Shares were mostly higher on Friday morning and stabilized after a sharp sell-off on Thursday after President Joe Biden considered a proposal to increase the tax rate on capital gains for high net worth individuals.
The S&P 500 rose after falling 0.9% on regular trading day for its worst session in five weeks. The Nasdaq also rose to reverse Thursday’s losses following the report, suggesting Biden was considering it Increase in capital income tax rate to 39.6% for individuals earning more than $ 1 million. The current tax rate for capital gains is 20%.
“I think the immediate response was probably a bit of an exaggeration. These proposals are coming out and you never know, especially with tax proposals, where we will end up. So it looks like an opening offer. I am sure there will be intense lobbying from the investment community to adjust those numbers, “said Kathy Jones, Charles Schwab chief fixed income strategist, Yahoo Finance said on Thursday. “But right now, I think if you have very high ratings in the market, anything bad news can sell off.”
Shares of the Dow component Intel (INTC) declined after the chipmaker posted first-quarter revenue from data center sales that fell short of expectations. Mattel (MATStocks rose after quarterly net sales rose far more than expected and the toy maker raised its full-year outlook. Snap (SNAP) Stocks rose as quarterly sales and daily active users extended the momentum of 2020 and clearly exceeded the estimates in each case.
Overall, stocks moved just below record levels this week as investors searched for new stock drivers and more data on corporate earnings and activity results.
In another report that appeared to confirm the recovery in economic activity, Thursday’s first unemployment claims report showed so 547,000 people applied for unemployment benefits for the first time last week, This marks an unexpected improvement to a new low in the pandemic. Next week’s expanded pressure on first quarter gross domestic product and quarterly results from mega-cap companies like Apple (AAPL), Amazon (AMZN) and alphabet (TogetL) and Facebook (FB) are expected to further underscore the recent recovery in economic activity and corporate earnings during the recovery from the pandemic.
“We spent the entire month of April fighting for direction in the markets. We had 13 of the 14 slowest days of the year in April. We are just looking for new catalysts. I think the market did this.” Gabriela Santos, The global market strategist for JPMorgan Asset Management told Yahoo Finance. “And it just feels like we should consolidate, maybe even pull back, before continuing this trend for 6 months and 12 months. I think this is just part of the market that is struggling to find a direction in the short term Find.”
“This should come as no surprise, particularly with capital gains,” added sh. “It was part of President Biden’s agenda during the election and was expected to be part of the American family plan, due out next week and discussed for the rest of the year [stocks are] I’m just struggling to find direction that we would otherwise still consider a favorable backdrop for stocks. ”
10:00 a.m. ET: New home sales soar to their highest level since 2006 in March
New home sales rose much faster than expected in March, reaching their highest level in 15 years. Demand for residential property continued even as mortgage rates started rising this year.
New home sales were up 20.7% in March versus February. the trade department said Friday. A monthly increase of 14.2% was expected. The jump brought the seasonally adjusted annual rate of new home sales to 1.021 million, the highest since 2006. A 40.2% monthly increase in new home sales in the South led to progress, and sales in the Northeast and Midwest rose during the month as well – on a monthly basis. However, new home sales in the west were down 30% in March versus February.
New home sales fell 16.2% m / m in February, with harsh winter weather hurting property market activity over the period.
9:49 a.m. ET: U.S. manufacturing and service sectors hit record highs in April: IHS Markit
Activity in both US private services and manufacturing hit record highs in April. The broad-based reopening made possible by vaccines contributed to the growth of the economy.
The preliminary US manufacturing purchasing managers’ index for April rose to 60.6 from 59.1 in March, IHS Markit reported on Friday. This was the highest level since the company began tracking the metric.
The US service sector grew even faster, with the PMI rising to 63.1 from 60.4 in March. This was faster than the expected value of 61.5, according to Bloomberg data, and also marked a series high.
“The recovery is broad-based: the service sector is growing at the fastest rate recorded in nearly 12 years of survey history, and manufacturers reported one of the strongest expansions in seven years,” said Chris Williamson, chief economist for IHS Markit in a statement. “The latter was all the more impressive as factories continued to be throttled by unprecedented delays in the supply chain, leading to another sharp rise in prices.”
“The deteriorating supply situation is worrying for the outlook, particularly in terms of prices. Supply needs to be improved to match demand, “he added in the short term.”
9:36 a.m. ET: Bitcoin, other cryptocurrency prices drop amid tax gains on capital gains
Bitcoin (BTC-USD) Prices fell 11% below $ 49,000 on Friday, prolonging the sell-off of other risk-weighted assets viewed Thursday as concerns of higher capital gains taxes weighing on assets that were seeing rapid price gains.
The largest cryptocurrency by market cap was on track to deliver its worst weekly performance in nearly two months during the drawdown, according to Bloomberg data. Ether (ETH-USD), the second largest cryptocurrency, also fell 14%. Meme-based dogecoin (DOGE-USD), which saw a renaissance this week that drove prices up sharply, fell 19%.
9:30 a.m. ET: Stocks open open, Intel pulls Dow down, S&P 500 and Nasdaq rise
The three main indices opened mixed on Friday morning, with a drop in Intel stocks pushing the Dow down 70 points, or 0.2%. However, the S&P 500 and Nasdaq rose to shake off heavy losses from the previous session, sparked by concerns about an increase in the tax rate on capital gains for high net worth individuals.
7:05 a.m. ET Friday: Stock futures rise and shake off declines on Thursday
Here the markets traded before the opening bell:
S&P 500 Futures (ES = F.): 4,138.25, plus 10.5 points or 0.25%
Dow Futures (YM = F.): 33,777.00, plus 69 points or 0.2%
Nasdaq Futures (NQ = F.): 13,780.25, plus 30.00 points or 0.22%
Raw (CL = F.): + 0.35 USD (+ 0.57%) to 61.78 USD per barrel
Gold (GC = F.): + $ 5.70 (+ 0.32%) to $ 1,787.70 per ounce
10-year state treasury (^ TNX): -0.5 bps to give 1.551%
6:02 p.m. ET Thursday: Stock futures fall lower
This is where the markets were trading as the overnight session began.
S&P 500 Futures (ES = F.): 4,129.75, plus 2 points or 0.05%
Dow Futures (YM = F.): 33,720.00, plus 11 points or 0.03%
Nasdaq Futures (NQ = F.): 13,759.75, plus 9.5 points or 0.07%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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