Stocks wobble as GOP pulls health bill
NEW YORK — U.S. stocks flirted with sharp losses but managed a mixed finish after Republicans canceled a vote on their health care bill because it became clear the bill would fail. Hospital stocks soared in response, while companies that stand to benefit from other Trump proposals faltered.
For the second day in a row, stocks started higher and wilted as it became clear that the health care bill was in trouble. The Dow Jones industrial average plunged as much as 126 points in afternoon trading on reports of the bill’s impending failure, although Wall Street cut its losses after the vote was canceled. Consumer-focused companies like Nike and Starbucks rose.
The health care act became something of a proxy for the rest of the Trump agenda, and it dominated the market for most of this week. It was the worst week for stocks since the week before the presidential election. Banks and small-company stocks, which made huge gains after President Donald Trump was elected, suffered their biggest losses in more than a year.
Trump and other Republicans said they were moving on from health care, and Michael Scanlon, a portfolio manager for Manulife Asset Management, said investors will be glad if that happens.
“You’re going to see a very quick pivot to corporate tax reform,” he said. A corporate tax cut could give stocks a large boost.
Hospitals and insurers that do a lot of business with Medicaid celebrated the demise of the bill.
The American Health Care Act would likely have left more Americans uninsured and would make big changes to Medicaid, a federal-state health program for those with low incomes. Those stocks fell earlier this year when the bill was introduced because investors were concerned that hospitals would have to take in more patients who lack insurance and that insurers would get less Medicaid money.
But insurance company stocks slumped Friday.