U.S. stock markets moved mostly sideways on Friday. The Dow 30 posted its longest winning streak for so far this year. Notably, healthcare stocks were down initially following the news that President Trump unveiled his new healthcare plan. However, the broad market recovered later after the announcement was not followed up by stringent measures. Low inflation data and weak dollar also boosted investor’s confidence on equities.
The Dow Jones Industrial Average (DJI) closed at 24,831.17, increased 0.4%. The S&P 500 Index (INX) also increased 0.2% to close at 2,727.72. However, the Nasdaq Composite Index (IXIC) closed at 7,402.88, decreased by a marginal 2.09 points. A total of 5.8 billion shares were traded on Friday, lower than the last 20-session average of 6.6 billion shares. Advancers outnumbered decliners on the NYSE by 1.24 -to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.23 to -1 ratio. The CBOE VIX decreased 4.4% and closed at 12.65.
How Did the Benchmarks Perform?
The Dow gained 0.4% marking its seventh straight positive session. This was the blue-chip index’s longest winning streak since Nov. 8, 2017. Notably, 18 of the 30-stocks in the index closing in the green while 12 traded in the red.
The S&P 500 increased 0.2% led by 1.5% gain of the Healthcare Select Sector SPDR (XLV). Notably, 7 out of 11 sectors of the benchmark index ended in positive territory.
The Nasdaq Composite lost marginally 2.09 points. NVIDIA Corp. (NVDA - Free Report) , whose share price dropped 2.2%, pulled down the whole index into negative zone. NVIDIA declined as its CEO Jensen Huang stated that a short-term surge in demand for graphics chips from cryptocurrency miners may drop in future.
Trump Unveils New Healthcare Plan
President Trump introduced his new healthcare plan called "American Patients First" aimed at lowering prescription drug prices. The major thrust of the plan is to increase competition, improve negotiation and create incentives to lower list prices of prescription drugs.
The plan will introduce rebate-sharing in Medicare drug plans, which will promote generics version of biologic drugs. Per the plan, drug manufacturers have to publish list prices for drugs in TV advertisements. However, the new plan stops short of introducing massive reforms for healthcare companies. Also it does not mandate Medicare to work directly with drug manufacturers on prices.
The import price index rose 0.3% in April because of an increase of crude oil price. This was better than the 0.5% gain expected by consensus estimate. Excluding fuel, core import prices rose 0.2% in April.
Additionally, lower than expected increase in the consumer price index (CPI) cooled fears about growing inflation. The Labor Department stated that consumer price index (CPI) increased 0.2% in April compared with expectations of a 0.3% increase. Moreover, core CPI increased, which excludes food and energy components increased 0.1% in April, slower than February and March.
Moreover, a weak dollar and lower 10-year treasury yield also bolstered investor’s confidence in stock markets.
For the week, all the three major benchmarks increased. The Dow, the S&P 500 and the Nasdaq gained 2.3%, 2.4% and 2.7% respectively. This was the blue-chip index’s largest weekly gain since March. Energy and tech stocks were major drivers of the U.S. stock markets.
Oil prices rallied on Wednesday in the wake of United States’ decision to exit the Iran nuclear deal. The rally somewhat stabilized on Thursday after Iran’s Oil Minister Bijan Zanganeh said that nothing significant will happen to oil exports as a result of the sanctions. However, oil prices once again perked up at the end of the session to end the day higher. Notably, oil prices are at a three-year high. This increase fueled a rally in energy stocks once again.
The tech stock rally was led by Apple Inc. (AAPL - Free Report) . Apple’s shares jumped after celebrity investor Warren Buffett’s Berkshire Hathaway (BRK.B - Free Report) announced that it had bought 70 million shares of Apple in the first quarter. Consequently, shares of Apple rose to an all-time high $190.37. Additionally, Alphabet Inc. (GOOGL - Free Report) and Facebook Inc. (FB - Free Report) also gained significantly.
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