US Market sinks on tax proposals

The US stock market finished session firmly in negative territory on Thursday, 22 April 2021, as a resurgence of COVID-19 cases globally sapped appetite for stocks with data showing tepid U.S. home sales and reports President Joe Biden planned to almost double the capital gains tax adding to the grim mood. However, market losses capped after Labor Department report showing a continued decline in initial jobless claims in the week ended April 17.

At the close of trade, the Dow Jones Industrial Average index fell 321.41 points or 0.94% to 33,816. The S&P 500 index declined 38.44 points or 0.92% to 4,135. The tech-heavy Nasdaq Composite Index dropped 131.81 points or to 0.94% 13,818

Investor sentiment was dampened after reports that US President Joe Biden will propose raising the marginal income tax rate to 39.6% from 37% and nearly double taxes on capital gains to 39.6% for people earning more than US$1 million to fund spending on child care and education. Meanwhile, a surge in COVID-19 cases in India and elsewhere in Asia was weighing on sentiment.

Longer-term US treasury yieldsfell on Thursday as investors digested the release of jobless claims data and US President Biden's reported tax proposal. The US Treasury sold US$18 billion of 5-year Treasury Inflation-Protected Securities (TIPS) at a record low yield of -1.631%. US 10-year yields fell by 2 points to near 1.54%. But US 2-year yields were steady near 0.15%.

ECONOMIC NEWS: US Existing Home Sales Tumble 3.7% In March- US existing home sales tumbled by 3.7% to an annual rate of 6.01 million in March after plunging by 6.3% to a revised rate of 6.24 million in February, the National Association of Realtors reported on Thursday. Existing home sales fell to their lowest annual rate since August but were still up by 12.3% compared to the same month a year ago. The report showed the median existing home price was $329,100 in March, up 5.9% from $310,700 in February and up 17.2% from $280,700 a year ago. Meanwhile, housing inventory at the end of March totaled 1.07 million units, up 3.9% from 1.03 million in February but down 28.2% from 1.49 million in the same month last year.

US Jobless Claims Fall To New One-Year Low- US Labor Department released a report on Thursday unexpectedly showing a continued decline in initial jobless claims in the week ended April 17. The report said initial jobless claims fell to 547,000, a decrease of 39,000 from the previous week's revised level of 586,000. With the unexpected decrease, jobless claims slid to their lowest level since hitting 256,000 in the week ended March 14, 2020.

US Leading Economic Index Jumps 1.3% In March- US leading economic index jumped by 1.3% in March after edging down by a revised 0.1% in February, a report released by the Conference Board on Thursday showed. The report showed the coincident economic index rose by 0.6% in March after slipping by 0.1% in February. Meanwhile, the lagging economic index fell by 0.5% in March after surging up by 1.6% in the previous month.

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