The markets got off to a strong start on Thursday, with the most significant indices up nearly a full percent at the day’s peak. Better-than-expected earnings from Whirlpool, Tractor Supply Company, and AT&T boosted morale, as did a lower-than-expected jobless claims survey. As recruiting activity increased, the number of new jobless claims suddenly dropped to a new low. However, the good news was ruined later in the day when President Biden revealed a new tax package.
President Biden’s latest initiative would tax capital gains on wealthy individuals at approximately 40% to fulfil a campaign promise. The news caused the markets to reverse course, with the S&P 500 losing roughly 1.0 percent by the end of the day. If the market cannot cope with this new growth, a much deeper correction could be in store. The danger now is that stock selling will pick up on Friday, taking the index below its most recent support level.