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Talk of more Biden tax hike proposals rattles Wall Street

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NEW YORK – SEPTEMBER 15: Traders work on the floor of the New York Stock Exchange September 15, 2008 in New York City. In afternoon trading the Dow Jones Industrial Average fell over 500 points as U.S. stocks suffered a steep loss after news of Merrill Lynch & Co. Inc was selling itself to Bank of America Corp, the financial firm Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy protection, and insurance giant American International Group Inc. (AIG) was approved to secure capital from itself. Spencer Platt/Getty Images/AFP (Photo by SPENCER PLATT / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

Wall Street stocks tumbled Thursday following reports the Biden administration is considering a tax hike on wealthy stock investors, while European equities rallied as the European Central Bank kept its stimulus taps wide open.

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US indices rallied Wednesday, but have been under pressure most of the week amid concerns about lofty equity valuations and rising coronavirus infections in India and other countries.

But losses deepened Thursday following reports President Joe Biden is developing a plan to increase the tax rate on profits from stock transactions to 39.6 percent from 20 percent on people earning more than $1 million.

All three major US indices dropped 0.9 percent.

Any tax plan faces a long process on Capitol Hill before becoming a reality, but analysts said the reports indicate tax hikes are very much in the mix in Washington. Biden also called for an increase in corporate taxes to finance his $2 trillion infrastructure package.

“The market was reminded that this was a possibility and now this whole prospect of higher taxes is going to be sitting out there,” said Briefing.com analyst Patrick O’Hare, adding that it also served as “an excuse to do some selling.”

Earlier, Frankfurt stocks ended the day 0.8 percent higher and Paris climbed 0.9 percent following the ECB announcement.

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ECB keeps taps open
As widely expected, the ECB kept its massive pandemic-fighting stimulus package in place as Europe’s ailing economies are facing slow recoveries amid a resurgence of Covid cases and slow vaccination campaigns.

“European markets have been cheered by the continued dovish stance of the ECB and their decision to ‘significantly’ increase the pace of bond purchases for the second quarter,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“This has, unsurprisingly, put pressure on the euro, which has edged back against the US dollar, but overall the continued support for the eurozone economy has bolstered investor enthusiasm for eurozone assets,” he added.

The euro traded at $1.2016, down from $1.2035 late on Wednesday.

Among individual companies, shares in Credit Suisse shed 2.1 percent after the Swiss banking giant suffered a first-quarter loss on fallout from the bankruptcies of British finance firm Greensill and US hedge fund Archegos.

Administrators overseeing Greensill’s activities meanwhile declared its Australian parent group had entered liquidation.

– Key figures around 2130 GMT –
New York – Dow: DOWN 0.9 percent at 33,815.90 (close)

New York – S&P 500: DOWN 0.9 percent at 4,134.98 (close)

New York – Nasdaq: DOWN 0.9 percent at 13,818.41 (close)

London – FTSE 100: UP 0.6 at 6,938.24 (close)

Frankfurt – DAX 30: UP 0.8 percent at 15,320.52 (close)

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Paris – CAC 40: UP 0.9 percent at 6,267.28 (close)

EURO STOXX 50: UP 1.0 percent at 4,014.80 (close)

Tokyo – Nikkei 225: UP 2.4 percent at 29,188.17 (close)

Hong Kong – Hang Seng Index: UP 0.5 percent at 28,755.34 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,465.11 (close)

Euro/dollar: DOWN at $1.2016 from $1.2035

Pound/dollar: DOWN at $1.3840 from $1.3931

Euro/pound: UP at 86.78 pence from 86.39 pence

Dollar/yen: DOWN at 107.94 from 108.08 yen

Brent North Sea crude: UP 0.1 percent at $65.40 per barrel

West Texas Intermediate: UP 0.1 percent at $61.43 per barrel

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