Traders work on the floor at the New York Stock Exchange. — Reuters pic
NEW YORK, July 12 ― The Dow and S&P 500 rose yesterday to close at record highs as health insurers gained after the Trump administration scrapped a plan designed to rein in prescription drug prices, while financial shares climbed with bond yields.
A 5.5 per cent gain in UnitedHealth Group Inc helped the Dow close above 27,000 points for the first time. Cigna Corp surged 9.2 per cent.
The abandoned proposal would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.
On the flip side, drugmakers such as Merck & Co Inc and Pfizer Inc dropped following the news, and the Nasdaq biotech index was down 1.5 per cent. Merck ended down 4.5 per cent while Pfizer was down 2.5 per cent. The S&P 500 healthcare index ended flat.
The S&P 500 traded above 3,000 for a second day in a row but again failed to close above that milestone, suggesting investor cautiousness.
“The fact that it has not been able to get through it and stay above that level has been a big psychological negative,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Helping to support stocks were comments from Federal Reserve Chairman Jerome Powell, which supported investor expectations for an interest-rate cut.
In his first day of testimony before Congress on Wednesday, Powell confirmed the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war and said the Fed stood ready to “act as appropriate.” Powell testified before the Senate Banking Committee yesterday.
US benchmark bond yields rose, and the S&P 500 financial index gained 0.6 per cent.
The Dow Jones