Traders at the New York Stock Exchange (NYSE), today, Wednesday, April 21, 2021.
Futures linked to major U.S. stock indexes rose at the start of the session overnight as investors prepared to end a week of decline for stocks, fearing the White House would seek to raise the price. capital gains tax.
Futures on S&P 500 climbed less than 0.1% while contracts linked to the Dow added 22 points. Nasdaq 100 contracts also rose just north of the flat line.
The after-hours moves came following a turbulent session for stocks after multiple media outlets announced Thursday afternoon that President Joe Biden is expected to propose much higher capital gains taxes for the rich.
Bloomberg News reported that Biden is forecasting a capital gains tax hike of up to 43.4% for wealthy Americans.
The proposal would raise the capital gains rate to 39.6% for those earning $ 1 million or more, from the current 20%, according to Bloomberg News, citing people familiar with the matter. Reuters and the New York Times then made headlines.
Although capital gains tax headlines appeared to weigh on sentiment Thursday afternoon, the sale was tempered by the tough battle such a proposal would face in a divided Senate.
The Dow Jones Industrial Average fell more than 300 points at the end of regular trading. At its low for the day, the blue-chip benchmark fell 420 points. The S&P 500 erased previous gains and closed 0.9% lower, while the Nasdaq Composite slipped 0.9%.
Since the start of the week, the S&P 500, Dow and Nasdaq are down 1.2%, 1.1% and 1.6%, respectively.
Before the news broke, major averages were trading slightly higher as investors scrutinized corporate results and generally positive economic data.
Chipmaker Intel and social media platform Snap reported their earnings for the first calendar quarter after the closing bell on Thursday.
Although Intel’s revenue and earnings were better than Wall Street expected, it released second quarter earnings guidance that fell short of analysts’ expectations. Intel, which said it expected earnings per share of $ 1.05 for the next quarter, saw its shares fall 3.1% in extended trading.
Snap shares, meanwhile, rose 4.7% in after-hours trading after announcing accelerating revenue growth and a significant number of users in the first quarter. Snap broke break even while posting $ 770 million in revenue.
Companies have mostly managed to beat Wall Street forecasts so far in earnings season. Still, the strong first quarter results were greeted with a lukewarm response from investors, who have not, to date, bought shares of companies with some of the best results.
Strategists say the already high valuations and near-record levels of the S&P 500 and Dow have subdued traders’ enthusiasm. But the indices are within 1.5% of their all-time highs, even after Thursday’s losses.
The Labor Department said Thursday morning that first unemployment insurance claims stood at 547,000, which was lower than the Dow Jones estimate of 603,000.
Later today, Republicans launched a counter-offer to Biden’s $ 2 trillion infrastructure plan. The GOP has launched a $ 568 billion framework that includes funding for bridges, airports, roads and water storage. It does not include tax increases.
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