Stocks erased earlier gains to trade sharply lower after Bloomberg reported Thursday afternoon that President Joe Biden would propose increasing the capital gains tax rate on wealthy individuals.

[Click here to read what's moving markets heading into Friday, April 22]

The Dow dropped more than 250 points, or 0.7%, immediately following the report, after trading just slightly lower earlier. The S&P 500 and Nasdaq erased gains to trade at session lows.

Biden's plan would involve increasing the capital gains tax rate on the wealthy to 39.6%, according to the report from Bloomberg citing people familiar with the matter. This would apply to those earning at least $1 million. The current base capital gains tax rate is 20%.

Earlier, in the session, stocks were little changed and struggled for direction. Stocks have churned in recent sessions as investors digested a bevy of corporate earnings results and awaited additional reports, more economic data and more commentary from Federal Reserve officials in the coming weeks.

Corporate earnings have so far exceeded Wall Street's even lofty expectations, as companies benefited from both a pick-up in revenue as demand recovered, and as cost-cutting measures implemented during the pandemic boosted their bottom lines. Chipotle (CMG) shares edged higher in early trading after the restaurant company posted first-quarter earnings that blew away expectations late Wednesday, with digital sales more than doubling.

With stocks hovering near all-time highs and the early stages of the post-pandemic recovery already under way, any additional moves higher will likely come with some difficulty, some analysts said.

"What we have is the absence of a catalyst. Everything that we’ve done over the last twelve months has been to build up to this point, to get this recovery, to get a very, very strong second-quarter GDP, which we think could be upwards of 10%," Jim Caron, Morgan Stanley investment management fixed income portfolio manager, told Yahoo Finance. "But after that, things start to slow down. It doesn’t mean that the data gets bad, it just means on a relative basis that the third quarter will be weaker will the second quarter and the fourth quarter may be weaker than the third quarter."

Looking forward, the contours of additional government spending and monetary policy support will likely serve as key drivers, Caron added.

"We have an infrastructure spending plan that’s also coming out ... And once we have that, we’ve already spent $5.8 trillion, we’re going to spend some more, we’re going to have a very large deficit, so then what comes next? The next 12 months of fiscal spending is probably going to be less than the last 12 months," Caron added. "So that seems like a net tightening. And then we have Fed tapering to throw into the whole thing as well. So the market’s realizing that it has some hard work to do."

Others offered a similar view.

"I do think that returns for equities are certainly going to be more subdued. I mean, we did have a very strong recovery from the bottom that we’ve seen. But now we are bumping up against price targets. We’re probably about 5% away from our year-end price target," Anastasia Amoroso, JPMorgan Private Bank head of cross asset thematic strategist, told Yahoo Finance. "It’s possible that as long as the earnings revisions come through and they’re higher, we’ll revise that. But I think there’s going to be not as big of a beta rally going forward. There’s going to be more discerning investments needed in the markets."

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4:04 p.m. ET: Stocks end a volatile session lower after Biden reportedly seeks capital gains tax increase on the wealthy; Dow drops 322 points, or 0.9%

Here were the main moves in markets as of 4:04 p.m. ET:

• S&P 500 (^GSPC): -38.44 (-0.92%) to 4,134.98

• Dow (^DJI): -322.66 (-0.95%) to 33,814.65

• Nasdaq (^IXIC): -131.81 (-0.94%) to 13,818.41

• Crude (CL=F): +$0.28 (+0.46%) to $61.63 a barrel

• Gold (GC=F): -$9.60 (-0.54%) to $1,783.50 per ounce

• 10-year Treasury (^TNX): -1 bps to yield 1.5540%

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2:09 p.m. ET: Stocks extend losses after Bloomberg reports Biden is eyeing capital gains tax increase on the wealthy

Here's where markets were trading Thursday afternoon:

• S&P 500 (^GSPC): -39.57 points (-0.95%) to 4,133.85

• Dow (^DJI): -344.43 points (-1.01%) to 33,792.88

• Nasdaq (^IXIC): -140.5 points (-1.01%) to 13,809.38

• Crude (CL=F): -$.10 (-0.16%) to $61.25 a barrel

• Gold (GC=F): -$10.70 (-0.6%) to $1,782.40 per ounce

• 10-year Treasury (^TNX): -1.2 bps to yield 1.552%

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11:29 a.m. ET: Stocks trade mixed, Dow dips

The three major indexes struggled for direction Thursday morning, with the Dow shedding about 60 points, or 0.2%, while the S&P 500 and Nasdaq traded slightly higher.

The industrials, real estate and communication services sectors led advances in the S&P 500, with a mix of cyclicals and growth tech stocks leading on Wednesday. Salesforce (CRM), Visa (V) and American Express (AXP) outperformed in the Dow.

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10:34 a.m. ET: Existing home sales dropped more than expected in March, while prices rise at a record rate

Sales of previously owned homes slumped another 3.7% in March after a 6.3% from in February, according to the National Association of Realtors. The drop brought the seasonally adjusted annualized rate for existing home sales down to 6.01 million, the lowest since August.

"The February drop was not all due to the storm; demand is cratering," Ian Shepherdson, Pantheon Macroeconomics chief economist, said in an email Thursday morning.

"This is a housing-specific story, driven by rising mortgage rates and tightening lending standards, and – perhaps – fading COVID fear making the flight to the burbs less attractive," he added. "It tells us nothing about the prospects for the rest of the economy as COVID fades away. Note that prices continue to rocket, despite the decline in sales, because inventory remains very low, less than half the year-ago level."

The median existing home sale price rose by a record annualized rate of 17.2%, reaching $329,100, with every geographic region posting double-digit price gains, the National Association of Realtors said.

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9:32 a.m. ET: Stocks open slightly lower

Here's where markets were trading after the opening bell:

• S&P 500 (^GSPC): -7.64 points (-0.18%) to 4,165.78

• Dow (^DJI): -110.77 (-0.32%) to 34,026.54

• Nasdaq (^IXIC): -12.51 points (-0.08%) to 13,937.70

• Crude (CL=F): +$0.48 (+0.78%) to $61.83 a barrel

• Gold (GC=F): -$9.40 (-0.52%) to $1,783.70 per ounce

• 10-year Treasury (^TNX): -1.2 bps to yield 1.552%

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8:34 a.m. ET: New jobless claims unexpectedly sink to a new pandemic-era low

New jobless claims sank further to a new pandemic-era low during the week ended April 17, as the labor market made additional strides in recovering.

New jobless claims totaled 547,000 last week, the Labor Department announced Thursday. This came in below the 610,000 expected and the upwardly revised 586,000 from the prior week.

Continuing jobless claims also declined, but came in slightly higher than anticipated. Continuing claims totaled 3.674 million for the week ended April 3 versus the 3.650 million expected.

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7:00 a.m. ET Thursday: Stock futures point to a slightly lower open

Here's where markets were trading ahead of the opening bell Thursday morning:

• S&P 500 futures (ES=F): 4,161.75, down 3.00 points or 0.07%

• Dow futures (YM=F): 34,014.00, down 2 points or 0.01%

• Nasdaq futures (NQ=F): 13,907.5, down 11.75 points or 0.08%

• Crude (CL=F): -$0.45 (-0.73%) to $60.90 a barrel

• Gold (GC=F): -$5.60 (-0.31%) to $1,787.50 per ounce

• 10-year Treasury (^TNX): -0.7 bps to yield 1.557%

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6:02 p.m. ET Wednesday: Stock futures edge lower

Here's where markets were trading as the overnight session began.

• S&P 500 futures (ES=F): 4,158.00, down 6.75 points or 0.16%

• Dow futures (YM=F): 33,984.00, down 32 points or 0.09%

• Nasdaq futures (NQ=F): 13,897.00, down 22.25 points or 0.16%

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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