes
Tomorrow, Biden will likely unveil his $1.8 trillion American Families Plan in a speech before Congress. That plan will complement the American Jobs Plan, and some consider it an antipoverty proposal. Although the White House will not introduce measures to lower prescription drug costs as previously speculated, the proposal will tackle early child education, tuition-free community college, childcare and efforts to support the Affordable Care Act.
All along, investors have had one question. Where will the money come from?
Tomorrow, it seems like Wall Street will find out. The talk on the town is already that Biden is considering raising the capital gains tax to a rate above 40% for the wealthiest Americans. This move would nearly double the current base rate of 20%. It would also likely come with measures that increase the capital gains tax at death. As Axios reported this morning, this would prevent wealthy individuals from holding onto their assets until death simply to avoid taxes. To some economists, this is a clear way to raise more revenue.
We could even more insight into potential tax changes today. As the Wall Street Journal reported, Biden also will be looking to make an $80 billion investment in the Internal Revenue Service. His administration estimates that would net $700 million in taxes, because that $80 billion would go toward beefing up its tax enforcement capabilities. How? It would increase the size of the IRS by 50%.
What is the bottom line? Although news of tax changes has had Wall Street on edge, many want to reassure investors. But there may not be reason to worry. As Brian Deese, the director of the National Economic Council tells it, it’s “not the top 1%, it’s not even the top one-half of 1%.”
Bitcoin Could Face Regulatory Blowback
As we wrote this morning, Bitcoin (CCC:BTC-USD) is looking to bounce back, spurred on by bullish comments from Elon Musk during the Tesla (NASDAQ:TSLA) earnings call. However, not everyone on Wall Street is so sure about the path for the digital gold.
According to Anatoly Crachilov, who serves as the CEO of Nickel Digital Asset Management, there are a variety of headwinds pressuring Bitcoin. European and U.S. regulators are making moves to legislate the cryptocurrency space. Talk of a capital gains tax increase could frighten investors. The rise of central bank digital currencies (CBDCs), such as those emerging in China, Great Britain and Russia also could hurt traditional cryptos. All things combined, Crachilov worries that the crypto space could turn into just a fork of the traditional financial sector.
Is there a silver lining? CBDCs are not likely to deter Bitcoin bulls, although the could lessen demand for other altcoins. However, Crachilov sees one path forward with ESG-compliant cryptocurrencies. This is because increased awareness of the energy consumption associated with mining has pushed some investors to find eco-friendly alternatives.
If the regulatory woes have you down, finding such environmentally conscious cryptos is one path forward. As InvestorPlace Markets Analyst Tom Yeung highlights, Cardano (ADA-USD) could be one of those picks.
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 serves as the Editor of Today’s Market with InvestorPlace.com.