Wall St sinks on Obama’s health sector plans

Wall St sinks on Obama’s health sector plans
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First Published: Fri, Feb 27 2009. 08 43 AM IST
Updated: Fri, Feb 27 2009. 08 43 AM IST
New York: US stocks fell in volatile trading on Thursday as investors sold off shares of healthcare companies such as Merck & Co on worries that US President Barack Obama’s budget proposal will strangle profits.
A batch of sour economic data added to the gloom, spurring investors to sell shares in big consumer companies such as McDonald’s Corp and Coca-Cola Co, which slid 3%.
The plan to expand healthcare coverage and curb costs calls for cutting Medicare payments to private insurers, letting consumers buy cheaper medicines and preventing drug companies from making deals that block generic competition.
Merck was the Dow’s biggest weight, down 6.7% at $26.04. Health insurers also fell, including Humana, which lost 19.5% to $23.64.
“They are certainly looking at providing healthcare across the board for everyone, but to pay for that they are looking to obviously reduce revenue for some of the healthcare agencies,” said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.
The Dow Jones industrial average dropped 88.81 points, or 1.22%, to 7,182.08. The Standard & Poor’s 500 Index shed 12.07 points, or 1.58%, to 752.83. The Nasdaq Composite Index fell 33.96 points, or 2.38%, to 1,391.47.
The Dow is down 10.2% for the month and 18.2% year-to-date.
Adding pressure, financial shares trimmed gains after a report showed the number of troubled US banks soared in the fourth quarter, tempering optimism about the prospect of another government bailout for the sector. Among laggards, Citigroup slid 2.4% to $2.46.
On Nasdaq, biotech companies including Gilead Sciences and Amgen were among the primary laggards, falling 5 and 9.4%, respectively.
The S&P Health Care index fell 5.1%.
After the closing bell, Dell Inc reported fourth-quarter earnings of 29 cents a share, excluding items, above the 28-cent average estimate of analysts surveyed by Reuters Estimates. However, revenue of $13.4 billion missed analysts’ estimates of $14.06 billion.
Shares of the world’s No. 2 personal computer maker rose 2.1% to $8.38 in extended trade.
The government released more bleak news on the economy on Thursday as one report showed the number of US workers continuing to claim jobless benefits notched a fresh record in the second week of February while another showed US orders for long-lasting manufactured goods fell for a sixth straight month in January to a six-year low, and data showed new homes sales slumped to their lowest since 1963.
Shares of General Motors fell 6.7% to $2.38 after the auto-maker posted a quarterly loss and said its auditors were likely to cast doubt on its viability.
Declining stocks outnumbered advancers on the NYSE by 10 to 9 and on the Nasdaq by about 5 to 3.
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First Published: Fri, Feb 27 2009. 08 43 AM IST
More Topics: Markets | US | Stocks | Wall Street | Healthcare |