Major Wall Street indices ended lower after shaky trading on Thursday as losses in healthcare stocks eclipsed gains in Cisco and energy stocks, while positive economic data stoked fears that interest rates would stay lower for longer. CVS Health was strong in the S&P 500, falling 8% after it was announced that Blue Shield of California plans to reduce its reliance on the company as a Pharma Benefit Manager (PBM) and partner with other companies, including Amazon.com.
Shares in major health insurers UnitedHealth and Cigna, which also own PBM units, fell 1.9% 6. by 4% each, leading to a 0.8% decline in the broader S&P 500 Healthcare Index. The S&P 500 experienced a decline of 33.97 points, translating to a 0.77% decrease, settling at 4,370.36 points, while the Nasdaq Composite saw a drop of 143.75 points, equivalent to a 1.07% decrease, and closed at 13,330.88 points. The S&P 500 is down 2.7% over the past three sessions, the sharpest drop over three sessions since mid-March. The Nasdaq’s three-day drop of 3.4% is its biggest three-day drop since February.
The value of the Dow Jones Industrial Average saw a drop of 290.91 points, reflecting a 0.84% decrease, and eventually stabilizing at 34,474.83 points.
Rising oil prices pushed Exxon Mobil and Chevron shares up 1.9% and 1.7%, respectively, as commodities were buoyed by hopes that China’s central bank is trying to prop up the housing market and the broader economy. New pressure on stocks, US 10-year bond yieldTreasury bonds hit their highest level since October as a string of strong economic data this week stoked fears that the Fed might keep interest rates at current levels for longer. “stocks can be volatile in the short term, waiting for earnings to rise or yields to fall”; said Jeffrey Buchbinder, chief equity strategist at LPL Financial.
A Labor Department report last week showed a decline in new jobless claims, suggesting the labor market remains tight. Minutes of the Fed’s July meeting released on Wednesday showed that most policymakers are prioritizing the fight against inflation, increasing uncertainty about the bank’s central interest rate path. Stock market weakness over the past few days is due to US strength. U.S. economic growth suggests the Fed is likely to “keep interest rates high for longer”; said Barry Bannister, chief capital markets strategist at Stifel.
Most traders expect the Federal Reserve to leave interest rates unchanged in September, although pause bets have fallen to 86.5% from around 89% the week before, according to CME Group’s Fedwatch tool. Cisco Systems hid losses and improved the network equipment maker’s fourth-quarter profits 3.3 times better than expected, and its CEO discussed the possibilities of artificial intelligence.
Pfizer shares are up 2.9%, the company said its updated injection of COVID-19 tested for emerging variants showed a neutralizing effect against the “Eris” subvariant in a mouse study. Vaccine makers Moderna and Novavax also posted gains as data from the US showed hospitalizations for COVID-19 rose more than 40% from their recent lows in June.
Walmart raised its full-year guidance after beating second-quarter sales estimates, but its shares fell 2%.2%, falling stocks outperformed rising S&P 500 stocks by 2.7 to 1. The S&P 500 marked 2 fresh peaks alongside 17 novel troughs, while the Nasdaq logged 25 unprecedented crests and 252 uncharted nadirs. Tape over U.S. stock was relatively heavy with 11.2 billion shares traded compared to an average of 11.0 billion shares over the last 20 sessions.
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