Thursday trading is over and investors may find themselves still scrambling to catch up with all of the news. So what did the stock market do today?
To start, the major indices all ended the day in the red. The S&P 500 was down .92%, while the Dow Jones Industrial Average sunk .94%. The Nasdaq Composite also fell, to the tune of .94%.
So what did the stock market do today? Here are the top three stories.
What Did the Stock Market Do Today? Talk Taxes.
One of the biggest news stories in the stock market today came as an afternoon surprise.
Writing for Bloomberg, Laura Davison and Allyson Versprille reported that President Joe Biden was planning on raising the capital gains tax to levels as high as 43.4% for wealthy individuals. Although this builds on campaign promises, the news seemed to shock investors. In response, the major indices saw a midday selloff, dipping as much as 1%.
So what should investors know about the news? To start, there has not been official confirmation of these plans. Instead Bloomberg says the news comes from people familiar with the plans, who spoke on conditions of anonymity. They say Biden is considering raising taxes on wealthy individuals who make more than $1 million to a rate as high as 39.6%. This is nearly double the current base rate of 20%, and would come with an additional 3.8% tax thanks to the Obamacare levy.
This proposal may be formalized next week when Biden unveils his American Families Plan, a follow up to the American Rescue Plan and the American Jobs Plan. Bloomberg says this will come in at roughly $1 trillion and focus on childcare and education.
For investors, InvestorPlace contributor Chris MacDonald sums up the dilemma well. If you have a large portfolio, taking money off the table can already be expensive. If investors think they may soon have to do so at a much higher tax rate, they may see now as an ideal time to sell. That action could be behind the midday drop in stocks today.
What Happens If D.C. Becomes a State?
Today, the House of Representatives passed a bill that would grant statehood to Washington, D.C. Investors may be wondering what this means for their wallets — and for the stock market.
The legislation would reduce the size of the federal district, and turn the remaining area into a new state. D.C. would then gain two senators as well as representatives, enfranchising 712,000 Americans. Biden has voiced his support for this bill, and Senate Majority Leader Chuck Schumer has promised to bring it to a vote in his chamber. However, many commentators have already warned that the legislation will face a tough fight in the Senate.
Heading into 2020, InvestorPlace Markets Analyst Tom Yeung tackled the question of D.C. statehood and Wall Street. He wrote that instead of looking at what this would mean for the overall U.S. economy, investors are better served focusing on the specifics. Essentially, granting D.C. statehood could create investing opportunities in D.C.-based businesses. The same goes for Puerto Rico, although the question of statehood there is not identical. Yeung identified stocks like Bank Popular (NYSE:BPOP) and First Bancorp (NYSE:FBP) as investments to watch.
The bottom line? Although what happens in the Senate matters, start prepping for the potential of D.C. statehood with some focused research.
#DogeDay, Coinbase and Sky-High Hopes
Investors often have sky-high expectations for market events. Those sky-high expectations often come with equally massive disappointments.
Or at least, that is how Myles Udland tells it for Yahoo Finance. He focuses in on Netflix (NASDAQ:NFLX), which recently disappointed investors with its quarterly update. After continuing to attract new subscribers, the streaming giant missed its own goal in the first quarter. This has raised concerns of increased competition and the role of the pandemic on at-home entertainment offerings. Investors expect the world from high-growth companies like Netflix, making the estimate miss worse.
Netflix is not unique in this dynamic. Ahead of the Coinbase (NASDAQ:COIN) direct listing, analysts were setting price targets of $400 and $600. The day was called a coming-out party for cryptocurrencies and a historical milestone. When Coinbase closed below its first trading price, Wall Street felt the pain. #DogeDay, a holiday for Dogecoin (CCC:DOGE-USD) delivered the same pain, albeit in a more casual way. Some crypto bulls were hoping to see Dogecoin prices hit 50 cents or even $1 on April 20, and when the crypto actually started to sell off, sentiment quickly soured. This ignores the fact Dogecoin had already rocketed to a new all-time high above 40 cents in a matter of days.
So what is the bottom line for investors? Perhaps this is a message to take things in perspective. Udland writes however that this could also be a warning that more negative surprises are to come. With such high expectations on Covid-19 winners, these next few weeks could see more companies disappoint. Keep this story on your radar and be mindful of your expectations.
Full story on InvestorPlace.com
