U.S. stocks were unchanged on Friday as investors poised to end a week on stocks amid concerns the White House about seeking a capital gains tax hike.
The S&P 500 was up 0.1%, while the tech-heavy Nasdaq Composite was up 0.4%. The Dow Jones Industrial Average fell 70 points as American Express and Intel stocks fell.
Intel stock fell more than 5% after it released an earnings forecast in the second quarter that fell below analysts’ hopes. American Express fell over 4% after the credit card company reported quarterly revenue that fell slightly short of forecast.
Wall Street had a tumultuous meeting for stocks after several news outlets reported Thursday afternoon that President Joe Biden is expected to propose much higher capital gains taxes for the rich.
Bloomberg News reported that Biden plans to increase capital gains tax up to 43.4% for wealthy Americans.
The proposal would increase the capital gains rate for those earning $ 1 million or more from the current 20% to 39.6%, Bloomberg News said, citing people familiar with the matter. Reuters and the New York Times later also reported similar stories.
“We expect Congress to pass a scaled-down version of this tax hike,” Goldman Sachs economists wrote in a note. “We expect Congress to agree on a more modest increase, possibly 28%.”
For weeks the S&P 500, Dow and Nasdaq have fallen 1.2%, 1.1% and 1.6% respectively.
Snap stocks rose 9% after seeing accelerated revenue growth and strong user numbers in the first quarter. Snap broke even on balance with sales of $ 770 million.
Companies so far have largely managed to beat Wall Street’s predictions for the earnings season. Even so, strong first quarter results have been met with a tepid reaction from investors who have not yet bought shares in companies with some of the best performing.
Strategists say that already high ratings and near record highs for the S&P 500 and Dow have kept traders’ excitement in check. But even after Thursday’s losses, the indices are within 1.5% of their all-time high.
Bitcoin tumbled overnight, possibly due in part to concerns about higher capital gains taxes, with the cryptocurrency recently declining about 8%, according to CoinMetrics. Other cryptocurrencies like Ethereum have also been hit. So far, the sell-off there has not been carried over to other risk-weighted assets such as stocks.
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