(Reuters) – U.S. stocks rose on Thursday on improved bets of an interest rate cut following Fed chief Jerome Powell’s dovish remarks, while healthcare stocks were mixed after the Trump administration withdrew a rule that would kill rebates.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 1, 2019. REUTERS/Brendan McDermid
Shares of pharmacy benefit managers gained as the news meant these companies would continue to benefit from after-market discounts from drugmakers. Health insurers and drug distributors also rose.
A 5.16% gain in UnitedHealth Group Inc (UNH.N) helped the Dow Industrials break above 27,000 points for the first time. Cigna Corp (CI.N) surged more than 11%, leading gains in the S&P 500 index .SPX, while drug distributors such as McKesson Corp (MCK.N) rose 1.2%.
The lack of progress in Washington suggests that the healthcare industry will face ongoing political pressure, including legislative risks, Morgan Stanley analyst David Risinger said in a note.
“We see no solution to the challenges drug manufacturers face regarding growing rebates.”
The healthcare index .SPXHC, which is the worst performing S&P sector this year, was off 0.26%. Six of the 11 major S&P sectors were higher.
Stock markets were also supported by dovish comments from Powell, who on the first of his two days of testimony before Congress said on Wednesday that the central bank stood ready to “act as appropriate” to support record U.S. economic growth. He began the second day of his testimony on Thursday.
“It seems like they (Fed) are getting closer to a decision point where they are more willing to openly communicate the possibility or the likelihood of