In the past week, the S & P 500 closed at an all-time high for four consecutive trading days, the longest straight gain week in more than five months.

The strong performance of the S & P 500 cannot be achieved without the help of technology stocks, or the US stock market has once again achieved its gains since the beginning of the year with the "old-fashioned approach" led by super-large technology stocks, with each FAAMG stock up 4 per cent or more than 5 per cent so far this week.

However, capital markets still have lingering fears about Biden's tax increases.

On Wednesday, Biden officially announced more than $2 trillion in infrastructure and economic recovery plans in a speech in Pittsburgh, the traditional industrial hub that began his 2019 presidential campaign. But the day before the Pittsburgh speech, the White House unveiled details of the tax increase plan, with two tax increases to prevent the outflow of corporate profits-raising the corporate income tax rate from 21 per cent to 28 per cent and raising the "global minimum tax rate" ("global minimum tax") for overseas subsidiaries of US companies to 21 per cent from about 13 per cent today.

Analysts warned that the Biden tax increase could threaten the steady upward pace of US stocks. Although the current market mood remains optimistic and there is no concern about the Biden tax increase, the market knows that a storm will come one day.

The average tax rate paid by US companies (including federal, state and local taxes) fell from 40 per cent to 27 per cent after the Trump tax cut in 2018 and has remained at that level ever since, according to KPMG. Trump's tax cuts were largely designed to stimulate the return of US multinationals, and listed companies that received tax benefits also shared the tax cuts with shareholders in the form of share buybacks and dividends. A year after the Trump tax cuts were passed, the number of buybacks by US technology companies reached an all-time high of about $387 billion, more than triple the amount in 2017, according to TrimTabs, an investment research firm.

Thanks to the low-cost bond financing environment, corporate buybacks are the largest net buyers in the US stock market, in other words, the biggest supporting factor in the bull market in US stocks over the past decade. In the decade from 2008 to 2018, ETF, mutual funds, pension funds, economic dealers and retail investors accumulated net US purchases of $500 billion, while net share buybacks of listed companies reached $4,000bn over the same period. In this context, buyback expansion has led to excess growth in US stocks whose EPS is higher than earnings. Since 2010, the S & P 500 EPS has grown at an average annual rate of about 1.1 times net profit, while repo has grown at an average annual rate of 19% over the same period.

The tech giants included in the S & P 500 large-cap index pay lower average tax rates because of their large international business and are better at taking advantage of more favourable tax regimes overseas, such as Irish Dutch sandwiches.

Companies in the s & p 500 were taxed at 17.5% in the first three quarters of last year, compared with 14.8% in the technology sector, according to Howard Silverblatt, a senior index analyst at s & p. Dow. But once the global minimum tax rate proposed by Biden is fully introduced by G7 member states, or OECD, it will officially declare the end of the era of "wool" for technology companies.

Goldman Sachs Group estimates that if the Biden tax increase is approved by Congress, it could lead to a 9 per cent drop in earnings per share in the S & P next year. Tobias Levkovich, chief u. S.analyst at Citibank, believes that compared with the 7% increase in corporate tax proposed by Biden, an increase of just 4% could reduce the EPS of the s & p 500 by 3%.

Analysts generally believe that Biden's plan to raise the corporate tax rate will be the most immediate risk for the US stock market in the second half of this year and even 2022, not only to erode corporate profits, but also to curb corporate hiring plans.

The market is holding its breath to see if Biden's tax increase can be passed by Congress. Senate Democrat Joe Manchin has rejected the 28% tax rate and proposed a cap of 25%.

Due to the strength of the economic rebound, s & p's first-quarter earnings data released in the coming weeks are likely to record an impressive year-on-year increase of nearly 25%. But it also fuelled complacency in the market. The VIX volatility index of US stocks has fallen sharply, falling to 20 levels from 85 at the time of the outbreak. Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, warns that current complacency will make the market vulnerable when unexpected events occur.