Off The Wire
U.S. stock sink on reports of Biden tax proposals
U.S. stocks dived on Thursday on reports President Joe Biden planned to almost double the capital gains tax, but analysts said the news was an excuse to take profits in a listless market ahead of big tech's earnings next week.
The three main indexes on Wall Street were trending slightly lower when Bloomberg reported Biden also planned to raise income taxes for the wealthy, a proposal some said would be hard to pass in Congress.
"If it had a chance of passing, we'd be down 2,000 points," said Thomas Hayes, chairman and managing member at hedge fund Great Hill Capital LLC.
Biden will propose raising the marginal income tax rate to 39.6% from 37% and nearly double taxes on capital gains to 39.6% for people earning more than $1 million, sources told Reuters. read more
"Until we get out of this information vacuum the market is going to be generally directionless," he said. "All that really matters moving forward is what are those big tech earnings next week?"
American Airlines Group Inc (AAL.O) and Southwest Airlines Co (LUV.N) reported smaller-than-expected quarterly losses, signaling a revival in travel demand. Both shares fell, with American down 3.3% and Southwest 0.2%. read more
Investors welcomed data showing the number of Americans filing new claims for unemployment benefits last week dropped to a fresh one-year low. The Labor Department report suggested layoffs were subsiding and expectations were rising for another month of blockbuster job growth in April. read more
Separately, data showed U.S. home sales fell to a seven-month low in March, as an acute property shortage boosted prices and made owning a house more expensive for some first-time buyers. read more
The speedy U.S. vaccination rollout has improved the economic outlook as people plan summer vacations or spending on leisure activities, while giving a solid start to the first-quarter earnings season.
However, a surge in COVID-19 cases in India and elsewhere in Asia has kept investors anxious, Hayes said.
Chipmaker Intel Corp (INTC.O) is expected to post a drop in first-quarter revenue later in the day, with analysts looking forward to updates on its U.S. manufacturing plants and chips for automakers amid a global microchip supply shortage. Its shares fell 1.1%.
Declining issues outnumbered advancing ones on the NYSE by a 1.40-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.
The S&P 500 posted 83 new 52-week highs and no new lows; the Nasdaq Composite recorded 83 new highs and 16 new lows.