Dow Jones futures rose slightly Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally reversed lower Thursday after President Joe Biden proposed nearly doubling the top capital gains rate on the wealthy to 43.4%.
While the negative reversal is never good to see, the Dow Jones, S&P 500 and Nasdaq didn’t suffer too much damage from the Biden capital gains tax hike plan. However, the Bitcoin price continued to retreat from record highs. Bitcoin fell Thursday, then kept tumbling overnight, undercutting $50,000.
Intel (INTC), Snapchat parent Snap (SNAP), Mattel (MAT) and BJ’s Restaurants (BJRI) headlined key earnings reports after hours. Apple (AAPL) supplier Skyworks Solutions (SWKS) bought a Silicon Labs (SLAB) division to expand deeper into automotive chips.
Snap, Intel, Mattel and BJ’s Restaurants all beat earnings views.
Intel stock fell 2% in extended trade, amid weak data center chip sales and mixed Q2 guidance. Shares declined 1.8% to 62.57 on Thursday, undercutting the 50-day line.
Snap stock rallied 5% overnight, signaling a move back above its 50-day line. Shares fell 2.1% to 57.09 on Thursday. Snap stock has a 65.96 cup-with-handle base buy point. Pinterest (PINS), Facebook (FB) and Twitter (TWTR) all climbed slightly overnight. FB stock dipped just below a buy point Thursday while PINS and TWTR are consolidating but are currently below their 50-day lines. All three social giants report earnings next week.
Mattel stock jumped 7% in overnight trade. That would push MAT stock over a 21.97 flat-base entry. Shares closed up 0.1% to 20.88. Mattel stock has been finding support at its 50-day line for several weeks.
BJ’s stock climbed 3% in extended action. Shares of the pizza and brew pub chain rose 2.1% to 60.42 on Thursday, rebounding from the 21-day and 50-day lines. BJ’s stock has a 63.52 flat-base buy point, but could have an early entry with a positive post-earnings move.
Skyworks Buys Silicon Labs Unit
Skyworks stock popped 4% to 191 while SLAB stock surged 12% to 162.50. It will buy Silicon Labs’ Infrastructure & Automotive business for $2.75 billion cash. Skyworks has primarily been a wireless chip maker and a key Apple iPhone supplier. But the auto chip business is a fast-growing business.
SWKS stock has a 194.59 handle buy point. Skyworks closed down 1.7% to 183.42, but found support at its 50-day line.
SLAB stock has a 163.53 buy point, but a gap above the 50-day line and a trend line could offer an early entry Friday. Shares fell 2.2% to 144.65 on Thursday.
As for Apple stock, shares fell 1.2% to 131.94 on Thursday. AAPL stock has a 145.09 cup-base buy point, but is working on a possible handle or three-weeks-tight, or perhaps both.
Apple, Skyworks and Silicon Labs all report earnings next week.
Bitcoin Price Breaks $50,000
Late Thursday, Bitcoin fell to just above $49,000, hitting a one-month low. Bitcoin peaked at $64,899 on April 14, hours before Coinbase (COIN) debuted on the NYSE. A Biden capital gains tax hike would affect Bitcoin and other cryptocurrencies, not just stocks.
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.2% and Nasdaq 100 futures climbed 0.1%.
Coronavirus cases worldwide reached 145.32 million. Covid-19 deaths topped 3.08 million.
Coronavirus cases in the U.S. have hit 32.66 million, with deaths above 584,000.
Stock Market Rally Thursday
The stock market rally was enjoying solid gains when the Biden capital gains tax hike news came out. The major indexes quickly reversed lower, closing near the lows of the day.
The Dow Jones Industrial Average fell 0.9% in Thursday’s stock market trading. The S&P 500 index and Nasdaq composite also lost 0.9%. The Russell 2000 dipped 0.4% after briefly regaining its 50-day line.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged down 0.15%. The VanEck Vectors Semiconductor ETF (SMH) retreated 2.2%, as Lam Research (LRCX) led a sector retreat despite seemingly strong earnings and guidance.
Stocks erased modest gains on the Biden capital gains tax plan, which would hike the rate on long-term investments from 20% to 39.6% for those earning $1 million or more. Along with a 3.8% surcharge to help fund ObamaCare, the top rate would be 43.4%.
The federal and state combined capital gains rate would often top 50%, including in New York and California.
The Biden capital gains tax proposal shouldn’t have been a surprise. It’s in line with what President Biden said during the 2020 campaign.
Some Wall Street strategists also expect an eventual plan to be watered down. The Biden capital gains tax hike plan wouldn’t affect holdings in pension funds, retirement accounts and anyone who isn’t a millionaire. So the share of stock sales subject to the higher tax would be relatively low.
The Biden plan would be only a modest tax hike on investments held less than one year, which are taxed at normal income tax rates. Those currently top out at 37%.
Still, a capital gains tax hike would make stocks less attractive. President Biden also has proposed hiking the corporate tax rate to 28% from the current 21%, though there are indications it might end up at 25%.
The public supports higher taxes on corporations and capital gains for the wealthy, according to the April IBD/TIPP Poll. By 54%-33%, Americans favor lifting the corporate income tax rate to 28%. By 65%-23%, they backed an unspecified capital gains tax hike for millionaire households, including 75% of self-described investors.
In the near term, a sharp capital gains tax hike could spur heavy selling by wealthy investors with long-term holdings. However, it’s possible a capital gains tax hike would be retroactive to Jan. 1, 2021. If it is, that would make any tax-related selling this year irrelevant.
The Biden capital gains tax hike would help finance the president’s third huge spending package, following the $1.9 trillion stimulus and a proposed $2.2 trillion package of infrastructure and more.
Investors bid up stocks in early 2021 in part due to massive fiscal stimulus. But tax hikes are part of that.
Market Rally Analysis
The Biden capital gains tax hike plan rained on what was looking to be a solid session. Still, the Dow Jones and S&P 500 remain near record highs and are now a little closer to their 50-day lines, after coming close to being extended in recent days. The Nasdaq is trading within its recent range. The Russell 2000 is still close to its 50-day line.
Some leading stocks, notably chip plays, took some losses Thursday. But much of that was related to earnings.
If the Biden tax plan is a one-off for the stock market rally, then Thursday’s action is no big deal. If the indexes and leading stocks continue to weaken and break key support, that would be a different issue.
Sideways action for the stock market rally would be fine, and would let some more handles develop. Investors may not want to step up their exposure with hundreds of companies reporting next week, headlined by Apple, Facebook (FB), Google (GOOGL), Amazon.com (AMZN), Microsoft (MSFT), Tesla (TSLA) and Caterpillar (CAT).
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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The 5 Best Digital Marketing Strategies to Empower Your Business
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How digital marketing can change the game
Digital marketing is cost-effective and easily measured. With analytics, you can see near real-time results. You can also employ A/B testing and experiment until you find what works best for your particular business. Digital marketing allows you to move more rapidly than ever before. Plus, you’re able to forge more personal relationships with potential customers.
1. Create a killer content strategy
80% of shoppers say they prefer to receive company information via articles over advertisements. That means they’d prefer to gather information about your brand organically rather than through ads. What’s more, educating buyers has been proven to help convert sales. So take time to study your analytics and your competition. Make a list of topics that relate to your business and your target audience. Then, create content that aims to provide value to your customers. Whether you share the content on your blog or social media, be sure to track how it does and adjust your content plan as you go. Pay close attention to shares and tags – this type of organic spreading is key.
2. Make the most of your email list
Email marketing can have an ROI as high as $44 for every $1 spent. There’s huge potential there. So focus on building your email list – offer a discount or free download in exchange for emails. Host contests and giveaways, and shamelessly plug your newsletter. As you plan your email marketing strategy, keep subject lines short and make emails interactive with gifs and polls. With emails, short and sweet is the name of the game. Include personalized details and make sure it’s mobile-friendly. Finally, make sure you have a strong landing page for any click throughs, so you can close the sale.
3. Use social media to create relationships
Most people under the age of 65 are on at least one social media platform. Social media is an excellent place to share content and build a reputation. Customers use social media to inform their purchasing decisions as well: 54% of people on social media use it to research before purchasing. 71% say social media referrals make them more likely to purchase. So don’t miss out on the free advertising you get from having social media profiles. While you’re there, study the analytics and demographics to ensure you’re sharing the right content for your target audience.
4. Step up for a social cause
If you’re not sure what to share on your blog or social media, share about any social causes you stand for. Maybe you donate a portion of sales to a certain charity. Maybe you have a monthly volunteer day for your employees. Perhaps you’re going plastic-free with your packaging – whatever it is, share content that relates to the cause. Share why you care and how your audience can get involved. Most importantly, share how you’ll continue to support in the future and the impact of your support.
5. Use remarketing/retargeting
Have you ever googled something and then seen ads for it everywhere afterward? That’s because of remarketing, also known as retargeting. Using this tactic makes site visitors 70% more likely to buy. It works by displaying ads on other sites to people who have already visited your webpage, urging them to head back and buy that item they were looking at. It’s an effective way to ensure you don’t miss out on potential sales.
Digital marketing is a powerful tool that you should should keep in your repertoire. There are several areas to focus on, so try not to get overwhelmed, especially if you own a small business. Start with one and work your way out. Most importantly, track your progress by studying analytics and be open to adjusting your plan as need be. When you share content that your customer base wants to see, the results will follow. What can you do to up your digital marketing game today?
5 Digital Marketing Trends For Your Business In 2021
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In the 21st century, technology has revolutionized our lives and is undergoing a process of continual development and acceleration. The landscape of the Internet, in particular, is constantly evolving and changing. For your business to continue to experience growth and expansion, it is crucial that you adapt and adjust your digital marketing strategies accordingly.
Digital marketing in 2021 will require a multi-faceted and diverse approach, incorporating some of the tried-and-tested trends of previous years whilst also capitalizing on the opportunities provided by innovative and emerging trends. In this article, we’re going to be discussing five digital marketing trends that every business should keep an eye on in 2021 so that you can begin strategically developing and structuring your plans to give your business a competitive edge.
1. The (continued) rise of social media
Inevitably, social media will continue to serve a pivotal role in digital marketing strategies in 2021. Social media platforms such as Instagram, Facebook and Twitter may have been created as a means for interpersonal communication, but they have since become pivotal marketing tools. Through social media, businesses have the perfect platform through which they can easily create and publish content, market their products and/or services as well as interact with their target audiences.
What’s more, these platforms are increasingly accommodating the entire marketing process – from the moment of discovery to actually making a purchase without ever having to leave the platform. Social media commerce is only going to grow in 2021.
2. Using social media advertising features
Alongside publishing content on your actual social media pages, social media platforms are increasingly providing specialized advertising and marketing services to businesses as well. One such example is Facebook, which has revolutionized how businesses market via social media. Businesses can use Facebook for online advertisements, which are created, published and distributed through the social media platform.
Facebook Ads are directed towards specific target audiences, which means that advertisements are only displayed to those users who have been selected according to Facebook’s targeting software. With more than two billion active users, Facebook Ads is an invaluable marketing tool for businesses because of the reach, visibility and personalization it provides.
3. Email marketing is as effective as ever
Compared to other forms of digital marketing, email marketing has been around for a long time. Due to its age, there may be some questions surrounding its relevance, but the truth is that email marketing is as relevant in 2021 as it was a decade ago. The automated distribution of time or action-triggered emails to email lists and subscribers with relevant information still generates incredible amounts of engagement.
Email automation is a powerful marketing tactic, and automating an email campaign allows businesses to generate leads, sales and revenues whenever the opportunity arises. Examples of email automation include a triggered workflow designed to interest customers, seasonal or birthday greetings, as well as automated blog updates. It is one of the most effective methods of communicating with potential customers and sustaining the interest of existing customers.
4. Segmenting your customers for optimum retention
With the prevalence of digital technologies, customers are becoming increasingly accustomed to personalized online experiences tailored to their behaviors, preferences, interests and demographics. It’s important that businesses continually collect and analyze data regarding their potential and existing customers and then change their digital marketing strategies accordingly.
Segmenting customers is an incredibly effective way to reach out to as broad an audience as possible whilst simultaneously providing them with a bespoke experience of your business. By identifying which group of customers should receive selected content based on the data your business has collected, you can more effectively allocate your marketing resources by ensuring that the content you distribute reaches those most likely to respond positively.
5. Interact directly with your customers
The Internet has effectively removed the various geographical, language and time barriers which once separated a business from its customers. Whilst in the past, a customer would have had to write an email or call a number to interact with a particular business, in the 21st century, it is as simple as leaving a comment under a post or sending a private message in a matter of minutes. Everyone is always accessible online, and the expectation that customers should be able to interact with a business has extended even beyond the realms of social media.
In a digital era, it is more important than ever that businesses ensure they are available to interact with potential and existing customers in the event of a query, review, or even a complaint. Interacting with customers in a timely and professional manner will be a critical part of digital marketing in 2021 because it will demonstrate a business’ commitment to satisfying and listening to its customers.
Customer experience is everything, and by ensuring a positive customer experience, a business is more like to see repeat purchases, glowing reviews as well as recommendations to family and friends.
Digital marketing is a multi-faceted and complex endeavor that requires a comprehensive and strategic approach. The 5 digital marketing trends described above are just some of the strategies you can incorporate into your digital marketing initiatives. This article provides a useful and informative starting point. You can decide which strategies you would like to prioritize depending on your business’s purpose, objectives, and scope.
Email marketing, for example, may be one of the oldest digital marketing strategies around, but it continues to be one of the most effective with regards to the traffic it generates and its high conversion rates. The business features provided by social media platforms have just been introduced, but considering that millions of users per month visit these platforms, the scope for reaching out to a larger audience is immense. Digital marketing in 2021 consists of a combination of traditional strategies and innovative methods through which you can propel your business forwards into the year ahead.
Business groups warn of energy market disaster if Whitmer shuts Line 5
Wednesday is Whitmer’s 180-day deadline for Enbridge to halt operations at the Straits of Mackinac, though the Calgary, Alberta-based petroleum transport giant has said it won’t comply unless ordered by a federal judge or its regulators, the U.S. Pipeline and Hazardous Materials Safety Administration.
In mid-November, Whitmer revoked the 68-year-old easement agreement that has given Enbridge and its predecessors the right to operate the 4-mile underwater pipelines on the bed of Lake Michigan since the Eisenhower administration.
On Tuesday, Whitmer sent an Enbridge executive a letter warning that if the state is to prevail in court that it would consider any continued operation of Line 5 beyond Wednesday a form of trespassing on state land. The governor said the state would then seek to be compensated from Enbridge’s daily profits for operating the pipeline without a legal easement agreement in place.
The Democratic governor and environmental groups have long argued Enbridge’s aging pipelines are an ecological threat to the Great Lakes in the event there were ever an oil spill. Line 5 itself has never had a rupture or leak of oil at the Straits of Mackinac.
The coalition of chambers argued Wednesday that shutting down Line 5 without a viable plan alternative plan for transporting its light sweet crude oil and natural gas liquids to refineries in Detroit, Toledo, Sarnia, Ontario, and as far east as Montreal would be disastrous for energy markets.
“The Chambers expect that if the segment of Line 5 is shut down as proposed, the interstate and international effects will be substantial,” the group wrote in its amicus brief. “Their members will face at best, significant strains on their businesses due to inflated energy prices, and will almost certainly face energy emergencies for propane, gasoline, jet fuel, and other products on which they depend and that flow and are processed across state lines and the international boundary with Canada.”
In their fight to shut down Line 5, the Whitmer administration and Michigan Attorney General Dana Nessel have not laid out a plan for how to get Line 5’s oil and natural gas liquids to refineries.
Energy industry and business groups have long said it would require thousands of oil tanker trucks crossing the Mackinac Bridge daily to replicate the volume of petroleum products that flow through Line 5 each day.
In a Wednesday morning news conference on Zoom with executives from the other chambers of commerce, Michigan Chamber CEO Rich Studley said using barges to transport oil on the Great Lakes would be an “insanely bad idea.”
Using railroads to transport the oil would require “mile and miles and miles of railroad cars,” Studley said.
“Oil transported by rail is 4.5 times more likely to encounter a spill, where as a product transported by tanker trunk is 10 times more likely (to spill),” said Aaron Henry, senior director of natural resources and sustainable growth for the Canadian Chamber of Commerce.
The National Propane Gas Association says 55 percent of Michigan’s annual propane supply comes from Line 5’s natural gas liquids that are fractionated by Plains Midstream Canada in Sarnia and the Upper Peninsula town of Rapid River. About three-quarters of Michigan’s propane is used for residential heating, according to ICF International.
Michigan propane wholesalers also get natural gas liquids from the Marcellus Shale region of Pennsylvania and Gulf Coast pipelines that lead to Chicago, according to industry officials.
“Michigan uses more propane than any state in the country and depends heavily not just on in-state propane production facilities,” the coalition of chambers wrote in the legal brief.
About 18 percent of Michigan’s petroleum products are refined at the Marathon Petroleum Corp. refinery in Detroit, the state’s lone refinery. The rest comes from other states, including Ohio refineries that are supplied by Enbridge’s Line 5, which runs through the Upper and Lower Peninsulas, according to the chambers’ legal brief.
Oil extracted from northern Lower Peninsula wells is added into Line 5 in the northern Lower Peninsula town of Lewiston.
PBF Energy’s refinery in Toledo has said it relies on Line 5 to produce jet fuel for Detroit Metropolitan Airport and airports in Toledo, Akron, Cleveland, Columbus and Dayton, Ohio; Indianapolis and Fort Wayne, Ind.; Grand Rapids and Pittsburgh.
Both the BP-Husky PBF Energy refineries in Toledo will shut down and lay off 3,000 workers if oil stops flowing in Line 5 through Michigan, said Andrew Doehrel, president and CEO of the Ohio Chamber of Commerce.
“The impact it would have across the country would be enormous,” Doehrel said.
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