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By Nicholas
Jasinski | Wednesday, March 31 Build
It. The first quarter ended with a good
day for technology stocks, as investors digested the preliminary details
from President Joe
Biden’s “American Jobs Plan,”
which he unveiled at a carpenters' training facility outside Pittsburgh this
afternoon. With a price
tag of some $2.3 trillion over 10 years, Biden’s proposal includes a wide
range of infrastructure improvements, including fixing the nation’s roads and
bridges, expanding access to clean drinking water, and upgrading America’s
electric grid. It would
also provide funding for high-speed broadband in rural areas and clean energy
generation. Plus, the bill includes investments in domestic semiconductor
manufacturing and technology research and development, aimed at better
competing with China. To pay for
at least some of that, Biden proposed increasing the U.S. corporate tax rate
to 28% from 21%, and raising taxes on companies’ foreign income to 21% from
10.5%. That could raise about $1.3 trillion over the next decade. And Biden
isn’t done yet. Part two of the proposal is due in April, which will focus on
education, healthcare, and other priorities and could be funded by higher
individual tax rates. That all comes less than a month after the
president signed a separate $1.9 trillion stimulus bill into law. Jefferies Chief
Economist Aneta
Markowska wrote today that if enacted in its entirety,
Biden's package unveiled today could add between a half a point and a
percentage point to 2022 GDP growth, which she currently forecasts at
5.2%. The plan would also add about $140 billion annually to the
federal deficit, per Markowska's estimates. Barron's Randall
Forsyth has
thoughts on the stock and bond-market implications of the
proposal. Needless to
say, the legislative path for Biden's plans is far from simple. The final
bills may look very different from his opening offers to Congress. The S&P
500 ended
the first quarter with a 0.4% gain today, to close just 0.04% below its
record high from last week. The Dow Jones
Industrial Average slipped 0.3% on the day, the Nasdaq Composite rose 1.5%, and the Russell
2000 gained 1.1%. The
small-cap index handily outperformed the large-cap indexes in the first
quarter, up 12.4%, versus a 7.8% rise for the Dow, 5.8% for the S&P 500,
and 2.8% for the Nasdaq. |
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DJIA: -0.26% to 32,981.55 The Hot
Stock: Enphase Energy +7.7% Best Sector:
Technology +1.6% |
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