(RTTNews) - After turning in a lackluster performance for much of the morning, stocks came under pressure in afternoon trading on Thursday. The major averages all pulled back sharply, offsetting the strong gains posted in the previous session.
The major averages climbed off their worst levels but still closed firmly in negative territory. The Dow tumbled 321.41 points or 0.9 percent to 33,815.90, the Nasdaq slumped 131.81 points or 0.9 percent to 13,818.41 and the S&P 500 slid 38.44 points or 0.9 percent to 4,134.98.
The afternoon sell-off came following reports President Joe Biden plans to propose nearly doubling the capital gains tax rate for wealthy individuals to fund spending on child care and education.
According to media outlets including Bloomberg News and the New York Times, Biden's so-called "American Families Plan" would raise the capital gains rate for those earning $1 million or more to 39.6 percent from 20 percent.
The report raised concerns the Biden administration's tax policies could halt the nearly persistent advance by the markets throughout the past year.
Earlier in the day, traders were reacting to a Labor Department report unexpectedly showing a continued decline in initial jobless claims in the week ended April 17.
The report said initial jobless claims fell to 547,000, a decrease of 39,000 from the previous week's revised level of 586,000.
The continued drop came as a surprise to economists, who had expected jobless claims to rebound to 617,000 from the 576,000 originally reported for the previous month.
With the unexpected decrease, jobless claims slid to their lowest level since hitting 256,000 in the week ended March 14, 2020.
Meanwhile, the National Association of Realtors released a report showing another steep drop in U.S. existing home sales in the month of March.
NAR said existing home sales tumbled by 3.7 percent to an annual rate of 6.01 million in March after plunging by 6.3 percent to a revised rate of 6.24 million in February.
Economists had expected existing home sales to dip by 0.5 percent to a rate of 6.19 million from the 6.22 million originally reported for the previous month.
Semiconductor stocks pulled back sharply after turning in some of the market's best performances in the previous session, dragging the Philadelphia Semiconductor Index down by 2.3 percent.
Considerable weakness was also visible among gold stocks, as reflected by the 2.1 percent drop by the NYSE Arca Gold Bugs Index.
The weakness in the gold sector came amid a decrease by the price of the precious metal, with gold for June delivery sliding $11.10 to $1,782 an ounce.
Brokerage stocks also came under pressure following the capital gains reports, resulting in a 1.7 percent drop by the NYSE Arca Broker/Dealer Index.
Chemical, oil and banking stocks also saw notable weakness on the day, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index spiked by 2.4 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.
The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index climbed by 0.6 percent, the German DAX Index and the French CAC 40 Index advanced by 0.8 percent and 0.9 percent, respectively.
In the bond market, treasuries fluctuated over the course of the session before closing slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1 basis point to 1.554 percent.
Earnings news is likely to be in focus on Friday, with semiconductor giant Intel (INTC) among the companies releasing their quarterly results after the close of today's trading.
American Express (AXP) and Honeywell (HON) are also among the companies due to report their results before the start of trading on Friday.
The earnings news is likely to overshadow the Commerce Department's report on new home sales in the month of March.
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