NEW YORK: Wall Street stocks tumbled Thursday following reports the Biden administration is considering a tax hike on wealthy stock investors, while European equities rallied as the European Central Bank kept its stimulus taps wide open.

US indices rallied Wednesday, but have been under pressure most of the week amid concerns about lofty equity valuations and rising coronavirus infections in India and other countries.

But losses deepened Thursday following reports President Joe Biden is developing a plan to increase the tax rate on profits from stock transactions to 39.6 percent from 20 percent on people earning more than $1 million.

All three major US indices dropped 0.9 percent.

Any tax plan faces a long process on Capitol Hill before becoming a reality, but analysts said the reports indicate tax hikes are very much in the mix in Washington. Biden also called for an increase in corporate taxes to finance his $2 trillion infrastructure package.

"The market was reminded that this was a possibility and now this whole prospect of higher taxes is going to be sitting out there," said Briefing.com analyst Patrick O'Hare, adding that it also served as "an excuse to do some selling."

Earlier, Frankfurt stocks ended the day 0.8 percent higher and Paris climbed 0.9 percent following the ECB announcement.