US STOCKS-U.S. stock sink on reports of Biden tax proposals

* AT&T rises on strong quarterly results
* Southwest Airlines rises on smaller-than-expected loss
* U.S. weekly jobless claims decline further
* Indexes down: Dow 0.89%, S&P 500 0.78%, Nasdaq 0.74%

(Adds prices to mid-afternoon)
By Herbert Lash
NEW YORK, April 22 (Reuters) - U.S. stocks dived on Thursday
on reports President Joe Biden planned to almost double the
capital gains tax, but analysts said the news was an excuse to
take profits in a listless market ahead of big tech's earnings
next week.
The three main indexes on Wall Street were trending slightly
lower when Bloomberg reported Biden also planned to raise income
taxes for the wealthy, a proposal some said would be hard to
pass in Congress.
"If it had a chance of passing, we'd be down 2,000 points,"
said Thomas Hayes, chairman and managing member at hedge fund
Great Hill Capital LLC.
Biden will propose raising the marginal income tax rate to
39.6% from 37% and nearly double taxes on capital gains to 39.6%
for people earning more than $1 million, sources told Reuters.
Markets have been listless as investors await guidance from
Microsoft Corp MSFT.O , Google parent Alphabet Inc GOOGL.O
and Facebook Inc FB.O when they report earnings next week,
Hayes said.
"Until we get out of this information vacuum the market is
going to be generally directionless," he said. "All that really
matters moving forward is what are those big tech earnings next
week?"
Earlier in the session the S&P 500 healthcare sector
.SPXHC hit a fresh record high while industrials .SPLRCI
were the biggest gainers.
American Airlines Group Inc AAL.O and Southwest Airlines
Co LUV.N reported smaller-than-expected quarterly losses,
signaling a revival in travel demand. Both shares fell, with
American down 3.3% and Southwest 0.2%. welcomed data showing the number of Americans
filing new claims for unemployment benefits last week dropped to
a fresh one-year low. The Labor Department report suggested
layoffs were subsiding and expectations were rising for another
month of blockbuster job growth in April. Separately, data showed U.S. home sales fell to a
seven-month low in March, as an acute property shortage boosted
prices and made owning a house more expensive for some
first-time buyers. The speedy U.S. vaccination rollout has improved the
economic outlook as people plan summer vacations or spending on
leisure activities, while giving a solid start to the
first-quarter earnings season.
However, a surge in COVID-19 cases in India and elsewhere in
Asia has kept investors anxious, Hayes said.
The Dow Jones Industrial Average .DJI fell 0.89%, the S&P
500 .SPX lost 0.78% and the Nasdaq Composite .IXIC dropped
0.74%.
Chipmaker Intel Corp INTC.O is expected to post a drop in
first-quarter revenue later in the day, with analysts looking
forward to updates on its U.S. manufacturing plants and chips
for automakers amid a global microchip supply shortage. Its
shares fell 1.1%.
Declining issues outnumbered advancing ones on the NYSE by a
1.40-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.
The S&P 500 posted 83 new 52-week highs and no new lows; the
Nasdaq Composite recorded 83 new highs and 16 new lows.