Insurers slump as health care bill fails; tech stocks rise
NEW YORK » U.S. stocks were divided Tuesday as health insurers declined after the failure of the latest Republican health care bill while a big jump in subscribers for Netflix sent technology and consumer-focused companies higher.
Stocks spent most of the day lower after the health care push stalled and several financial firms, including Goldman Sachs, reported underwhelming second-quarter results. Energy and industrial companies also slipped.
While stocks flirted with larger losses and most of the companies listed on the New York Stock Exchange fell, the gains for tech and consumer stocks were enough to send the Standard & Poor’s 500 index and Nasdaq composite to new highs.
Wall Street did not have a big reaction to the Republican health care defeat, as it did when a related bill failed in March. After four months of struggles over health care, investors don’t expect as much from Congressional Republicans and President Donald Trump on other issues.
“Tax changes aren’t likely to take place any time soon and are likely to be smaller than they hoped,” said Kate Warne, an investment strategist for Edward Jones.
The S&P 500 rose 1.47 points, or 0.1 percent, to 2,460.61, just above the record it set Friday. The Dow Jones industrial average fell 54.99 points, or 0.3 percent, to 21,574.73. Goldman Sachs was responsible for almost all of that loss. The Nasdaq composite climbed 29.87 points, or 0.5 percent, to 6,344.31 as tech companies like Facebook and Alphabet, the parent of Google, rose. After a plunge in June, the Nasdaq has surged over the last two weeks.
The Russell 2000 index of smaller-company stocks sank 3.99 points, or 0.3 percent, to 1,427.61. That index closed at an all-time high Monday.
Several major banks reported strong second-quarter results, but that wasn’t enough to get investors excited. Bank of America and Goldman Sachs both said their trading businesses struggled, as the market has been calm for months. Banks did very well in the first quarter, and Warne said investors may have been caught off guard that the second quarter doesn’t look as good for them.
“When they’re not benefiting as much as expected from higher interest rates, I think that makes investors more cautious about what results will look like going forward,” Warne said.
Goldman lost $5.95, or 2.6 percent, to $223.31 and Comerica fell $1.47, or 2 percent, to $73.05. Bank of America declined 12 cents to $23.90.
Netflix jumped after the company said it added 5.2 million subscribers over the last three months, and for the first time, it has 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 big gain. Netflix gained $21.90, or 13.5 percent, to $183.60. Among other consumer companies, Amazon added $14.34, or 1.4 percent, to $1,024.38.
Facebook gained $3.13, or 2 percent, to $162.86 and Alphabet picked up $10.99, or 1.1 percent, to $986.85.
The Senate Republican health care bill was defeated Monday night when two more GOP senators announced they opposed it, which prevented the proposal from coming to a vote. Republican leaders shifted their efforts to repealing the 2010 Affordable Care Act without creating a replacement law, but that effort was quickly shut down as well.
When Republicans in Congress started trying to repeal and replace the Obama-era health care law, investors saw it as a test of their ability to work together. If Republicans succeeded, there was a good chance they would be able to pass tax cuts and potentially an infrastructure spending bill as well. But as the work dragged on for four months, that seemed far less likely.
Health insurers declined. Aetna fell $1.69, or 1.1 percent, to $153.31 and Anthem retreated $2.64, or 1.4 percent, to $189.45. UnitedHealth, the largest company in the industry, inched higher after it reported strong second-quarter results and raised its annual outlook. It gained 59 cents to $186.85.
The dollar slipped again. It has steadily lost ground for most of this year and the ICE US dollar index is now at its lowest level since August. The dollar slid to 111.98 yen from 112.66 yen. The euro rose to $1.1563 from $1.1480.