Stock Market

Dow Jones Loses 350 Points As Biden Seeks Big Capital Gains Tax Hike; These Stocks Score Breakouts

The Dow Jones Industrial Average sold off in today’s market as the major indexes traded near session lows. Stocks were trading near their highs of the day but cratered shortly after President Joe Biden proposed increasing the corporate tax rate on wealthy individuals. The Nasdaq and the Dow both led on the downside.


Stock Market Today

At around 3 p.m. ET, the Nasdaq composite fell roughly 0.8%. The S&P 500 also traded around 0.8% lower, while the Dow Jones posted a loss of roughly 0.9%. The small-cap Russell 2000 index held a small gain of less than 0.1% after paring strong earlier gains. Volume was running higher on the NYSE and the Nasdaq vs. the same time on Wednesday.

Stocks sold off across the board after a Bloomberg report noted that President Biden is looking to raise the capital gains tax to as high as 43.4% for wealthier 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. This could see total tax rates for New Yorkers and Californians rise above 50%.

Additionally, 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 with levels in 2005.

Amid all the commotion around Biden’s plans, the Labor Department reported that jobless claims fell to 547,000 last week, down from the prior week’s 586,000 claims. The figure beat consensus estimates.

Growth Stocks Passing Buy Points

As for growth stocks, a few from the MarketSmith Growth 250 list broke out from proper bases. Shares of Atkore (ATKR), Ingersoll Rand (IR) and TransUnion (TRU) traded inside key buy zones on Thursday.

Infrastructure play Atkore rose above a flat base and its 75.70 buy point, according to MarketSmith analysis. However, shares slipped back below this key buy area in afternoon trading. Atkore holds a near-perfect Composite Rating of 98 and a very good Relative Strength Rating of 97.

The stock has remained well above its 50-day line since the end of 2020. The firm makes electrical conduits, cable frames and related products used in larger commercial construction projects, energy generation and data centers.

Elsewhere, Ingersoll Rand also broke out from a flat base with a 51.71 buy point. Despite holding a gain of over 1%, shares still faded and remained below the buy point in afternoon trading.

The industrial machinery manufacturer holds a solid Composite Rating of 91. But investors should note that the stock’s RS Rating of 75 is below the ideal minimum of 80 for stocks breaking out.

TransUnion stock gained over 5% Thursday and rose above the key buy zone, which topped out at 102.60. The stock’s cup-with-handle base held a buy point of 97.72. However, the firm shows a major weakness with its RS Rating sitting at 38 for now. This signals severe market underperformance in recent months.

Finally, swimming pool equipment supplier Pool (POOL) remains inside a buy zone after gapping up and passing a cup-base buy point of 401.39. Shares gained in heavy volume on stronger-than-expected earnings.

As for the Innovator IBD 50 ETF (FFTY), shares of the growth-focused ETF fell less than 1% Thursday, proving to be a market outperformer. Stocks leading the downside in the index were Plby Group (PLBY) and Sibanye Stillwater (SBSW), with losses of 6% and 4%, respectively.

Dow Jones Today

As for the Dow Jones industrials, a handful of blue chips held losses of more than 1%, including Dow (DOW), Walgreens (WBA) and JP Morgan (JPM), leading the downside.

However, a handful of stocks beat the trend and held gains, including (CRM), Visa (V) and McDonald’s (MCD).

Shares of Visa rose above a flat-base buy point of 228.33, according to MarketSmith analysis. The credit card company pared gains in afternoon trading but still held above the bottom of the buy area with a gain of roughly 0.4%.

Elsewhere, continued forming a long consolidation with a 271.02 buy point. The base shows elements of an elongated double bottom with a middle peak of 251.23. Therefore, a lower buy point of 251.33, 10 cents above the middle peak, is justified.

Shares remain roughly 17% away from the higher buy point and have a long way to go before breaking out. The firm maintains a perfect Earnings Per Share Rating of 99 but a very low RS Rating of 38, signaling recent underperformance.

Follow Fox on Twitter at @foxonstocks for more Dow Jones and market commentary.


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