U.S. stocks saw their biggest drop in five weeks after President Joe Biden offered to nearly double the capital gains tax for the rich. The dollar has advanced.
The S&P 500 fell after Bloomberg Newsreported that for those earning $ 1 million or more, the new top rate, coupled with an existing surtax on investment income, means federal tax rates for wealthy investors could reach 43.4%. Speculation has arisen that some traders may sell stocks before any changes are made to capture the lower rate.
“The shock of the stickers on some of these tax numbers will be hard to shake off for some investors,” wrote Edward Moya, senior market analyst at Oanda, in a note. “Some traders are looking for an excuse to lock in profits and they might choose to use this tax story as a catalyst.”
Shares jumped throughout the session amid mixed economic data and new concerns about the worsening pandemic. All major groups in the S&P 500 fell, led by stocks in materials, energy and technology.AT&T Inc. surged after beating earnings estimates.Intel Corp. – the largest chipmaker – has slipped in after-hours trading, signaling declining data center revenues and a sharp drop in gross profit margin.
Elsewhere, Bitcoin declined for the sixth time in seven days, extending losses after the higher capital gains proposal was revealed. Investors are already subject to capital gains tax if they hold the cryptocurrency for more than a year.
Here are some key events to watch out for this week:
- The United States released new home sales data on Friday.
Here are some of the main movements in the markets:
- The S&P 500 fell 0.9% at 4 p.m. New York time.
- The Stoxx Europe 600 index rose 0.7%.
- The MSCI All-Country World Index fell 0.2%.
- The Bloomberg Dollar Spot Index gained 0.2%.
- The euro fell 0.2% to $ 1.2014.
- The Japanese yen appreciated 0.1% to 107.98 per dollar.
- The yield on 10-year Treasuries fell one basis point to 1.54%.
- Germany’s 10-year yield rose by one basis point to -0.25%.
- Britain’s 10-year yield was unchanged at 0.74%.
- West Texas Intermediate crude rose 0.5% to $ 61.66 a barrel.
- Gold fell 0.5% to $ 1,783.50 an ounce.
– With the help of Justina Lee, Andreea Papuc, Cecile Gutscher, Claire Ballentine, Dave Liedtka and Katherine Greifeld