Healthcare firms pull down stocks
Losses for healthcare companies and banks left U.S. stocks lower Thursday, although a late push for technology and industrial companies helped the market avoid a steeper decline.
After a weak finish the day before, the Dow Jones industrial average dropped as much as 393 points Thursday morning. Thanks to another gain in Boeing, it ended slightly higher.
Companies including insurer AIG, prescription drug distributor Cardinal Health and music streaming service Spotify suffered big losses. Banks declined along with interest rates.
Electric car maker Tesla fell after it reported another big loss and Chief Executive Elon Musk mocked some questions from analysts during the company’s conference call.
Microsoft and Cisco Systems helped technology companies to some modest gains. But investors haven’t found much to get excited about the last couple of days as they worry about trade tensions and the possibility that growth in company profits has peaked.
“Investors went from being very optimistic to being more concerned about what could happen next,” said Kate Warne, investment strategist at Edward Jones. “People are getting far ahead of themselves.”
About three-fourths of S&P 500 companies had reported results as of Wednesday, according to CFRA Research, and their profits and revenues have consistently blown past Wall Street’s expectations. But the market isn’t acting like it: since April 12, the day before big banks started reporting their results, the S&P 500 is down 1.3%.
Warne, of Edward Jones, said she still expects stocks to rise this year because of continued economic and profit growth. But she said it might take weeks or even months before that happens. Banks fell in tandem with interest rates as bond prices climbed. The yield on the 10year Treasury note fell to 2.95% from 2.97%. Lower bond yields mean banks can’t make as much money from lending.
Cardinal Health, which distributes prescription drugs, also had a smallerthan-expected profit and slashed its forecast for the rest of the year. Cardinal said its Cordis cardiovascular products business ran into supply chain problems and also paid a higher expected tax rate. The stock gave up 21.4% to $50.80.
Tesla tumbled 5.6% to $284.45 after the electric car maker took another big loss as it struggles to produce its lower-cost Model 3 sedan. Some experts are wondering if Tesla will be able to pay all of its bills because of the repeated losses.
Musk appeared to make matters worse on the company’s conference call, as he dismissed questions about the company’s cash needs as “boring, boneheaded” and “not cool.” After being asked about reservations for the Model 3, he said the subject matter was “killing me.”
Benchmark U.S. crude rose 0.7% to $68.43 a barrel in New York. That was its highest price since December 2014. Brent crude, the international standard, rose 0.4% to $73.62 a barrel in London.
Wholesale gasoline picked up 0.4% to $2.09 a gallon. Heating oil slipped 0.4% to $2.11 a gallon. Natural gas lost 1% to $2.73 per 1,000 cubic feet.
Gold rose 0.5% to $1,312.70 an ounce. Silver added 0.4% to $16.45 an ounce. Copper gained 0.4% to $3.08 a pound.
The dollar fell to 109.17 yen from 109.73 yen. The euro rose to $1.1993 from $1.1988.
Germany’s DAX fell 0.9% and France’s CAC 40 shed 0.5% . The British FTSE 100 slipped 0.5% . Hong Kong’s benchmark Hang Seng index dropped 1.3% and South Korea’s Kospi fell 0.7% . Japanese markets were closed for a holiday.