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Weekly Economic Update: Higher Capital Gains Taxes

Presented by Nicholas Wealth Management

April 26th, 2021


Weekly Market Update

In this week’s recap: Mixed signals lead to a choppy week.


The Week on Wall Street

The crosscurrents of strong corporate earnings, rising global cases of COVID-19, and the specter of higher capital gains taxes led to a choppy week of trading that left stock prices slightly lower for the week.

The Dow Jones Industrial Average lost 0.46%, while the Standard & Poor’s 500 slipped 0.13%. The Nasdaq Composite index fell 0.25% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 0.47%.1,2,3


A Directionless Week

Despite continued better-than-expected corporate earnings, stocks retreated as concerns over rising global COVID-19 infections weighed on investor sentiment. A mid-week rally erased much of these losses, with reopening stocks and small cap companies leading the market.

The stock market resumed its decline in reaction to reports that President Biden supported a capital gains tax increase on wealthy Americans. The Biden news prompted worries that stocks could come under pressure this year if such an increase were to go into effect next year.

Solid economic reports, along with a reassessment of the capital gains news, helped stocks to bounce back and close out the week on a positive note.


Housing Shows Strength

Two housing market reports last week reflected strong consumer demand for homes.

Sales of new homes in March jumped by 20.7% from February and by more than 66% from last March, reaching levels not seen since 2006. All regions recorded double-digit gains, except for the West, which experienced a decline of 30%.4

Though existing home sales fell 3.7%, it wasn’t for lack of consumer interest, as evidenced by the 18-day average to sell a home. The decline was largely an issue of tight inventories. This demand/supply imbalance drove median home prices higher by 17.2% from March 2020 to $329,100.5


Tip of the Week

Save your business money by buying furnishings and equipment at bankruptcy auctions, government sales, closeouts and furniture rental outlets.


Media

https://url.us.m.mimecastprotect.com/s/cf2JC0R7XVHJKyoSO0wZGv?domain=youtube.com
A McDonald's here in Georgia was forced to close a day after stimulus checks were issued. The ENTIRE restaurant staff did not show up for work. David Nicholas joined Fox Business Varney & Co. on 4/20 to discuss why employers are struggling to get employees back to work.
https://url.us.m.mimecastprotect.com/s/k1wYCjRKOqHl2O5u1LXgXK?domain=youtube.com
The Biden Administration believes our money is their money. We need to remind them that it's our money and we decide how much they can take. David Nicholas joined Charles Payne on Fox Business on 4/22 to discuss Joe Biden's proposed capital gains tax hikes.

Be sure to subscribe to our YouTube page for all of David’s media commentaries CLICK HERE!



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CITATIONS:

1. The Wall Street Journal, April 23, 2021.

2. The Wall Street Journal, April 23, 2021

3. The Wall Street Journal, April 23, 2021

4. Yahoo! News, April 23, 2021

5. CNBC, April 22, 2021