(Bloomberg) -- Futures rose Friday as investors digested a proposal for higher taxes to pay for trillions of dollars of fiscal stimulus engineered by President Joe Biden.
The upbeat sentiment signaled the S&P 500 Index may be poised to rebound from the steepest decline in five weeks that followed a Bloomberg News report the Biden administration plans to nearly double the capital gains rate on the wealthy. Treasuries and the dollar dipped.
Investors are weighing the implications of higher taxes against the potential spillover benefits of a spending on infrastructure. While loose central bank policy is helping support stocks near record highs, these levels look precarious given worsening news about the spread of Covid-19 in parts of the world.
Read: Fat Valuations and Tech Stocks Seen as at Risk in Biden Tax Plan
"We don't think it derails the equity market recovery," said Nupur Gupta, portfolio manager at Eastspring Investments, said of the tax proposal on Bloomberg TV. "Equity sentiment does appear to be stretched, which is why any negative news that you get can lead to a consolidation in markets in the short term."
European stocks opened modestly lower amid a mixed batch of earnings. Shares in Swedish telecom Telia Co. fell as much as 3% as analysts flagged "worrying" service revenue trends in the first quarter even though overall results were in line.
Meanwhile, oil rose but remains on course for a weekly drop of around 2% as energy demand wavers with the virus rampant in key markets outside the U.S.
Elsewhere, Bitcoin slid below $50,000, headed for its seventh loss in eight days. Investors already face a capital-gains tax if they hold the cryptocurrency for more than a year.
The U.S. releases new home sales data later on Friday.