- US equities gained on Tuesday on new hopes for a capital gains tax cut and wary optimism around a Russian coronavirus vaccine.
- President Trump said Monday afternoon he is “considering” lowering the US capital gains tax. Such a move would increase investors’ realised profits but likely faces legal challenges if done through an executive order.
- Investors also mulled Russia’s announcement that it has developed and approved the world’s first successful coronavirus vaccine. While news of vaccine progress has previously lifted markets, the lack of phase 3 testing of the drug has several health authorities sceptical of its safety.
- Oil gained after US COVID hospitalizations sank to the lowest level in a month. West Texas Intermediate crude rose as much as 2.4%, to $US42.94 per barrel.
- Watch major indexes update live here.
US stocks rose on Tuesday after President Trump’s call for a capital gains tax cut.
The president said in a Monday afternoon press conference he is “considering” lowering the US capital gains tax, a move that would boost investors’ realised profits. Trump decided against passing such a cut in September after saying it did too little for the middle class.
While the president can’t unilaterally slash the capital gains tax rate, he could adjust the level by the level of inflation through an executive order. Still, such a move would likely prompt legal challenges.
Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Tuesday:
- S&P 500:3,372.88, up 0.4%
- Dow Jones industrial average: 28,105.69, up 1.1% (314 points)
- Nasdaq composite:10,892.68, down 0.6%
In vaccine news, Russian President Vladimir Putin claimed Tuesday that the country had developed and approved of the first successful coronavirus drug. Futures moved higher following the announcement, despite global health authorities expressing scepticism toward the vaccine’s safety.
Clinical trials for the drug took place over just two months, and the Russian government approved its use before phase 3 studies are set to begin on Wednesday.
“I know that it works quite effectively, forms strong immunity, and, I repeat, it has passed all the needed checks,” Putin said on Tuesday, according to Reuters. The president added that one of his daughters received the vaccine.
Investors also cheered a gradual easing of the coronavirus’s damage in the US. American hospitalizations fell to their lowest level in a month, suggesting the country’s surging death toll could soon slow.
Inovio Pharmaceuticals tumbled after missing quarterly estimates. The company also announced that the next trials for its experimental coronavirus vaccine would begin in September, later than the summer deadline Inovio previously established.
Chinese electric automaker Nio leaped after trouncing earnings estimates and nearly tripling its second-quarter vehicle deliveries. The Tesla competitor also guided for record revenue and deliveries in the third quarter despite many other companies withholding official forecasts.
Oil futures climbed as falling US hospitalizations boosted hopes for a demand rebound. West Texas Intermediate crude gained as much as 2.4%, to $US42.94 per barrel. Brent crude, the international benchmark, jumped 1.8%, to $US45.78 per barrel, at intraday highs.
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