Dow Zooms as Tax Fears Subside
U.S. stocks rebounded on Friday as Wall Street reassessed concerns arising from news that the White House could seek a hike to the capital gains tax.
The Dow Jones Industrials jumped 227.59 to 34,043.49, amid a jump in Goldman Sachs and JPMorgan shares.
The S&P 500 zoomed 45.19 points to 4,180.17, led by financials and materials.
The NASDAQ Composite leaped 198.4 points, or 1.4%, to 14,016.81.
The S&P 500 closed the turbulent week with just a 0.1% loss, while the Dow dropped 0.5%, and the NASDAQ fell 0.3% for the week.
Wall Street came off a turbulent session for equities after multiple news outlets reported Thursday afternoon that President Joe Biden is slated to propose much higher capital gains taxes for the rich.
Bloomberg News reported that Biden is planning a capital gains tax hike to as high as 43.4% for wealthy Americans.
The proposal would hike the capital gains rate to 39.6% for those earning $1 million or more, up from 20% currently, according to Bloomberg News, citing people familiar with the matter. Reuters and the New York Times later also reported similar stories.
Intel shares dropped more than 5% after it issued second-quarter earnings guidance below analysts’ hopes. American Express fell over 4% after the credit card company reported quarterly revenue that was slightly short of forecasts.
Snap shares, meanwhile, jumped 7.5% after the company said it saw accelerating revenue growth and strong user numbers during the first quarter. Snap broke even on the bottom line while posting revenue of $770 million.
Corporations have for the most part managed to beat Wall Street’s forecasts thus far into earnings season. Still, strong first-quarter results have been met with a more tepid response from investors, who have not, to date, snapped up shares of companies with some of the best results.
Bitcoin plunged overnight, perhaps in part because of concerns about higher capital gains taxes, with the cryptocurrency last down about 8%, according to CoinMetrics. Other cryptocurrencies like Ethereum were also getting hit. So far, the selloff there was not spilling over into other risk assets like equities.
Prices for 10-Year Treasurys weakened, raising yields to 1.56% from Thursday’s 1.54%. Treasury prices and yields move in opposite directions.
Oil prices climbed 71 cents to $61.85 U.S. a barrel.
Gold prices dropped $5.90 to $1,776.10 U.S. an ounce.