Good morning and welcome to the stock market today! There is a lot on tap, including earnings from Amazon (NASDAQ:AMZN), Twitter (NYSE:TWTR), Mastercard (NYSE:MA) and Caterpillar (NYSE:CAT). One other earnings report tonight promises to shed insight into the impacts of the chip shortage on electric vehicle manufacturers. So with all of that on the calendar, what will the stock market do today?
- The S&P 500 is up 0.7%
- The Dow Jones Industrial Average is up 0.45%
- The Nasdaq Composite is up 0.62%
So what else will the stock market do today? Here are the top three stories.
What Will the Stock Market Do Today? Talk Spending.
Yesterday, President Joe Biden unveiled his American Families Plan and the tax changes he is proposing to fund the proposal. The plan itself includes two years of tuition-free community college for every American, tuition-free preschool for all three three and four year olds, and paid family and medical leave for workers. The White House is also calling for big spending on campaigns fighting child poverty.
Total, this plan comes in at $1.8 trillion. This includes $1 trillion in spending and $800 billion in tax credits. Combined with his American Rescue Plan and American Jobs Plan, this proposal outlines a plan to heal the economy and the impacts of Covid-19. It also will face pushback from Republican lawmakers.
Part of this pushback comes from the plan to fund it.
Right now, Biden is calling for roughly $1.5 trillion in tax hikes. This will include nearly doubling the base rate for capital gains taxes, up from 20% to nearly 40%. For the wealthiest Americans, additional tax levies will raise the rate to above 40%. Biden is also calling to apply this tax to assets after death. He is also calling to raise the top income tax rate from 37% to 39.6% and to spend about $80 billion to beef up the enforcement abilities of the Internal Revenue Service.
Expect chatter to continue on Wall Street this morning, as investors think about what the American Families Plan and associated tax changes will mean for them. You can find the full White House fact sheet on the proposal here.
Will Nio Have Any Chips With Its Earnings Dip?
Later today, Nio (NYSE:NIO) will share its first-quarter results, and investors are closely watching. The company was a top gainer in 2020, but NIO stock has lost 15% so far in the year to date. Wall Street wants to know: Can the electric vehicle maker turn things around?
Ahead of the earnings report, there are a few good signs. Nio has been drumming up enthusiasm with corporate updates, including the formal start of construction on its Neo Park. This is a smart electric vehicle industrial park in Hefei, the capital of the Anhui province. For Nio, it will be a chance to gain further legitimacy and centralize its investments in R&D. Most importantly, the company says it will have an annual production capacity of 1 million vehicles. As Nio works to scale up production and set new delivery records, this upgraded capacity is key.
Nio is also making big moves with its expansion story. Investors know that the company will officially share its Norway plans next week, but today, other narratives are catching buzz. Reports on social media indicate that Nio vehicles made their debut in Russia. Plus, relatively recent postings on LinkedIn convey that Nio may be making its entrance in the United Kingdom.
All things combined, it sounds like Nio is setting itself up for a spectacular earnings report. However, the ongoing chip shortage could derail those plans.
Nio has already announced a temporary production halt, although it did not stop the company from reporting record deliveries in Q1. Could that change? Will Nio be forced to change its outlook for the rest of the year? Just this morning, legacy automaker Ford (NYSE:F) said it will have to cut its production in half during Q2 because of the shortage. General Motors (NYSE:GM) also said it was the worst auto supply issue ever.
As InvestorPlace contributor Robert Lakin wrote this morning, Nio has a chance to soar after earnings, as long as the chip shortage is on its side. Stay tuned.
Ethereum Is Gaining, But Is It Too Late?
Ethereum (CCC:ETH-USD), the No. 2 cryptocurrency behind Bitcoin (CCC:BTC-USD), has continued to set a series of new all-time highs. In fact, ETH just touched a new high of $2,795.91 earlier this morning.
As InvestorPlace Web Editor Vivian Medithi wrote recently, these records follow growing support for Ethereum. A new low in GAS fees — the fees associated with the computational steps required to complete transactions on the Ethereum network — has bolstered support. The European Investment Bank is about to sell bonds on the Ethereum blockchain, and Ethereum exchange-traded funds are finding listings on Canadian exchanges.
So what does this all mean? The team at Morning Brew highlighted that many see Ethereum as silver, while Bitcoin is gold. However, with mainstream support, Ethereum continues to grow. Also helping matters is the the role the crypto plays in powering all things related to non-fungible tokens, including top platforms like CryptoKitties. Does this mean that Ethereum is coming to dethrone Bitcoin?
Not so fast. Although Ethereum certainly has its backers, there is another key story to watch.
In recent weeks, investors have thrown their support behind even smaller altcoins that promise to rival Ethereum with lower fees and faster transactions.
Take for instance Fantom (CCC:FTM-USD), which has one of the fastest blockchains in the world and is racking up institutional investments. There is also Polygon (CCC:MATIC-USD), which similarly is setting new highs and attracting attention as an Ethereum rival.
The bottom line? Ethereum may be gaining on Bitcoin, but investors cannot ignore the other altcoins hoping to prove their merit against larger players.
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 the Editor of Today’s Market for InvestorPlace.com.