US Stocks Lower on Tax Proposal 04/22 13:11
Stocks turned lower Thursday following a report saying President Biden will
propose a hefty tax increase on the gains wealthy individuals reap from
(AP) -- Stocks turned lower Thursday following a report saying President
Biden will propose a hefty tax increase on the gains wealthy individuals reap
Investors who earn $1 million or more would have to pay a 39.6% tax rate on
any capital gains, nearly double the current rate for Americans in that income
bracket, according to the report by Bloomberg. A separate surtax on investment
income could boost the overall federal tax rate for wealthy investors as high
as 43.3%, the report said, citing unnamed people familiar with the proposal.
The S&P 500 was down 1% as of 1:58 p.m. Eastern, having shed an earlier
gain. The Dow Jones Industrial Average fell 344 points, or 1%, to 33,789. The
Nasdaq was 1% lower. The S&P 500 closed higher Wednesday, ending a two-day
slide, but it's still down for the week.
The selling was widespread, with every sector in the S&P 500 lower.
Technology stocks, banks and companies that rely on consumer spending,
accounted for much of the decline. Treasury yields held steady.
Earnings are a key focus for investors as the bulk of companies in the S&P
500 spend the next few weeks reporting their financial results. Wall Street is
hoping to get a better sense of just how much companies in various sectors are
benefiting from the economic recovery. They are also listening for clues on
prospects for the recovery to continue as vaccine distribution rolls on and
people try to return to some semblance of normal.
AT&T rose 3.7% after reporting results that beat expectations, helped by
higher wireless phone charges as well as the success of its streaming service
HBOMax. Equifax also rose after reporting strong results.
Union Pacific fell 3% after the railroad operator reported a 9% drop in
The broader market has had a choppy week of ups and downs as Wall Street
digests earnings and tries to gauge how much and how quickly the U.S. and
global economy will recover through 2021.
"It's not a clear time in the market," said Jay Hatfield, CEO and portfolio
manager at Infrastructure Capital Advisors. "You're in a trading range until
you get some more clarity on the global recovery."
The U.S. is showing solid signs of recovery, while Europe and other parts of
the world lag behind. That will likely change as soon as more vaccines are
distributed internationally, Hatfield said.
Credit Suisse dropped 3.4% after the Swiss bank announced it would issue
more stock to help it recover from the losses it suffered because of the
implosion of a hedge fund earlier this year. Credit Suisse had been a primary
backer of Archegos Capital Management, which collapsed last month after several
of its bets went sour.
Investors will be looking to Intel after the closing bell when the chip
giant reports its quarterly results.
Investors got a bit of good news on the economy when the Labor Department
reported that the number of Americans filing for unemployment fell again last
week. Unemployment claims were 547,000, the lowest point since the pandemic
struck and an encouraging sign that layoffs are slowing.
The yield on the 10-year Treasury held steady at 1.56%.