By Joe Wallace and Amber Burton
U.S. stocks dropped Thursday on news reports that President
Biden is considering nearly doubling capital gains taxes on the
Mr. Biden is planning a capital gains tax increase to as high as
39.6% on the wealthiest Americans, an increase from the current
20%, Bloomberg News reported Thursday afternoon.
Major indexes wavered between small gains and losses for much of
the session before tumbling on the headlines. The S&P 500 fell
38.44 points, or 0.9%, to 4134.98. The Dow Jones Industrial Average
dropped 321.41 points, or 0.9%, to 33815.90. The technology-heavy
Nasdaq Composite slid 131.81 points, or 0.9%, to 13818.41.
All 11 sectors of the S&P 500 traded lower on the report.
Technology and other growth stocks were some of the biggest losers.
Shares of Micron Technology, Twitter and Western Digital dropped
more than 4%.
The planned tax increase is far from a surprise, but the fall in
stocks was a knee-jerk reaction, said Quincy Krosby, chief market
strategist at Prudential Financial.
"Even though this is not a surprise -- the expectation that
capital gains would be taxed at a higher rate -- it becomes more
immediate and there's a hitch in the market," she said. "This isn't
new. It has not been a question of if or when, it has just been
Elsewhere, investors continued to parse through another batch of
earnings reports and data on the labor market. Many investors
remain upbeat about the outlook for stocks but are growing
concerned that a surge in coronavirus cases globally could delay
plans to reopen economic activity. India on Thursday reported the
world's biggest one-day rise in new infections.
"It wouldn't take much news for [investors] to start ripping up
their reopening playbook," said Christopher Jeffery, head of
inflation and rates strategy at Legal & General Investment
Management. "The market has gone from a world of not questioning it
to starting to question it," he said, adding that his team is
following the rise in cases in Michigan closely.
Earnings season continues apace.
Shares of Equifax jumped $28.78, or 15%, to $221.41 after the
credit-reporting firm late Wednesday raised financial projections
for the year and said it expects to buy back more than $100 million
Blackstone Group shares climbed $2.65, or 3.3%, to $82.96 after
the private-equity firm swung to a record profit of $1.75 billion
in the first quarter.
Snap and Intel were among the companies to report earning
results after markets closed.
Snap reported a jump in sales and a narrower quarterly loss as
the social-media platform gained more users, helping shares jump
nearly 5% after hours.
Conversely, Intel reported lower quarterly sales and revenue.
The tech company's stock fell 2% in after-hours trading despite
raising its outlook for the year.
Some investors are wary of the results to come later this year.
"We're just going to have to see [what happens] when you take away
the stimulus and the cash payments," said Kimberly Woody, a senior
portfolio manager at Globalt Investments. "We're kind of on a sugar
On the economic front, worker filings for jobless claims reached
another Covid-19 low of 547,000 last week. The decline is a sign
the labor market is strengthening.
Jason Borbora-Sheen, multiasset portfolio manager at Ninety One,
said he expects the broad stock market to trend sideways or decline
over the next few months. "Things have become quite overbought," he
One of the two funds Mr. Borbora-Sheen manages has bought put
options to protect against downward moves in stocks. Puts are
contracts that pay out if the underlying asset falls below a
In the bond market, the 10-year U.S. Treasury yield ticked down
to 1.554% from 1.566% Wednesday. Yields, which move in the opposite
direction to bond prices, have fallen from a high of 1.749% in late
Overseas, shares of tech and utility companies led the Stoxx
Europe 600 up 0.7%.
Shares of Credit Suisse Group fell 2.1% after the Swiss lender
said it would issue new shares after losses from Archegos Capital
Management wiped out a strong first quarter. Renault shares dropped
1.3% after the French car maker said revenue fell in the first
The European Central Bank left its key interest rates and
bond-buying programs unchanged, seeking to maintain support for
governments and companies through a new round of coronavirus
infections and restrictions.
In Asia, chemical and pharmaceutical stocks helped Japan's
Nikkei 225 climb 2.4%. China's Shanghai Composite Index ticked down
Write to Joe Wallace at Joe.Wallace@wsj.com and Amber Burton at
(END) Dow Jones Newswires
April 22, 2021 17:15 ET (21:15 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.