Drugmakers drag down other stocks
U.S. stocks declined for the third time in four trading days Tuesday as healthcare companies took center stage.
Drugmakers fell after President Trump said he wants to bring drug prices down. Insurers rose and hospital companies dropped after Republicans in Congress introduced a bill intended to replace the 2010 Affordable Care Act, also known as Obamacare.
The healthcare proposal gave big health insurers a boost, but it hurt companies that do a lot of business with Medicaid. It’s not clear whether the bill will pass the Senate.
“We’re going to still be having this conversation six months from now,” said Les Funtleyder, healthcare portfolio manager for E Squared Asset Management.
Meanwhile, energy companies continued to slip and technology companies made smallish gains. Stocks hadn’t fallen for two consecutive days since the end of January, and the major U.S. indexes set their latest record highs last Wednesday.
Pharmaceutical and biotechnology companies fell after Trump said in a tweet that he intends to bring down drug prices.
Although Trump has talked about dealing with the issue before, he has never discussed details. Funtleyder said the task might be harder than it sounds.
“There’s no government mechanism at the moment to control costs directly,” he said.
Companies that make high-priced drugs took some of the largest losses. Biotechnology company Alexion Pharmaceuticals slid 3.1% to $129.18. Alexion makes Soliris, an expensive drug that treats two rare genetic disorders. Mallinckrodt, which has faced criticism over repeated increases in the price of its HP Acthar gel, declined 3% to $49.71.
The Republican healthcare legislation would provide tax credits for people buying their own insurance and would scale back the government’s role in helping people afford coverage. It probably would leave more Americans uninsured, and it would overhaul Medicaid, a joint federal-state health program for low-income Americans.
Hospital operators tumbled. Insurers heavily involved with Medicaid fell; Molina Healthcare was down 1.6%.
Benchmark U.S. crude fell 6 cents to $53.14 a barrel. Brent crude, used to price international oils, fell 9 cents to $55.92 a barrel.
Technology companies did better than the rest of the market. Nimble Storage soared 46.3% to $12.58 after the San Jose data storage company agreed to be acquired by Hewlett Packard Enterprise for $12.50 a share, or about $1 billion.
Snap declined 9.8% to $21.44 as the maker of the Snapchat app continued to slide.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.52% from 2.50%.
Wholesale gasoline rose 1 cent to $1.68 a gallon. Heating oil rose 1 cent to $1.61 a gallon. Natural gas fell 8 cents to $2.82 per 1,000 cubic feet.
Gold dropped $9.40 to $1,216.10 an ounce. Silver fell 24 cents to $17.54 an ounce. Copper fell 3 cents to $2.62 a pound.
The dollar bounced back to 114.05 yen from 113.92 yen. The euro fell to $1.0568 from $1.0588.