New York Stock Market Rebounds on Strong Economic Indicators Effect

by Paek Jongmin

Published 24 Apr.2021 06:02(KST)

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market overcame the negative impact of the capital gains tax hike in just one day, supported by the simultaneous rise in manufacturing and service sector indicators.

On the 23rd (local time), the Dow Jones Industrial Average rose 227.59 points (0.67%) to close at 34,043.49, the S&P 500 index increased by 45.19 points (1.09%) to 4,180.17, and the Nasdaq index climbed 198.40 points (1.44%) to finish at 14,016.81.

[Image source=Reuters Yonhap News]

Strong economic indicators led the market rally. The US manufacturing Purchasing Managers' Index (PMI) for April, released by IHS Markit, recorded 60.6, the highest since the index began in 2007. This exceeded both the previous month's 59.1 and the market expectation of 60.5.

The service sector PMI also reached 63.1, the highest since 2009, significantly surpassing the market forecast of 60.5.

The day before, the market had fallen on the bad news that a plan to nearly double the capital gains tax rate for high-income earners making over $1 million annually would be announced, but on this day, it showed signs of regaining composure.

The current 20% capital gains tax rate is unlikely to surge to 39.6% as planned by the government, according to market expectations. Goldman Sachs projected that after congressional discussions, the capital gains tax would rise to 28%.

Leading tech stocks such as Alphabet, Google's parent company, Apple, and Facebook mostly showed strength. Tesla rose about 1.3%, but Coinbase fell 0.63%, marking its fifth consecutive day of weakness.

Coupang surged 6% for the first time in a while, reclaiming the $45 level. Social media company Snap's stock rose more than 7% after its first-quarter earnings exceeded analysts' expectations.

Intel's stock dropped sharply by 5% after releasing earnings following the previous day's market close. This was attributed to concerns over a rapid recent price surge and anticipated increases in future expenses.