Health-Care Rally Helps Lift Dow Over 27000
July 11 2019 - 11:38AM
Dow Jones News
By Nathan Allen and Michael Wursthorn
The Dow Jones Industrial Average rose, briefly crossing 27000
for the first time, as shares of UnitedHealth Group rallied after
the Trump administration dropped its plan to curb drug rebates.
Health-care stocks were among the stock market's biggest movers
Thursday following the Trump administration's decision to cancel a
plan that would have curtailed billions of dollars in annual
rebates worked out between drugmakers and third parties that manage
benefits for Medicare as well as Medicaid managed care.
The plan's cancellation lifted a cloud of concern that had hung
over companies that own pharmacy-benefit managers, many of which
worried the proposal would have disrupted the U.S. pharmaceutical
industry. Shares of UnitedHealth jumped 4.7%, leading the Dow
industrials higher, while Cigna and CVS Health added 12% and 5.3%,
respectively, helping the S&P 500 notch a slim gain in recent
trading.
The blue-chip index gained 130 points, or 0.5%, to 26992 in
recent trading, paring some of its earlier gains to fall back below
27000. The S&P 500, meanwhile, added less than 0.1%, while the
Nasdaq Composite slipped less than 0.1%.
The blue-chip index extended its gains from Wednesday's session,
helping to reverse stocks' recent faltering amid concerns that
investors were overestimating the likelihood of a rate cut. Federal
Reserve Chairman Jerome Powell's dovish comments and minutes from
the Fed's June policy meeting reassured traders that further easing
is the most likely course of action.
Mr. Powell is speaking again on Thursday, though analysts don't
expect him to provide much new information. U.S. consumer-inflation
data will be in focus, as weak inflation would support the case for
further monetary easing.
"Powell needs a low inflation number to bolster the rate-cut
case. If it proves to be just like last week's employment read and
also comes in strong, then perhaps we've all been overeager for a
cut," said Mike Loewengart, head of investment strategy at
E*Trade.
U.S. government-bond yields, meanwhile, extended early gains
after data showed that consumer prices rose in June, a sign
inflationary pressures could be stabilizing after a period of
weakness. Core inflation, which strips out volatile food and energy
prices, rose faster than expected. The yield on 10-year U.S.
Treasurys climbed to 2.087% from 2.061% a day earlier. Bond prices
and yields move in opposite directions.
Elsewhere, minutes from the European Central Bank's June policy
meeting showed that officials are likely to consider injecting
fresh stimulus into the eurozone in light of weak inflation data.
The minutes suggest policy makers will weigh cutting the bank's key
interest rate or restarting its EUR2.6 trillion ($2.92 trillion)
bond-buying program.
Stocks in Europe edged lower, reversing an earlier gain, as the
pan-continental Stoxx Europe 600 declined 0.2%.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
July 11, 2019 11:23 ET (15:23 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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