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U.S. stocks close lower on worries over recovery, corporate tax hikes

EconomySep 14, 2021 06:46PM ET
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© Reuters. FILE PHOTO: American flags hang from the facade of the New York Stock Exchange (NYSE) building after the start of Thursday's trading session in Manhattan in New York City, New York, U.S., January 28, 2021. REUTERS/Mike Segar/File Photo

By Stephen Culp

NEW YORK (Reuters) - Wall Street lost ground on Tuesday as economic uncertainties and the increasing likelihood of a corporate tax rate hike dampened investor sentiment and prompted a broad sell-off despite signs of easing inflation.

Optimism faded throughout the session, reversing an initial rally following the Labor Department's consumer price index report. All three major U.S. stock indexes ended in negative territory in a reminder that September is a historically rough month for stocks.

So far this month the S&P 500 is down nearly 1.8% even as the benchmark index has gained over 18% since the beginning of the year.

"There is a possibility that the market is simply ready to go through an overdue correction," said Sam Stovall, chief investment strategist at CFRA Research in New York. "From a seasonality perspective, September tends to be the window dressing period for fund managers."

The advent of the highly contagious Delta COVID variant has driven an increase in bearish sentiment regarding the recovery from the global health crisis, and many now expect a substantial correction in stock markets by the end of the year.

"We're still in a corrective mode that people have been calling for months," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "Economic data points have been missing estimates, and that has coincided with the rise in the Delta variant."

The CPI report delivered a lower-than-consensus August reading, a deceleration that supports Federal Reserve Chairman Jerome Powell's assertion that spiking inflation is transitory and calms market fears that the central bank will begin tightening monetary policy sooner than expected.

U.S. Treasury yields dropped on the data, which pressured financial stocks, and investor favor pivoted back to growth at the expense of value. [US/]

The long expected corporate tax hikes, to 26.5% from 21% if Democrats prevail, are coming nearer to fruition with U.S. President Joe Biden's $3.5 trillion budget package inching closer to passage.

The Dow Jones Industrial Average fell 292.06 points, or 0.84%, to 34,577.57; the S&P 500 lost 25.68 points, or 0.57%, at 4,443.05; and the Nasdaq Composite dropped 67.82 points, or 0.45%, to 15,037.76.

All 11 major sectors in the S&P 500 ended the session red, with energy and financials suffering the largest percentage drops.

Apple Inc (NASDAQ:AAPL) unveiled its iPhone 13 and added new features to its iPad and Apple Watch gadgets in its biggest product launch event of the year as the company faces increased scrutiny in the courts over its business practices. Its shares closed down 1.0% and were the heaviest drag on the S&P 500 and the Nasdaq.

Intuit Inc (NASDAQ:INTU) gained 1.9% following the TurboTax maker's announcement that it would acquire digital marketing company Mailchimp for $12 billion.

CureVac slid 8.0% after the German biotechnology company canceled manufacturing deals for its experimental COVID-19 vaccine.

Declining issues outnumbered advancing ones on the NYSE by a 2.25-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and two new lows; the Nasdaq Composite recorded 50 new highs and 107 new lows.

Volume on U.S. exchanges was 10.07 billion shares, compared with the 9.38 billion average over the last 20 trading days.

U.S. stocks close lower on worries over recovery, corporate tax hikes
 

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Comments (32)
Az Jak
Az Jak Sep 15, 2021 11:49AM ET
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Talib Hussain Bajkani
Talib Hussain Bajkani Sep 15, 2021 6:26AM ET
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Hello
Darshana Trivedi
Darshana Trivedi Sep 14, 2021 9:01PM ET
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I believe that this tax hike will give fed a room for continuing bond purchases
Talib Hussain Bajkani
Talib Hussain Bajkani Sep 14, 2021 9:01PM ET
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Hello
Robert DZ the patterns
Robert DZ the patterns Sep 14, 2021 6:48PM ET
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it doesn't affect me at all, I day trade, I pull profits no matter what happens. LOL
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Joyce Yun
Joyce Yun Sep 14, 2021 6:48PM ET
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No one is interest to know if it affects you . Please be sensitive with your remarks as there may be tons of people in a negative position. Very good luck to your day trading.
Matt Novakovich
Matt Novakovich Sep 14, 2021 6:48PM ET
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Joyce Yun don't worry your husband will keep paying for you
Robert DZ the patterns
Robert DZ the patterns Sep 14, 2021 6:48PM ET
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you don't know much Fernando, some day you will learn
Benjamin Thomas
Benjamin Thomas Sep 14, 2021 6:48PM ET
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hello
Josh Davis
Josh Davis Sep 14, 2021 6:48PM ET
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Robert DZ the patterns 90% of daytraders are not profitable over their careers….
FUTURES MOONING
FUTURES MOONING Sep 14, 2021 6:27PM ET
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*Stocks close down 0.1% from ATH* The Media: eCoNoMiC rEcOvErY woRRiEs
milena villa escobar
milena villa escobar Sep 14, 2021 5:28PM ET
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What do you know the first time Reuters didn't blame a sell-off on Coronavirus. Lol
Shawn SMK
Shawn SMK Sep 14, 2021 5:28PM ET
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Funny, cause slowdown is causes by delta variant of corona virus!
Josh Davis
Josh Davis Sep 14, 2021 5:28PM ET
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Shawn SMK no its not
John Dislias
HephaestusTrades Sep 14, 2021 4:29PM ET
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You are finding something new reason Everyday to pursuite the traders that the decline will come but it will not come ridiculous journalyst and short sellers .
Stan Smith
Stan Smith Sep 14, 2021 4:19PM ET
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The Dems are proposing corporate tax hikes that are greater than those in Communist China...
Gee Oxie
Gee Oxie Sep 14, 2021 4:19PM ET
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Pratt Man did you factor in that orher countries has tariffs against us companies?
TR LH
TR LH Sep 14, 2021 4:19PM ET
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Pratt Man  Increasing taxes will stiffle the economy, cost jobs, result in lower tax income and corporations moving back off shore to tax havens. Biden and the left know this and that is their agenda. Build back better for them. All the things that created the greatest economy known to man will be dismantled by the looney left. 2022 cannot get here fast enough, then we can finish them off in 2024.
William Bailey
William Bailey Sep 14, 2021 4:01PM ET
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Crash imminent!!! Great news
Fakhri Sattarov
Fakhri Sattarov Sep 14, 2021 3:44PM ET
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Tax rate hikes should be already priced in the stock markets before. Just a stupid explanation of price falls when there are no any other smart arguments!
Emmanueldickson Mapulanga
Emmanueldickson Mapulanga Sep 14, 2021 3:44PM ET
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the only truth is that there is an imbalance in conviction on the sell side. Anything can happen.
 
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