U.S. Stocks Fell Due to Reports about Biden’s Tax Proposals

The U.S. stocks suffered losses on April 22 on reports President Joe Biden planned to almost double the capital gains tax. Nevertheless, the analysts stated that 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 trading slightly lower when Bloomberg released the information about Biden’s plan. According to this information, he planned to raise income taxes for the wealthy, a proposal some said would be hard to pass in Congress.

Joe Biden will propose raising the marginal income tax rate to 39.6% from the current 37%. He also wants to nearly double taxes on capital gains to 39.6% for people earning more than $1 million. That would be the highest tax rate on investment gains, which are mostly paid by the richest Americans. The rate has not surpassed 33.8% in the post-World War Two era.

President Biden plans to raise taxes on the richest Americans to fund about $1 trillion in childcare, universal pre-kindergarten education as well as paid leave for workers. This plan is part of the White House’s push for a sweeping overhaul of the country’s tax system. This way the Biden administration wants to make rich people and big companies pay more and help foot the bill for his ambitious economic agenda.

U.S. stocks and the country’s economy

The Dow Jones Industrial Average dropped 0.89%, the S&P 500 fell 0.78% and the Nasdaq Composite declined 0.74%. Earlier in the session the S&P 500 healthcare sector reached a fresh record while industrials were the biggest gainers.

Investors welcomed data about the labor market. Hopefully, the number of Americans who filed new claims for unemployment benefits last week dropped to a fresh one-year low. The report published by the Labor Department included interesting suggestions. The report suggested that layoffs were declining and expectations were rising for another month of blockbuster job growth in April.

Separately, data showed U.S. home sales declined to a seven-month low last month. The shortage of houses boosted the prices and made owning a house more expensive for some first-time buyers.

The speedy U.S. vaccination rollout helped to improve the economic outlook as people plan to spend money on leisure activities. Nonetheless, a surge in COVID-19 cases in India and elsewhere in Asia kept investors anxious.

Declining issues outperformed advancing ones on the New York Stock Exchange by a 1.40-to-1 ratio. In the case of Nasdaq, a 1.02-to-1 ratio favored advancers.