Healthcare stocks pull indexes down after GOP bill fails – Los Angeles Times
U.S. stocks and the dollar are slipping Tuesday morning after the latest Republican healthcare bill failed in the Senate. Drugmakers and health insurers are trading lower. Elsewhere, banks are falling as bond yields and interest rates decrease. Streaming video company Netflix is surging after it gained more than 5 million subscribers in the second quarter, which is giving consumer-focused companies a boost.
KEEPING SCORE: The Standard & Poor’s 500 index was down 2 points, or 0.1%, to 2,457 as of 10:10 a.m. Eastern time. The Dow Jones industrial average fell 52 points, or 0.2%, to 21,577. The Nasdaq composite was unchanged at 6,315. The Russell 2000 index of smaller-company stocks fell 3 points, or 0.2%, to 1,428. The Russell 2000 closed at an all-time high Monday; the Dow and S&P 500 set records Friday.
Most of the companies on the New York Stock Exchange traded lower.
HEALTHCARE REFORM: The Senate Republican healthcare bill suffered a potentially fatal setback late Monday when two more GOP senators announced they opposed it, which meant the proposal does not have enough support to proceed to a full vote. Senate leaders said they will next try to simply repeal the 2010 Affordable Care Act without creating a replacement, but that does not appear to have enough votes to pass either.
Most healthcare stocks dropped Tuesday as investors tried to divine what will come of the Republican healthcare effort. Generic drugmaker Perrigo sank 1.9% to $72.47. Drug distributor Cardinal Health fell 1.5% to $76.95.
Health insurers also declined even though UnitedHealth, the largest company in the industry, reported strong second-quarter results. UnitedHealth shares fell 1.2% to $184.11. Humana declined 2% to $232.89.
DOLLAR DIVES: The dollar slipped again as the agenda of President Trump appeared to be in greater jeopardy. Trump proposed greater infrastructure spending and cuts in taxes and regulation to boost the economy, but six months into his presidency, investors wonder how much of that will happen. The dollar has steadily lost ground for most of this year and the ICE U.S. dollar index is at its lowest level since August.
On Tuesday, the dollar slid to 111.90 yen from 112.66 yen. The euro rose to $1.1582 from $1.1480. The euro hasn’t been this strong against the dollar since early 2015.
STILL WATCHING: Netflix jumped 9.6% to $177.23 after the company said it added 5.2 million subscribers over the last three months and now has, for the first time, more subscribers outside the U.S. than in it. The second quarter is usually a slow period for Netflix, so investors were pleased to see the healthy gain. They seemed less concerned about the company’s high costs.
HOG NOT SO WILD: Harley-Davidson skidded 10.7% to $46.38 after its sales fell short of Wall Street estimates. The motorcycle maker cut its estimate of how many vehicles it will ship, and it expects weaker profit margins.
DIAL TONE: Swedish mobile networks company Ericsson dived 13.9% to $6.27 after it said that network and software sales fell in the second quarter, and that it doesn’t expect improvement any time soon. The company also said it will cut more spending.
BONDS: Bond prices rose. The yield on the 10-year Treasury note slid to 2.27% from 2.31%. That helped send bank stocks down.
Bank of America reported a bigger profit Tuesday thanks to higher interest rates even though the calm market led to a drop in its trading revenue. Investment bank Goldman Sachs reported flat earnings and its trading desk had another rough quarter, with a big drop in revenue from bond, currency and commodities trading. Unlike consumer banks, Goldman makes most of its money from trading securities and advising companies.
While both companies did better than analysts expected, it wasn’t enough to get investors excited. Goldman fell $1.83 to $227.43 and Bank of America declined 18 cents to $23.84. Comerica, which also topped estimates, dropped 1.7% to $73.22.
ENERGY: Benchmark U.S. crude was up 41 cents at $46.43 a barrel in New York. Brent crude, the international standard, rose 47 cents, or 1%, to $48.89 a barrel in London.
OVERSEAS: The DAX in Germany dropped 1.3% and France’s CAC 40 fell 1%. The British FTSE 100 index slipped 0.3%. Japan’s benchmark Nikkei 225 lost 0.6% as the yen gained against the dollar. The Kospi in South Korea was flat. Hong Kong’s Hang Seng climbed 0.2%.