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S&P 500 snaps losing streak with tax hikes, inflation data on horizon

EconomySep 13, 2021 07:00PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 27, 2021. REUTERS/Brendan McDermid/File photo

By Stephen Culp

NEW YORK (Reuters) - The S&P 500 closed higher on Monday, ending a five-day losing streak as investors focused on potential corporate tax hikes and upcoming economic data.

The Dow Jones Industrial Average also advanced, but the Nasdaq Composite Index ended lower.

Investors favored value over growth, with stocks set to benefit most from a resurging economy enjoying the biggest percentage gains.

"There are probably not a lot of positive surprises coming this month," said Liz Young, head of investment strategy at SoFi in New York. "We're having another period of volatility where I think that rotation could go back to cyclicals and the reopened trade, as the 10-year bond rate slowly grinds higher through the end of the year."

Market participants are focused on the likely passage of U.S. President Joe Biden's $3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%.

Goldman Sachs (NYSE:GS) analysts see the corporate tax rate increasing to 25% and the passage of about half of a proposed increase to tax rates on foreign income, which they estimate would reduce S&P 500 earnings by 5% in 2022.

The Labor Department is due to release its consumer price index data on Tuesday, which could shed further light on the current inflation wave and whether it is as transitory as the Fed insists.

"I don't see inflation settling back down under 2% where it was pre-pandemic," Young added. "Even if some of those transitory forces weaken, we will still stay at a higher rate than we were before."

Other key indicators due this week include retail sales and consumer sentiment, which could illuminate how much the demand boom driven by economic re-engagement has been dampened by the highly contagious COVID-19 Delta variant.

The Dow Jones Industrial Average rose 261.91 points, or 0.76%, to 34,869.63, the S&P 500 gained 10.15 points, or 0.23%, at 4,468.73 and the Nasdaq Composite dropped 9.91 points, or 0.07%, to 15,105.58.

Of the 11 major sectors in the S&P 500, healthcare suffered the largest percentage loss, while energy, buoyed by rising crude prices was the biggest gainer.

Shares of vaccine makers Moderna (NASDAQ:MRNA) and Pfizer Inc (NYSE:PFE) sank 6.6% and 2.2%, respectively, after experts said COVID booster shots are not widely needed.

Coinbase (NASDAQ:COIN) Global Inc announced plans to raise about $1.5 billion through a debt offering aimed at funding product development and potential acquisitions. The cryptocurrency exchanges shares slid 2.2%.

Salesforce.com Inc (NYSE:CRM) dipped 1.2% as rival Freshworks Inc's regulatory filing indicated that the business engagement and customer engagement software company is aiming for a nearly $9 billion valuation in it U.S. debut.

Advancing issues outnumbered declining ones on the NYSE by a 1.60-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 53 new highs and 71 new lows.

Volume on U.S. exchanges was 10.30 billion shares, compared with the 9.29 billion average over the last 20 trading days.

S&P 500 snaps losing streak with tax hikes, inflation data on horizon
 

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Comments (11)
Jeff Kim
Jeff Kim Sep 13, 2021 10:57PM ET
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It’s not about how much they collect but where they spend. Is it really for the good of the mass or for filling up the pockets of those who line up behind the politicians?
William Bailey
William Bailey Sep 13, 2021 8:48PM ET
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So , now rakes hikes are good for wallstreet? Lol funny ! Joe Machin is correct , time to stop the gravey train for the wealthy
Jimmy Joseph
Jimmy Joseph Sep 13, 2021 6:04PM ET
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high in taxes, index should be down, right? 🤔 not sure, what's happening here
Catharine Varady
Catharine Varady Sep 13, 2021 6:04PM ET
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people just move to las vegas to get low tax
Mitchel Pioneer
Mitchel Pioneer Sep 13, 2021 5:45PM ET
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The "late trade" fraud returns to biggest investment JOKE in the world, as "investors" magically come out of the woodwork to "buy" in the final hour.  Welcome back the greatest financial fraud in history.
Wayin Wayin
Wayin Wayin Sep 13, 2021 5:45PM ET
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Ya … final hours as always.
Catharine Varady
Catharine Varady Sep 13, 2021 5:45PM ET
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the same people buy and sell same stocks driving indexes green. if stocks perform very well, how did archegos lost us$10billions. i read they can't find buyers. so price is indeed engineered, waiting for legendary drop
Ricardo Diogo
Rcd72 Sep 13, 2021 4:51PM ET
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silly season ? celebrating tax on corporates? " maybe it was better than expected "
George Pichurov
George Pichurov Sep 13, 2021 3:59PM ET
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"economically sensitive shares rose as investors focused on potential corporate tax hikes" ...how many bottles of Jack inspired this authors' masterpiece?
Bo Davidoff
Bo Davidoff Sep 13, 2021 2:27PM ET
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Revise the title. S&P is in red
Adrian White
Adrian White Sep 13, 2021 2:27PM ET
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Are you sure you're looking at the S&P? It closed green, although only slightly.
Erski Gumby
SB20 Sep 13, 2021 2:27PM ET
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Adrian White it was red when he posted.
Invest Right
Invest Right Sep 13, 2021 2:01PM ET
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VIX options expiry Wed, OPEX on Friday, FOMC next week...yeah, it's going to be a wild ride. Watching from the sidelines till the dust settles.
Tyrone Jackson
Tyrone Jackson Sep 13, 2021 2:01PM ET
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Smart man
Radoslav Kolev
Radoslav Kolev Sep 13, 2021 1:43PM ET
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How higher - from futures +30 to -6?
William Bailey
William Bailey Sep 13, 2021 1:25PM ET
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Crack crack goes the thin thin ice
Mohd Izhar Muslim
Mohd Izhar Muslim Sep 13, 2021 9:40AM ET
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this is great 👍
 
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