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Stocks Turn Lower in Afternoon Trading

By Joe Wallace and Amber Burton 

U.S. stocks turned lower Thursday on news reports that President Biden is considering nearly doubling capital gains taxes on the wealthy.

Bloomberg News reported Thursday afternoon that Mr. Biden is planning a capital gains tax increase to as high as 43.4%, nearly double the current rate for wealthy Americans.

The S&P 500 and the Dow Jones Industrial Average dropped 1.2%, while the technology-heavy Nasdaq Composite fell 1.3%. The indexes had been wavering between small gains and losses ahead of the report.

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 17% after the credit-reporting agency late Wednesday raised financial projections for the year and said it expects to buy back more than $100 million worth of stock.

Blackstone Group shares gained 3.6% after the private-equity firm swung to a record profit of $1.75 billion in the first quarter.

Intel and Snap are among companies scheduled to report results after markets close.

Some investors are wary of the earnings to come. "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 high."

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.

Bond yields steadied. The 10-year U.S. Treasury yield ticked down to 1.563% from 1.566% Wednesday. Yields, which move in the opposite direction to bond prices, have fallen from a high of 1.749% in late March.

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 said.

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 certain price.

In overseas markets, shares of tech and utility companies led the Stoxx Europe 600 up 0.7%.

Shares of Credit Suisse Group fell 3% after the Swiss lender said it would issue new shares after losses from Archegos Capital Management wiped out a strong first quarter. Renault shares lost 1.3% after the French car maker said revenue fell in the first quarter.

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 0.2%. .

Write to Joe Wallace at and Amber Burton at


(END) Dow Jones Newswires

April 22, 2021 14:26 ET (18:26 GMT)

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