By Kristina Peterson
Stocks' modest gains dried up Wednesday afternoon as health-care
stocks moved deeper into the red following President Obama's latest
call on Congress to pass health-care legislation.
The sector, which is a traditional defensive haven, has
struggled throughout Wednesday's session, hurt at first by optimism
sparked by strong reports on jobs and U.S. service sector activity.
But the health-care category's losses piled up recently, following
conclusion of the president's latest remarks.
The Dow Jones Industrial Average (DJI), which was up more than
60 points at its intraday high, was recently down 22up just two
points at 10,407.72.
Looking to push the "long and wrenching debate" over health care
into its final stages, President Barack Obama asked lawmakers to
schedule a vote on overhaul legislation "in the next few weeks."
Looking to push the "long and wrenching debate" over health care
into its final stages, President Barack Obama asked lawmakers to
schedule a vote on overhaul legislation "in the next few
weeks."
"No matter which approach you favor, I believe the United States
Congress owes the American people a final vote on health-care
reform," Obama said Wednesday in remarks at the White House. "We
have debated this issue thoroughly, not just for a year, but for
decades."
Investors have fretted that any legislation might hurt the
ability of private health-care companies to seek profits. On
Wednesday, the S&P 500's health-care sector was off 0.4%,
leaving the broader index little changed, up just 0.3%. Its
materials sector was its biggest gainer, up 1.4% amid an increase
in commodity prices.
Headlining Wednesday's economic news, payroll giant Automatic
Data Processing reported a fewer-than-expected private-sector job
losses. The report is an important precursor to the government's
February employment report due Friday morning.
Traders' fears of a weather-induced slide in Friday's report
faded somewhat following the release of the ADP numbers. Analysts
are expecting Friday's report from the government to show a loss of
75,000 jobs from U.S. nonfarm payrolls in February, according to a
Dow Jones Newswires survey.
"I don't think [the Friday report] is going to be a big market
mover unless it's extremely positive or negative," said Jim
McDonald, chief investment strategist at Northern Trust Global
Investments. "Anything in the middle is going to be considered
snow-induced."
In other economic news on Wednesday, the Institute for Supply
Management said U.S. non-manufacturing activity, a measure of the
service sector, expanded at a faster-than-expected pace in
February.
And the Federal Reserve's beige book of regional economic
indicators was consistent with bank officials' recent comments
painting a picture of a gradual recovery underway.
The Nasdaq Composite (RIXF) fell 0.2%. The Standard & Poor's
500-stock (SPX) index declined 0.1%.
Movers
Industrial giant Caterpillar Inc. (CAT) rose 0.8% as the
economically sensitive company was boosted by the latest round of
improving data points. General Electric Co. (GE) rose 0.5%, boosted
by the signs of economic growth, along with materials components
Alcoa Inc. (AA) and DuPont (DD). Alcoa rose 0.8% and DuPont climbed
0.7%.
The Dow was also bolstered by its financial components as Fitch
Ratings said U.S. credit card delinquencies declined in the January
collection period, though charge-offs spiked.
Drug maker Pfizer (PFE) was the Dow's worst component. The stock
shed 2.1% after Medivation said its experimental Alzheimer's
disease treatment Dimebon, which was in development with Pfizer,
failed to show effectiveness in a large late-stage study. The news
sent shares of Medivation (MDVN) -- which has no products on the
market and isn't a Dow component -- plunging 67% on heavy
volume.
Novell (NOVL) shares surged 28% to $6.1, topping an offer price
announced late Tuesday from hedge fund Elliott Associates and
sparking speculation another software company or hedge fund could
step in with a higher bid.
Overseas, the Greek government announced a new austerity plan
Wednesday totaling 4.8 billion ($6.53 billion) to ensure it can
meet its deficit-cutting pledge this year, including steep cuts in
civil service salaries and entitlements. Greece will also raise its
sales tax by two percentage points.
Greece's planned measures helped prop up the euro against the
dollar, which was also weaker against the yen. In other markets,
crude-oil prices climbed above $80 a barrel after the government
reported a big jump in oil inventories along with an improvement in
demand. Meanwhile, gold futures rose and Treasurys declined, with
the 10-year note off 6/32 to yield 3.631%.