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

Published 09/14/2021, 06:45 AM
Updated 09/14/2021, 06:46 PM
© 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

© 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.

© 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

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.

Latest comments

hi
Hello
I believe that this tax hike will give fed a room for continuing bond purchases
Hello
it doesn't affect me at all, I day trade, I pull profits no matter what happens. LOL
you don't know much Fernando, some day you will learn
hello
90% of daytraders are not profitable over their careers….
*Stocks close down 0.1% from ATH* The Media: eCoNoMiC rEcOvErY woRRiEs
What do you know the first time Reuters didn't blame a sell-off on Coronavirus. Lol
Funny, cause slowdown is causes by delta variant of corona virus!
no its not
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 .
The Dems are proposing corporate tax hikes that are greater than those in Communist China...
did you factor in that orher countries has tariffs against us companies?
 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.
Crash imminent!!! Great news
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!
the only truth is that there is an imbalance in conviction on the sell side. Anything can happen.
Market manipulation by highlighting selective news
As usual.
So, the tax hikes were not known by the market in the morning? What´s the next explanation for a realisation of gains? Covid worries maybe? Tapering?
A new natural gas tax just hit the floor the night before.
taxes going up ... lmao yeah I would like to see that one pass. another shakeout to miraculously rally next days or weeks to a new ATH.
Its a good time to take off the profits if the taxes are going to go up ! After all the markets are severely inflated
The major securities markets are now poised for a major breakout to the upside. Cash position should be < 15%. Caveat: Never invest more than you can afford to lose.
Cash position should be ~50% at this time. We're posed for a major correction.
because the past year has been a consolidation period right ...
Yesterday's DOW "rally" walked a tightrope, and yet today we have more losses magically vanishing from the system.  Unimpeded upside, with criminal intervention on the downside.  How can you lose in the biggest investment JOKE in the world?
As the Fed is set to commence the tamper tantrum, a correction is needed to reflect intrinsic value before any growth can take place.
Nice narrative.  I knew tax increases might matter at some point. Now the debt ceiling. Running out of time. Politicians still on vacation.
With clockwork precision, the US Ponzi Scheme, biggest investment JOKE in the world, "rallies" at 11AM.  Remarkable how you don't see "gains" relinquished at 11AM.  And of course, the NASDAQ is miraculously in the green.  The greatest financial fraud in history is back on course to defraud America in broad daylight.
So now they’re taking their profits before their taxes go up. These guys are pure genius.
i find each day this market explanatory notes (afterwards of course) insulting to some basic intelligence not to mention misleading. Many would disagree but is clear to me each day the knucklehead on duty pulls from the pre-boiled tool box a couple of tools (reasons) to say... hey.... this is what caused mkt to move. the fact is ..... over time the same tools are not used consistently and reveal these mkt commentary are not even to ..... letz stop here
every day, new narratives, that doesn't make any sense. we did know about the tax stuff yesterday, right
fake inflation data ...
Price growth slows?  What a joke.
oh what a difference an hour makes.
lol such a scam these reporters.
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