The markets remained relatively flat this week, as positive economic news and corporate earnings sentiment was quelled by President Biden’s proposal to nearly double the capital gains tax for wealthy individuals. Despite the subdued performance this week, all three major indices are still up over 50% over the past 12 months!
Earnings – Corporate earnings continued to generate positive momentum, as many companies across several different sectors exceeded estimates. AT&T, Johnson & Johnson, Chipotle, and Coca-Cola are just a few of the major players whose quarterly numbers outperformed expectations. Perhaps even more significant has been the fact that the large majority of companies who have reported have either affirmed or raised forward-looking estimates. This has caused future earnings expectations to continue to trend higher.
Capital Gains – On Thursday, President Biden announced a proposal to increase the capital gains tax for the wealthy (those making greater than $1M per year) from 20% to as high as 43.4%. While this proposal would affect less than 1% of individuals, the markets still responded negatively to the news.
Economic Indicator Index – The Leading Economic Index, which measures economic momentum by tracking everything from consumer sentiment to unemployment data to housing permits, reported a substantial increase for the month. This sharp increase exceeded analyst estimates and paints a rosy picture for continued near-term economic expansion.
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Investment advice offered through Strauss Financial Group, Inc., a Registered Investment Advisor.
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The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.