Benchmarks finished mostly in the red on Thursday after declines in healthcare and energy stocks outpaced gains in financials sectors. Healthcare stocks declined yesterday following President Trump’s move to slash the overall budget for medical research and increase regulatory fees. Moreover, rising crude oversupply concerns weighed on energy stocks. Financial stocks rallied northward following optimism that Fed’s decision to hike interest rates will boost the sector, which in turn helped curb some of the day’s losses.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) decreased 0.1%, to close at 20,934.55. The S&P 500 fell 0.2% to close at 2,381.38. However, the tech-laden Nasdaq Composite Index closed at 5,900.76, gaining 0.71 points. The fear-gauge CBOE Volatility Index (VIX) declined 2.4% to settle at 11.35. A total of around 6.60 billion shares were traded on Thursday lower than the last 20-session average of 6.96 billion shares. Advancers outpaced declining stocks on the NYSE. For 54% stocks that advanced, 43% declined.
What Dragged the Benchmarks?
The White House released its 2018 federal budget proposal which intends to reduce the National Institutes of Health's (NIH) spending on medical research by $5.8 billion. Moreover, regulatory fees collected by the U.S. Food and Drug Administration are expected to increase to more than $2 billion, double the amount for this year. Concerns about higher regulatory costs and lower spending resulted in a selloff for the healthcare sector.
The Health Care Select Sector SPDR (XLV) decreased 1% and was one of the major decliners among the S&P 500 sectors. Also, the key biotech index iShares Nasdaq Biotechnology (IBB) fell 1.3%. Some of its key holdings including Amgen Inc. ( (AMGN - Free Report) and Biogen Inc. (BIIB - Free Report) declined 1.4% and 4.7%, respectively. Both the companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Additionally, crude oversupply concerns weighed on oil prices, which in turn led energy stocks lower. Domestic crude inventories declined last week by 0.2 million barrels but still remained at a record level of 528.2 million barrels. This is expected to have a negative impact on other major oil producing nations in their efforts to control a global crude supply glut.
Rising crude supply worries led the WTI and Brent crude to decrease 0.2% and 0.1% to $48.75 a barrel and $51.74 per barrel respectively. Decline in oil prices resulted in a 0.7% decrease in the Energy Select Sector SPDR (XLE). Dow component Chevron Corporation ( (CVX - Free Report) fell 0.9%.
Although financial stocks faltered following the Fed’s unexpectedly cautious approach regarding the path of future rate hikes, investors have warmed up to the sector. Financial stocks are expected to gain from the Fed’s decision to hike interest rate from 0.5%-0.75% to 0.75%-1%. Consequently, the Financial Select Sector SPDR (XLF) to increase 0.2% and emerged as the biggest gainer among the S&P 500 sectors.
In economic news, the U.S. Department of Labor reported that initial claims declined by 2,000 to a level of 241,000 for the week ending Mar 16. The U.S. Department of Commerce reported that housing starts jumped 3% to a seasonally adjusted annual rate of 1,288,000 last month, also higher than the consensus estimate of 1,265,000. However, building permits declined 6.2% to a seasonally adjusted annual rate of 1,213,000 in February, lower than 1,293,000.
Stocks That Made Headlines
Tiffany Beats on Q4 Earnings & Sales; Guides FY17
Tiffany & Co. (TIF - Free Report) posted the third straight quarter of positive earnings surprise, when it reported fourth-quarter fiscal 2016 results. ( Read More )
Google Eyes Algorithm Enhancement, Flags "Offensive" Content
Alphabet Inc.’s (GOOGL - Free Report) Google is reportedly taking steps to spot potentially upsetting or offensive content and reduce their appearance on the search results page. ( Read More )
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