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Fat Valuations and Tech Stocks Seen as at Risk in Biden Tax Plan

  • Capital gains tax hike could cut S&P 500 valuations by 7%: UBS
  • History shows momentum lags before capital gains increase: GS
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President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6%.Source: Bloomberg)

Wall Street got its stimulus. Now it’s hearing about the bill.

Aglow after trillions of dollars of government spending pushed markets to record after record in the first part of the year, securities professionals reacted cautiously to Joe Biden’s proposal to raise taxes on investing profits. Many counseled calm, pointing to the likelihood of long negotiations, while also noting the plan had the potential to provoke pre-emptive selling, cut stock valuations and slow down the rally in tech shares.