Stocks slide on news of Biden tax proposal

A report that President Biden will propose a hefty tax increase on the gains wealthy individuals reap from investments triggered a stock market sell-off Thursday afternoon that left indexes broadly lower.

The S&P 500 fell 0.9 percent, wiping out an early gain. The benchmark index gave up nearly all of its gain from the day before, leaving it on track for its first weekly loss in five weeks.

The selling was widespread, with every sector in the S&P 500 closing lower. Technology stocks, banks and companies that rely on consumer spending, accounted for much of the skid. Treasury yields held mostly steady.

“The things that the market is going to react to are the unknowns,” said Andrew Mies, chief investment officer of 6Meridian. “The knowns are the economy is good and improving, earnings are good and vaccinations are going pretty well in the United States. The things the market doesn’t know are tax policy, both at the corporate and individual level, and what the Fed is going to do in the next 12 to 18 months.”

The S&P 500 lost 38.44 points 4,134.98. The Dow Jones Industrial Average fell 321.41 points, or 0.9 percent, to 33,815.90. The Nasdaq slid 131.81 points, or 0.9 percent, to 13,818.41.

The S&P 500, which set a record high on Friday, started the week with a two-day slide before closing higher Wednesday. It’s still down 1.2 percent for the week.

Smaller company stocks also lost ground. The Russell 2000 index gave up 7.01 points, or 0.3 percent, to 2,232.61.

Investors are focusing on earnings as the bulk of companies in the S&P 500 spend the next few weeks reporting their financial results. Wall Street is hoping to get a better sense of just how much companies in various sectors are benefiting from the economic recovery.

AT&T rose 4.2 percent after reporting results that beat expectations, helped by higher wireless phone charges as well as the success of its streaming service HBOMax. Equifax jumped 14.9 percent after also reporting strong results.

Union Pacific fell 2.4 percent after the railroad operator reported a 9 percent drop in profit.

Credit Suisse dropped 3.6 percent after the Swiss bank anto nounced it would issue more stock to help it recover from the losses it suffered because of the implosion of a hedge fund earlier this year. Credit Suisse had been a primary backer of Archegos Capital Management, which collapsed last month after several of its bets went sour.

Investors got a bit of good news on the economy when the Labor Department reported that the number of Americans filing for unemployment fell again last week. The yield on the 10-year Treasury slipped to 1.55 percent from 1.56 percent late Wednesday.