Hope all is well. Despite mostly positive economic indicators and strong earnings results, the major stock indexes were slightly negative. For the S&P 500 and the Dow, the modest setback snapped a four-week string of gains that had pushed the indexes to record highs. Earnings season continued to exceed expectations. Profits at companies in the S&P 500 were expected to rise 33.8% as of Friday, but news headlines on Thursday caused a down draft. I have broken down this week’s news using quotes from the movie Office Space (a worthwhile watch if you have never seen it).
Like Milton’s HR department in the movie who moves his desk, stops paying him and takes his stapler. The government keeps taking away more tax dollars from people hoping the markets will not object. On Thursday, the market did take notice. U.S. stocks’ biggest move of the week came on Thursday, when the S&P 500 dropped more than 1% in less than an hour. The drop was triggered at least in part by reports that President Biden is considering a proposal to sharply increase capital gains tax rates for wealthy taxpayers—the increase was expected to be much less and caught the market flat footed. Don’t be surprised if we see more volatility in the coming weeks as markets fully digest what is being proposed.
We got conflicting on the COVID front like the paper jam in Office Space. On one hand, U.S. seems fine as Americans continue to get vaccinated and COVID rates drop. On the other, COVID-19 pandemic is surging in other parts of the world. India on Thursday reported the world’s biggest one-day rise in new infections.
Bitcoin stumbled with a case of the Mondays. It was an unusually volatile week for bitcoin, as the price of the cryptocurrency fell below $50,000 on Friday after climbing to $62,000 just a week earlier. Much of the weekly decline came during a span of about 20 minutes. Bitcoin crossed $60,000 in March for the first time after starting 2021 at around $29,000.
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