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US STOCKS-U.S. stocks close down on news of Biden tax proposal

Thu 22nd April, 2021 9:45pm
* AT&T rises on strong quarterly results
    * U.S. weekly jobless claims decline further
    * Indexes down: Dow 0.94%, S&P 500 0.92%, Nasdaq 0.94%

 (Adds Intel earnings)
    By Herbert Lash
    NEW YORK, April 22 (Reuters) - U.S. stocks dived on Thursday
on reports President Joe Biden planned to almost double the
capital gains tax, news analysts said provided an excuse to take
profits in a directionless market ahead of big tech's earnings
next week.
    The three main indexes on Wall Street also fell on reports
that Biden planned to raise income taxes on 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.
    Paul Nolte, portfolio manager at Kingsview Investment
Management in Chicago, said when a proposal is floated about
raising taxes or capital gains, everybody gets excited, sells
first and asks questions later.
    "It is more of a short-term, knee-jerk reaction," he said.
    Biden will propose raising the marginal income tax rate to
39.6% from 37% and nearly double capital gains taxes to 39.6%
for people earning more than $1 million, sources told Reuters.
    The proposal targets about $1 trillion for child care,
universal pre-kindergarten education and paid leave for workers,
the sources said.
    Markets have been listless after the Dow  .DJI  and S&P 500
 .SPX  recently scaled all-time peaks as investors await
guidance from Microsoft Corp  MSFT.O , Google parent Alphabet
Inc  GOOGL.O  and Facebook Inc  FB.O  when they report earnings
next week.
    "Until we get out of this information vacuum the market is
going to be generally directionless," Hayes said. "All that
really matters moving forward is what are those big tech
earnings next week?"
    During the session, the S&P 500 healthcare sector  .SPXHC 
hit a fresh record high while industrials  .SPLRCI  were the
biggest gainers. 
    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 stocks fell, with
American down 4.5% and Southwest 1.6%. urn:newsml:reuters.com:*:nL4N2MF2RH  urn:newsml:reuters.com:*:nL4N2MF1T8
    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.  urn:newsml:reuters.com:*:nL1N2ME282
    The speedy U.S. vaccination rollout has improved the
economic outlook as people plan summer vacations and leisure
spending, but a surge in COVID-19 cases in India and elsewhere
in Asia has kept investors anxious, Hayes said.
    Equities have likely reached a near-term top as expectations
are too high, said Randy Frederick, vice president of trading
and derivatives at Charles Schwab.
    "There's going to be continued positive moves throughout the
remainder of the year but we are due for some sort of a pullback
in the very short term," he said. "Then the dip buyers will step
back in."
    First-quarter earnings are expected to increase 31.9% from a
year ago, the highest rate since the fourth quarter, according
to IBES Refinitiv data.
    All 11 S&P 500 sectors closed lower as Microsoft, Apple Inc
 AAPL.O , Amazon.com Inc  AMZN.O  and Tesla Inc  TSLA.O 
weighted the most on the downdraft. 
    The Dow Jones Industrial Average  .DJI  fell 0.94% to
33,815.9, the S&P 500  .SPX  lost 0.92% at 4,134.98, and the
Nasdaq Composite  .IXIC  dropped 0.94% to 13,818.41.
    Volume on U.S. exchanges was 10.35 billion shares, compared
with the 10.32 billion full-session average over the last 20
trading days.
    Chipmaker Intel Corp  INTC.O  forecast second-quarter
revenue above Wall Street targets, betting its next generation
of processors for data centers and PCs will meet growing demand
for cloud-based services. Shares slipped about 1% in after-hours
trade.  urn:newsml:reuters.com:*:nL4N2MF448
    AT&T Inc  T.N  beat Wall Street revenue targets as the U.S.
economic reopening following pandemic-linked restrictions
boosted smartphone sales and the media business. AT&T shares
rose 4.2%.  urn:newsml:reuters.com:*:nL4N2MF2MT 
    Biogen Inc  BIIB.O  beat quarterly profit estimates on
stronger-than-expected sales for its muscle wasting disorder
drug, though concerns over its reliance on its yet-to-be
approved Alzheimer's therapy, aducanumab, weighed on shares.
 urn:newsml:reuters.com:*:nL4N2MF2SE Biogen shares fell 4.0%.
    Declining issues outnumbered advancing ones on the NYSE by a
1.57-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored decliners.
    The S&P 500 posted 84 new 52-week highs and no new lows; the
Nasdaq Composite recorded 86 new highs and 20 new lows.  

 (Reporting by Herbert Lash, additional reporting by Lewis
Krauskopf in New York, Shivani Kumaresan and Shreyashi Sanyal in
Bengaluru; Editing by Anil D'Silva and Richard Chang)
 ((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters
Messaging: herb.lash.reuters.com@reuters.net))
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