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US Stocks Close Lower on Tax Report    04/22 16:11

   A report that President Biden will propose a hefty tax increase on the gains 
wealthy individuals reap from investments triggered a stock market sell-off 
Thursday afternoon that left indexes broadly lower.

   (AP) -- A report that President Biden will propose a hefty tax increase on 
the gains wealthy individuals reap from investments triggered a stock market 
sell-off Thursday afternoon that left indexes broadly lower.

   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 fell 0.9%, wiping out an early gain. The benchmark index gave up 
nearly all of its gain from the day before, leaving it on track for its first 
weekly loss in five weeks.

   The selling was widespread, with every sector in the S&P 500 closing lower. 
Technology stocks, banks and companies that rely on consumer spending, 
accounted for much of the skid. Treasury yields held mostly steady.

   "The things that the market is going to react to are the unknowns," said 
Andrew Mies, chief investment officer of 6Meridian. "The knowns are the economy 
is good and improving, earnings are good and vaccinations are going pretty well 
in the United States. The things the market doesn't know are tax policy, both 
at the corporate and individual level, and what the Fed is going to do in the 
next 12 to 18 months."

   The S&P 500 lost 38.44 points to 4,134.98. The Dow Jones Industrial Average 
fell 321.41 points, or 0.9%, to 33,815.90. The Nasdaq slid 131.81 points, or 
0.9%, to 13,818.41.

   The S&P 500, which set a record high on Friday, started the week with a 
two-day slide before closing higher Wednesday. It's still down 1.2% for the 
week.

   Smaller company stocks also lost ground. The Russell 2000 index gave up 7.01 
points, or 0.3%, to 2,232.61.

   Stocks have rallied in recent weeks amid a string of encouraging reports on 
hiring, retail sales and other economic data. COVID-19 vaccinations and massive 
support from the U.S. government and Federal Reserve are fueling expectations 
for solid corporate profit growth as more businesses reopen after being forced 
to close or operate on a limited basis due to the pandemic.

   The last round of stimulus from the government helped lift retail sales, and 
investors now have to weigh other proposals in Washington, including possible 
changes to tax laws and a proposed $2.3 trillion infrastructure package that 
Biden has called for spending over eight years.

   Washington aside, investors are focusing on earnings 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 4.2% after reporting results that beat expectations, helped by 
higher wireless phone charges as well as the success of its streaming service 
HBOMax. Equifax jumped 14.9% after also reporting strong results.

   Union Pacific fell 2.4% after the railroad operator reported a 9% drop in 
profit.

   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 3.6% 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 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 slipped to 1.55% from 1.56% late Wednesday.

 
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