Reuters: NEW YORK A decline in healthcare shares overshadowed a string of positive corporate earnings and encouraging economic data from the US and China, which led to a slight decline in U.S. stocks on Wednesday.
Reuters: NEW YORK A decline in healthcare shares overshadowed a string of positive corporate earnings and encouraging economic data from the US and China, which led to a slight decline in U.S. stocks on Wednesday.
The S&P 500 continued to trade just 1% below its record high set in September, while the other two major U.S. stock indices all finished the session in the red.
On account of regulatory concerns, the healthcare sector fell 2.9%, its largest percentage decline in the previous four months.
Among the biggest drags on the broader S&P 500 were UnitedHealth Group Inc, Pfizer Inc, Merck & Co Inc, and Abbott Laboratories, which all closed down between 1.9% and 4.7%.
“Companies are worried about the attention ‘Medicare for all’ is getting,” said Jim Bell, president and chief investment officer at Bell Investment Advisors in Oakland, CA. “The way the CEOs of these companies are going on offense against the discussions in Congress, it starts a momentum of its own.”
Investors “prefer to invest in industries that aren’t experiencing such intense controversy.”
The industry’s decline tempered generally positive earnings reports.
Due to cost-cutting measures and the expansion of its wealth management division, Morgan Stanley increased 2.6% after beating analyst expectations.
Following Tuesday’s after-market earnings report, which showed that United Continental Holdings Inc had outperformed expectations and maintained its 2019 profit target even though Boeing Co.’s 737 MAX aircraft are still grounded, the company’s stock price increased by 4.7%
Strong business jet demand helped Textron Inc. beat earnings estimates, increasing its stock price by 4.0%.
On the strength of robust North American demand, PepsiCo Inc. reported better-than-expected first-quarter sales. Shares of the packaged food company increased 3.8%.
The S&P 500 is expected to have experienced its first year-over-year profit decline since 2016 between January and March, according to analysts’ expectations as the reporting season gets underway.
Compared to the 65% average beat rate dating back to 1994, 79.6% of the 54 S&P 500 companies that have released results so far have exceeded expectations.
The Nasdaq Composite dropped 4.15 points, or 0.05%, to 7,996.08 while the Dow Jones Industrial Average dropped 3.12 points, or 0.01%, to 26,449.54 and the S&P 500 dropped 6.61 points, or 0.23%.
Six of the S&P 500’s 11 key industries finished the session in the black.
After the chipmaker and Apple Inc. reached a long-running legal agreement, Qualcomm Inc. saw a 12.2% increase. Shares of Apple increased 1.9%.
Other chipmakers were encouraged by the news, and the Philadelphia SE Semiconductor index rose 1.6%.
On the economic front, a 20.2% decline in imports from China caused the U.S. trade deficit to reach an eight-month low in February.
China, meanwhile, saw its first-quarter GDP grow at a better-than-expected 6.4% annual rate.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a ratio of 1.39 to 1; on the Nasdaq, the ratio was 1.74 to 1.
The Nasdaq Composite recorded 68 new highs and 63 new lows, while the S&P 500 posted 47 new 52-week highs and 5 new lows.
In contrast to the 6.84 billion average over the previous 20 trading days, there were 7.07 billion shares traded on U.S. exchanges.
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