Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%, sources tell Bloomberg.
While it’s still early in the earnings period, a record percentage of first-quarter profit reports from major United States companies are coming in above analysts’ expectations.
Earnings are rebounding from last year’s pandemic-fuelled lows, but many companies were holding off on giving guidance, making it harder for analysts to estimate results for this year. Some strategists said stronger-than-expected earnings could help underpin the market even as valuations are considered expensive.
With results in from 110 of the S&P 500 companies as of Thursday, 85.5 percent have beaten analysts’ estimates for earnings per share, according to Refinitiv’s data. If that trend continues through the reporting season, it would be the highest beat rate on record going back to 1994.
An average of 78 percent of companies have beaten earnings estimates in the past four quarters.
Stronger-than-expected results from major banks and other companies have driven up the forecast for the quarter. Earnings are now expected to have risen 33.3 percent in the first quarter from the previous year, compared with 24.2 percent at the start of the month, based on Refinitiv’s data.
That is expected to be the highest quarterly profit growth since 2010 following the financial crisis.
To be sure, the S&P 500 is up less than 1 percent since mid-April when the earnings period kicked into high gear. Wall Street fell Thursday as sources said US President Joe Biden will propose raising taxes on the wealthy next week to fund about $1 trillion in investments.
A resurgence of coronavirus cases globally added to investor worries.
Also, earlier this week, Netflix Inc said slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter, and its shares dropped sharply.
Despite some high-profile disappointments, “the momentum for corporate earnings looks positive,” Mark Haefele, chief investment officer global wealth management at UBS AG, wrote in a note this week.
“Overall, the US earnings season has got off to a strong start.”