The Dow Jones Industrial Average sank on a report President Joe Biden wants to hike the capital gains tax rate on wealthy Americans. He also announced a new climate change target. The Nasdaq also reversed sharply after initially rallying on better-than-expected jobless claims data. Visa (V) passed a buy point as it led the blue chips.
Teradata (TDC) exploded on strong guidance, while Atkore (ATKR), Pool (POOL) and TransUnion (TRU) were among a cluster of stocks passing buy points. However, Leaderboard stock Lam Research (LRCX) slipped back into its buy zone despite posting strong earnings.
Biden Tax Hike Report, Climate Pledge
Stocks were slammed after a Bloomberg report emerged saying President Biden is looking to raise the capital gains tax hike to as much as 43.4% for rich Americans.
Under the plan, the capital gains rate could rise from the current level of 20% to 39.6% for those earning $1 million or more. It would also include a further ObamaCare levy. This could see total tax rates for New Yorkers and Californians rise above 50%.
Oanda senior market analyst Ed Moya said the news report had sent many investors to the sidelines.
“This will likely be the initial high ask from the Biden administration on taxes,” he said. “Some traders are looking for an excuse to lock in profits and they might choose to use this tax story as their catalyst.”
President Biden also unveiled a new emissions target Thursday as a two-day virtual climate summit at the White House kicked off. The aim is to make emissions 50% to 52% lower in 2030 compared to levels in 2005.
“No nation can solve this crisis on our own. All of us, and particularly those of us that represent the world’s largest economies, we have to step up,” he said. “The signs are unmistakable, the science is undeniable and the cost of inaction keeps mounting.”
Emissions were projected to fall 21% in 2020 compared to the 2005 baseline. However, this is partly because of the Covid-19 pandemic. Emissions have been tracking higher this year again as the economy reopens.
Meanwhile, the Labor Department reported jobless claims dropped to 547,000 last week, falling from the prior week’s 586,000 claims. The 547,000 figure was better than consensus estimates.
Nasdaq, S&P 500 Struggle
The Nasdaq had been the leading major index, but it fell out of positive territory to give up around 1.1%. China stock Pinduoduo (PDD) had been leading with a gain of almost 5%, while Micron Technology (MU) was the biggest laggard as it fell more than 4%.
U.S. Stock Market Today Overview
Last Update: 2:12 PM ET 4/22/2021
The S&P 500 also lost ground, slipping 1%. Chemical stock LyondellBasell Industries (LYB) was among the big laggards, ceding more than 4%. Equifax (EFX) was the standout performer after gaining more than 17%.
The S&P sectors were mixed. Industrials and real estate were leading, while consumer staples and materials lagged.
Small caps also reversed into the red, with the Russell 2000 giving up around 0.4%.
Growth stocks also turned negative despite posting early gains. The Innovator IBD 50 ETF (FFTY) also fell back around 0.1%.
Dow Jones Lags As Visa Stock Passes Buy
The Dow Jones Industrial Average was already in the red before sinking lower on the Biden tax report. It was down around 1%.
Chemical stock Dow (DOW) was the worst-performing component, giving up more than 5%.
Visa managed to pass a flat-base buy point of 228.33. The payments stock remained in the buy zone, though it gave up some gains. It was up around 0.4%.
Boeing (BA) was also another top Dow Jones performer earlier in the session. It closed in on its 50-day moving average as it climbed, but later reversed to a 0.3% loss.
Teradata Stock Makes Monster Move
The database and analytics software maker surged after it issued preliminary Q1 earnings data well clear of prior guidance.
The stock has been benefiting from a boom in cloud computing amid coronavirus lockdowns.
While it fell from session highs, the stock is still up around 26%. It is now eyeing a consolidation pattern buy point of 59.68.
It holds a good, not great, IBD Composite Rating of 82. Earnings are expected on May 6.
These Growth Stocks Pass Buy Points
Infrastructure play Atkore passed a flat-base buy point of 75.60, according to MarketSmith analysis. However it has slipped back below its buy point. It holds a near-perfect Composite Rating of 98.
The Harvey, Ill.-based outfit makes electrical conduits, cable frames and related products used in larger commercial construction projects, energy generation and data centers.
Swimming pool equipment supplier Pool is in a buy zone after passing a cup-base buy point of 401.39. It gapped up in above-average volume on strong earnings.
TransUnion raced out of its buy zone after passing a cup-with-handle buy point of 97.72. Stock market performance is a major weakness however, with its RS Rating sitting at 38.
Leaderboard Stock Falls Despite Strong Report
Lam Research fell more than 2%, giving up some of the gains it made Wednesday ahead of its report.
LRCX stock is now back in buy zone after previously clearing a consolidation pattern buy point of 603.70.
Lam Research crushed analyst estimates for the March quarter. It also posted upbeat guidance.
The Leaderboard stock holds a perfect 99 Composite Rating and sits at the summit of the Electronics-Semiconductor Equipment Industry Group.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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