Markets “In a Nutshell” for April 26, 2021
Investment Week at a Glance
Stocks finished mixed for the week. The Dow Jones Industrial Average was down 0.46%, the S&P 500 fell 0.13%, the New York Stock Exchange Composite (2,000 stocks) rose 0.12% and the average investors index (Value Line Index) was up 0.36%. Foreign stocks (DJ Global ex U.S.) were down 0.27%. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week 1 basis point lower at 1.58%. (Data source: Wall Street Journal)
Stocks End Mixed on Tax News
Stocks ended the week largely where they started, but the action in the middle was volatile off the news of the announcement of a proposal by the Biden administration to steeply raise capital gains taxes for wealthier investors. The current plan, that is expected to be more formally announced as an initiative this week, would be to raise the capital gains tax rate to 39.6% from 20% on those who make over $1 million, in line with the highest ordinary income tax rate that is also being pushed. Stocks fell sharply on the news, but rallied later in the week as continued improvement in the economy continues to be shown in the reported economic data and a continuation of impressive company earnings overshadowed the tax hike news. While all of the proposed tax hikes are all subject to negotiation in order to be passed, news of proposals is widely expected to continue for some time as the country begins to more firmly reopen and the government looks for new ways to pay for the massive stimulus bills passed in the past year and potential future infrastructure packages. (Barron’s)
Housing Continues to Surge
Housing, one of the foundations of the economy, has continued to surge throughout the year, despite soaring prices for building materials. While many people understood the surge in home buying at the onset of the pandemic paired with record low interest rates, the longevity of the housing boom has outstretched supply of new homes and builders’ ability to create new supply. Just this March, 85,000 new homes were bought, compared to a monthly average of 52,000 pre-pandemic and the highest monthly total since August 2006, the peak prior to the Financial Crisis. With supply of new housing challenged to meet current demand, prices of lumber and other building materials have soared. It is unclear how long the current surge in demand may last, but the challenges faced by new homebuyers and builders may persist for some time. (Barron’s)
In Barron’s annual Big Money Poll, what percentage of professional investors were optimistic about the stock market for the next 12 months? (Scroll Down for Answer)
Have a Great Week!
3. 67% of professional investors that participated in the Barron’s Big Money Poll described themselves as optimistic on the stock market for the next 12 months (Barron’s).