Good morning and welcome to a brand new trading week! Elon Musk is getting ready to host SNL with Miley Cyrus as the musical guest. As you work to wrap your head around that and guess what his monologue could include, what will the stock market do today?
To start, the major indices are all in the green. It appears that stocks are continuing to climb after a selloff shook the market late last week.
- The S&P 500 is up 0.29%
- The Dow Jones Industrial Average is up 0.17%
- The Nasdaq Composite is up 0.38%
So what else will the stock market do today? Here are the top three stories.
What Will the Stock Market Do Today? Watch Big Tech.
Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) all report earnings this week. Considering that these five companies make up 17% of the stock market, it seems that Big Tech is getting ready to make big waves.
These tech companies are in an odd spot. Investors flocked to the safety and predictability of Silicon Valley at the start of the pandemic, and lockdown trends only strengthened this case. Social media, online shopping and consumer electronics all gained as Americans cozied up for months at home. However, tech has stumbled in recent weeks, with rising U.S. Treasury yields and inflation concerns weighing on the stock market.
So what will this Big Tech wave bring? On one hand, the team at Robinhood Snacks writes that we could get an inside look into Covid-19 reopening. With the vaccine rollout picking up speed, these tech companies may be less appealing to consumers and investors. This is because there are friends to see and places to go — a welcome reprieve from online shopping and scrolling. On the other hand, even if these companies are optimistic about 2021, they may play it safe in their Q1 reports. This is because no one wants to rock the boat with so much uncertainty still on the horizon.
There is another story. Big Tech companies will hit the quarterly confessional and then report to lawmakers. Executives from Facebook, Twitter and YouTube will testify at a Senate Judiciary hearing on Tuesday as part of an effort by Congress to better understand how their algorithms work. As Cristiano Lima wrote for POLITICO, many Democratic lawmakers see algorithms as key in ongoing conversations on extremism, hate speech and misinformation.
Can Tesla Avoid Being the Punchline?
Tesla (NASDAQ:TSLA) had a terrible, horrible, no good, very bad week last week. A new Model S crash in Texas and protests at the Shanghai Auto Show raised questions about the safety of Tesla vehicles. How Elon Musk responded made the situation even worse.
Now, investors are waiting for the electric vehicle leader to report first-quarter earnings after the closing bell on Monday. Analysts are looking for earnings of $509 million on revenue of $10.5 billion.
In other words, analysts are hoping for record quarterly profit this afternoon. As Rebecca Elliott writes for the Wall Street Journal, this may be a tough year so far for Tesla. However, the electric vehicle company is still enjoying rapidly growing sales thanks to the Chinese market and its Model Y. After delivering nearly 500,000 cars in 2020, the company hopes to increase its yearly deliveries by more than 50% this year. It is on its way so far, reporting 184,800 deliveries in the first three months of 2021.
What does this mean for investors? In a way, Tesla has a lot on the line when it reports earnings later today. However, as Al Root writes for Barron’s, that may be an easier task than some investors think. With its recent stumbles in mind, expectations for the company may be lower. That means as long as Musk & Co. can meet analyst expectations, Tesla stock could see a boost.
The bottom line: Musk may be about to make his SNL debut, but investors hope that Tesla can avoid being the punchline.
Families and Funding
Experts think President Joe Biden will unveil his roughly $1.8 trillion American Families Plan this week. They also expect Biden to elaborate on fundraising measures such as proposed tax changes that could help foot the bill.
The American Families Plan comes as part of his Build Back Better plan, and follows his initiative to stoke infrastructure spending and create jobs for hard-hit families. Although investors do not have clear insight into the latest plan, we know it will focus on childcare, early childhood education, tuition-free community college and paid leave. There is also talk of including measures relating to consumer spending on prescription drugs, as well as increasing health insurance subsidies through the Affordable Care Act.
For investors, a key part of the plan is how Biden proposes to fund the spending. Bloomberg has reported that his administration is looking to raise the capital gains tax rate to as high as 39.6%. For Americans making more than $1 million, the total rate could end up being 43.4%. MarketWatch has also highlighted that Biden promises not to raise taxes on those earning less than $400,000.
Keep a close eye on the news leading up to the tentative April 28 unveiling. Although it seems investors are already bouncing back from the initial capital gains announcement, we could see more movement throughout the week.
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.