Good morning and welcome to the stock market today! Investors are looking at the White House for policy updates and closely watching tax news. Plus, with the U.S. getting closer to its new vaccine eligibility deadline, talk of reopening is in the air. So what will the stock market do today?
To start, the major indices are mixed, still coming off of highs and processing a jobless claims miss this morning. The S&P 500 is up 0.13% at the time of writing, while the Nasdaq Composite is up 0.6%. The Dow Jones Industrial Average is down 0.19%.
So what else will the stock market do today? Here are the top three stories.
What Will the Stock Market Do Today? Talk About Taxes.
Investors were likely already planning on paying attention to President Joe Biden today. That is because he is expected to unveil his executive actions intended to curb gun violence — putting gun stocks on watch this week. However, it is also important to dive into his tax proposals today.
Since unveiling the $2 trillion American Jobs Plan, Wall Street has had one big question. Where will the money come from?
Yesterday, Biden shed some insight on that plan. He is calling for an increase in the corporate tax rate from 21% to 28%, in line with many investor estimates. He is also calling for an increase in the tax rate companies pay on foreign earnings, from 10.5% to 21%. These plans are not entirely surprising, building on campaign promises and White House hints.
With that in mind, what should investors be watching?
- Biden has already said he is willing to negotiate on this plan, such as increasing the corporate tax rate to 25% instead.
- This comes as several lawmakers openly oppose his plan, and the broad nature of the infrastructure spending proposal.
- Treasury Secretary Janet Yellen is also highlighting how this is good for corporations. She is framing the higher taxes as a way for corporations to get more support, emphasizing the benefits of better traditional infrastructure and high-speed broadband.
Is the Stock Market About to Cool Down?
Yesterday, JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon made waves with his annual shareholder letter. Dimon commented on the economy, acknowledging that Federal Reserve policies, the Covid-19 vaccine rollout and massive infrastructure spending are long-term catalysts. In fact, Dimon said he estimates the current boom to take the U.S. economy through 2023. Turning to the stock market, the longtime CEO said he thought even high valuations could be justified. Investors are just looking at a very long growth runway after the pandemic.
Not everyone feels the same way, and some economic indicators show a more bearish trajectory.
The jobless claims report came in higher than expected again today, with 744,000 Americans filing for initial unemployment benefits in the past week. Data show professional money managers are selling, with Bank of America (NYSE:BAC) noting that its institutional clients were net sellers last week. Plus, as Dion Rabouin writes for Axios, the CBOE Volatility Index (VIX) fell yet again. In the face of interest rate and inflation fears, this could suggest investors are complacent with the stock market.
Combine all of this, and Rabouin writes that the stock market could be too hot. So what comes next?
According to Datatrek, there are five potential scenarios on the horizon that could trigger a bear market. These include interest rates, unpredictable consumer behaviors, fading global peace and growing regulation on tech. Also on the list? Investors have been chasing cryptocurrencies, non-fungible tokens and SPAC stocks. Datatrek says this could be a sign that the traditional stock market is getting left behind — the S&P 500 is not exactly filled with so-called NFT stocks.
Moving forward, what does this mean? Remember, this is just another take on the post-pandemic future. Plenty of experts side with Dimon, looking to growth in the coming months and years. Wise investors should just always be sure to consider all sides of the story.
IPO Investors: Add These 3 Names to Your List
Investors are very focused on Coinbase, which is set to list on the Nasdaq Exchange next Wednesday. The cryptocurrency exchange, which is the largest in the United States, promises to deliver a huge IPO. Investors are already hungry for info on COIN stock, and analysts are coming in with bullish targets. However, the Coinbase IPO is not the only one you should be watching.
So what else should you keep on your radar? To start, investors should watch TuSimple, which is expected to start trading under the ticker TSP next week. TuSimple is a specialist in autonomous vehicle production, and it has a deal with United Parcel Service (NYSE:UPS). AppLovin, a software maker specializing in mobile apps, also just shared more details on its IPO. You can read more about the AppLovin IPO here.
Lastly, fintech Plaid is starting to stir up IPO hype again. The company just raised $425 million in a Series D funding round, and is looking to the future. As Alex Wilhelm wrote for TechCrunch, Plaid was initially looking at a deal with Visa (NYSE:V). Because regulatory pressure tore that deal apart, the company now must chart a new course. Could that include a Plaid IPO in 2021?
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.